A "REVOLUTIONARY" deal between Oxford consultants and an American healthcare company has sparked new fears about privatisation of the local NHS.

The first fruit of a new public-private partnership at the Nuffield Orthopaedic Centre will be the creation of the Oxford Clinic for Specialist Surgery in September. And consultants are already turning their minds to creating what, in effect, would be a new private hospital on a site in Littlemore.

The new private medical centre at the NOC will offer orthopaedic surgery, neurosurgery, radiology, rheumatology, physiotherapy and related disciplines. The clinic has been advertising for staff.

It follows the creation of a partnership between Ascent Health, an American healthcare operator, the NOC and a group of medical and surgical consultants, who set up their own company, Oxford Musculoskeletal LLP.

The partnership will take over the lucrative orthopaedic private work at the NOC, which has always seen a substantial amount of funding ploughed back into the specialist hospital. The deal will also provide new funding to improve facilities for private patients at the NOC.

A spokesman for the American firm said: "The revolutionary relationship will work with the local NHS and private medical insurance companies to provide innovative and cost-effective acute care."

The chief executive of the NOC, Ed Macalister-Smith, said the deal represented a major departure for the hospital.

He said: "The purpose of the partnership is to pick up the private orthopaedic work that has been going on at the NOC site for many years and to develop and provide a modern new private facility for Oxford. We cannot invest NHS money to develop it and the fabric of the private facilities has fallen behind what is needed."

While there was no definite plan to move off site, he added, "If everything goes well, other plans will be brought forward."

The Oxford orthopaedic consultant Gavin Bowden, one of the key figures behind the project, said the NOC and its staff were central to the scheme.

He said: "It is not a private venture. We are trying to develop a partnership to deliver services that will see an improvement in patient care. This is not a private hospital but a true partnership with the NHS, in particular the NOC."

He said he hoped to later create a new facility with the NOC at Littlemore.

The speed of developments has taken the Oxford Keep Our NHS Public campaign by surprise.

Mark Ladbrooke, of Unison, said he feared what the financial implications would be for the NOC, which has borrowed heavily to invest in new buildings.

He said: "There is concern for staff being transferred in and out of the NHS. There are implications in changing people's terms and conditions."

News of the shake-up comes after MPs were warned that the NOC and the four other specialist orthopaedic hospitals in England faced having to abandon complex surgery on hips and bones.

The NOC's chief executive travelled to London yesterday to meet MPs. He and representatives from other specialist hospitals also met to form a new group of specialist hospitals to fight for more funding.

New Government rules creating a new system of payment by results had created a crisis in underfunding for complex operations. Ironically one of the complaints is that much routine orthopaedic surgery is being diverted into private sector treatment centres, leaving the five NHS centres of excellence to concentrate on more highly-skilled work.