Payment by results is set to become payment for performance in the North West of England, under a US model that rewards hospitals for the quality of their care.

Providers within NHS North West could be paid extra by primary care trusts if they score highly on clinical benchmarks as early as October, if the strategic health authority strikes a deal with a US not-for-profit hospital alliance.

NHS North West chief executive Mike Farrar said it was 'a long way down the road' towards signing a deal with US outfit Premier to bring its payment model to the UK.

Premier's hospital quality incentive demonstration, which began in 2003, has tested whether financial incentives are effective at improving the quality of inpatient care across 260 hospitals, using metrics to judge performance across five clinical conditions: pneumonia, heart failure, hip and knee replacement, heart bypass, and acute myocardial infarction.

The scheme measures the quality of care provided as well as outcomes, using clinically agreed, evidence-based standards.

With heart bypass, for instance, the scheme assesses whether aspirin is prescribed at discharge, and the type of antibiotics given to patients, as well as recording the inpatient mortality and post-operation haemorrhage rates.

The top 10 per cent of hospitals in each clinical area receive a 2 per cent payment bonus, with the next 10 per cent getting 1 per cent extra. The scheme has been proved to cut length of stay, mortality rates and readmission rates, as well as reducing costs.

NHS North West hopes to introduce the model across part of its area in October, with the whole patch taking it on next year.

The SHA has been looking at procurement, data gathering and clinical engagement, with both practice-based commissioners and lead clinicians from acute trusts assessing how the system might work.

Mr Farrar said: There is nothing in the US pay for performance work that could not be replicated in the UK.'