Hypochondria is adding millions to the cost of the NHS, but hospital trusts are refusing to tackle the problem due to perverse financial incentives that would leave them worse off if they did so, according to a leading psychiatrist.

One in 10 patients attending hospital has health anxiety disorder – the new name for hypochondria – which is often a bigger problem than the physical ailment that gives rise to it. Patients with chest pains, for example, may become so fearful of a heart attack that any recurrence prompts them to call an ambulance and seek admission.

Professor Peter Tyrer, head of the Centre for Mental Health at Imperial College, London, said preliminary studies showed up to half of patients with health anxiety could be helped by nurses trained in cognitive therapy.

"All the messages out there for the public are if you have symptoms, come in as early as possible to have them checked because early intervention gives the best chance of cure. At least 99 per cent will have nothing wrong but for patients who have had, say, heart trouble in the past, the doctors are very nervous and do all the tests," Professor Tyrer said."

However, success in preventing unnecessary hospital admissions damaged trusts' financial positions, because they are not paid for patients they did not admit. Professor Tyrer said: "We have got excellent evidence that our approach – cognitive behaviour therapy for health anxiety – can reduce anxiety and hospital visits by over 40 per cent. But the trusts say the trouble is that this means they will get a reduction in income. If patients don't come to the hospital they don't get the money. It is the perverse effect of the system of payment."

Professor Tyrer said a report published last week revealing the soaring rate of emergency hospital admissions, up 12 per cent in five years, by the health think-tank the Nuffield Trust, had failed to mention the effect of hypochondriasis or the financial incentives that prevent it being tackled.

"We have trusts telling us that they like our treatment as it gets people better and makes them more satisfied with their care, but they are worried that they may suffer a loss of income from reduced attendances so it may not pay them to support our service. And this in spite of evidence that there would be financial gains to the NHS overall," he said.

A trial of the technique in five trusts – Sherwoood Forest (Nottingham), St Mary's, Charing Cross, Hillingdon, and Hammersmith (all in London) – has recruited 430 patients who will receive five to 10 sessions of cognitive behavioural therapy and be followed for two years. Early results were promising, Professor Tyrer said.

"Dozens of patients say they have been ill for a decade and nothing has helped but now they feel better than ever. We had one patient who had had a stent [a metal tube to hold a blood vessel open] fitted for heart trouble. He had been so petrified of another heart attack he had not been out of the house for a year and only went for his hospital appointment by specially arranged taxi. After therapy he went on holiday and climbed Snowdon."

Simon Beshir, consultant cardiologist at King's Mill Hospital, Nottinghamshire, which is involved in the trial, said: "I am hopeful the results will be positive and we can avoid unnecessary admissions."

Paul Wallace: 'I got upset that no-one could explain what was wrong'

After a car accident Paul Wallace, 56, of Mansfield, Notts, began to get chest pains which made him worry he was having a heart attack. Over six years he was admitted to hospital as an emergency eight times. Yet despite repeated investigations – including two angiograms [X-ray examinations of the heart] – doctors could find nothing wrong. "I used to get these pains that made it very hard to breathe," Paul says. "I would phone 999 and they would take me to A&E and I would stay in hospital. The last time the doctor said they couldn't find anything wrong and I got very upset that no one could explain what was happening to me. Then the doctor suggested I go to this new clinic they were setting up."

The effects were dramatic. Paul had felt "constantly morbid". After a course of therapy, he felt he had got his life back – and cancelled a heart scan he was due to have. He said: "I still get chest pains but I ignore them. They are not going to find the cause but so what?"