More and more NHS hospitals are building private wings and units - 56 had dedicated private units amounting to 790 beds early this year, a rise of seven units and more than 100 beds in only a year. The income of the largest units, in London, exceeds pounds 5m a year.
Some are generating a "substantial proportion" of their private work by asking patients as they are admitted through casualty departments whether they want private rather than NHS treatment, according to the review, the annual bible of the private health care market.
"Patients are being persuaded to make use of their insurance cover in situations - emergency admission to an NHS hospital - where they would not previously have done so," William Laing, the report's author, said.
The situation is already alarming insurers who fear higher premiums will result from the higher claims rate. Bupa, the biggest medical insurer, has already changed its rules to say it will not pay for treatment in intensive care units unless it is part of a planned admission.
It is pressing the NHS Executive to issue new guidance on the borderline between NHS and private treatment, arguing that NHS trusts are exploiting patients' private cover.
The higher pay-bed activity has reversed a historic decline in the NHS share of private treatment so that it now takes 15 per cent of the market.
The growth has led private hospital groups to lobby health ministers, with the private sector arguing that it is facing unfair competition from the NHS. In a foreword to the review, Tom Sackville, the junior health minister, says: "I am well aware of the concern in the independent sector at the recent growth in the amount of private practice undertaken by NHS hospitals. I can assure you that we have no target for the amount of private practice to be undertaken."
He adds that NHS hospitals charged commerical rates - not subsidised ones, as the private sector argues. And trusts had a statutory obligation to meet NHS contracts before undertaking private work, Mr Sackville said.
That row is rumbling on as the numbers covered by private medical insurance have risen for the first time in five years.
Just over 6.5 million policies are now held, covering 10.9 per cent of the population, last year's 4 per cent rise providing the first significant increase since 20 years of growth were halted by the 1990 recession, according to Laing and Buisson.
The review also confirms that the first year of the new community care system has seen the first fall in long-stay residents and patients since comprehensive statistics on both the private and public sector were compiled in 1970. Numbers were down from 512,000 in April 1993 to 503,000 in April 1994.
9Laing's Review of Private Healthcare 1995; Laing and Buisson, Lymehouse Studios, 38 Georgiana Street, London NW1 0EB; pounds 120.Reuse content