HOSPITALS across Merseyside and Cheshire face multi-million pound fines if they treat patients too quickly, under shock new government plans.

The punishments are designed to stop hospitals generating extra cash by performing more operations than agreed with community health organisations.

The department of health (DoH) says some hospital bosses are slashing waiting times to squeeze more money from the primary care trusts (PCTs) – plunging them into the red.

But the bizarre consequence will be patients forced to wait longer than necessary for operations and other treatments.

Last night, Steve Webb, the Liberal Democrat health spokesman, branded the idea "absolutely ridiculous".

Furthermore, the Daily Post has learned that PCTs will be allowed to dish out fines of up to 2% of the value of the contract they have with each hospital.

With a typical contract worth around £100m annually, it means hospitals face a staggering penalty of up to £2m for treating patients too quickly.

Mr Webb said: "It’s absolutely ridiculous. Isn’t the NHS supposed to be working together for the patient and the taxpayer?

"I can see the point of having a mechanism stopping hospitals going mad and carrying on regardless if the PCT has a cash limit. But this is not it.

"You just need better contracts where the PCT specifies what it wants and the hospital better delivers that.

"This is competition gone mad."

But a DoH spokesman said: "We want patients to be seen as quickly as possible, but we recognise the PCT have to stick within their budgets.

"The contract will be agreed at the beginning of the financial year and there shouldn’t be any problem with delivering that contract."

Under the new system, PCTs will also, from 2008, be able to fine hospitals that treat patients too slowly – missing a target of a maximum 18-week wait from GP referral.

The new regional strategic health authorities (SHAs) will act as regulators of the penalty system and intervene if it is thought a fine is unfair. But the plan is likely to provoke howls of protest from hospital trusts that are forecasting big financial deficits for the current year.

They include North Cheshire trust (£10.8m), Southport and Ormskirk trust (£5.6m) and Wirral Hospitals trust (£3.4m).

All hospitals are paid – or commissioned – by the PCTs to carry out an agreed amount of treatment each year.

Earlier this year, a PCT in Suffolk refused to pay Ipswich Hospital £2.5m because it was treating patients too quickly.

The hospital and the trust had agreed that patients should wait at least four months for treatment – but doctors breached the deal.