Hospital funds tied to patient satisfaction

Prime minister Gordon Brown announced the move as he set out government plans for legislation next year, including an NHS Reform Bill.

"For the first time, payments to NHS hospitals will be adjusted according to patient satisfaction and health outcomes," he said.

The proposal was part of efforts to make the NHS more "patient-focused", he added.

But experts said the approach could create more problems than it solved.

King's Fund chief economist John Appleby warned tweaking treatment tariffs could mean primary care trusts paying more for procedures at the best-performing hospitals.

"That means a primary care trust buying from a high quality provider will have less money to spend and that could affect the volume of care," he said.

"The right thing to do would be to leave the tariff alone."

Mr Appleby suggested establishing a separate national fund to reward good performance.

But he said the best solution would be "to hold PCTs to account for commissioning from high quality providers".

The main purpose of the NHS Reform Bill will be to take forward changes that come out of Lord Darzi's review of the health service, due next month. It will include a new NHS constitution, which will set out patients' rights and minimum standards of care.

Mr Brown said there would be new powers to "ensure no healthcare provider falls below the minimum standards that we require" under a "comprehensive NHS performance regime". This would include the capacity to suspend chairs and non-executive directors who are not up to scratch.

The bill will also feature measures to boost public involvement in PCTs' commissioning.

Opposition parties hit out at the plans.

"The NHS - shoved from pillar to post - will get a 14th reform bill in 10 years," said Liberal Democrat leader Nick Clegg.

See Michael White's column for more analysis.