Published: 02/12/2004, Volume II4, No. 5934 Page 22

Richard Devereaux-Phillips, public affairs manager UK and Ireland, Medtronic

Michael White's article on tariffbased funding (news, page 23, 11 November) was a welcome contribution. The point he made best was that while the system makes sense at a macro level, as soon as you get below the surface the wheels start to come off.

At a high level, payment by results seems like a good idea and using the existing health resource group labels is not unreasonable. Neither is attaching a tariff to them.

It all works as long as the basic premise holds that 70 per cent of healthcare costs are fixed holds.

And, as long as it does, it is reasonable to lump together 10, 20, 50 or even 100 procedures into a single tariff-bound label.

But as soon as you start pulling out individual procedures, and where high-cost prosthetics are involved, the sums just do not behave in the same way.

A£10,000 device implanted in a two-hour procedure will not account for only 30 per cent of the total cost, and even though it may satisfy costeffectiveness criteria that would please the National Institute for Clinical Excellence, its use in the NHS is far more uncertain under the tariff-based system.

Add to this the fact that only five high-cost devices appear to have been excluded from tariff, and providers - especially those with a specialised case mix - face potential difficulties.

Providers will need to use whatever mechanisms exist in technical guidance to negotiate some local flexibility. If not, there is the real prospect that many services, especially new and specialised ones, will no longer be available.