Image caption NHS staff from Great Ormond Street Hospital took part in the London 2012 Olympic Opening Ceremony

High-profile NHS hospitals in England are to be encouraged by the government to set up profit-making branches abroad to help fund services in the UK.

An agency will aim to link hospitals such as Great Ormond Street with foreign governments that want access to British-run health services.

Investment would have to be drawn from hospitals' private UK work, but with profits ploughed back into the NHS.

A patients' group said the move was a "distraction" at a time of "upheaval".

The drive, building on an initiative first started under the Labour government, is set to be launched by the Department of Health and UK Trade and Investment this autumn.

The BBC understands the initiative is unlikely to involve regular district or general hospitals but would target world-renowned hospitals like the Royal Marsden, Great Ormond Street and Guy's and St Thomas'.

This is not about distorting what the NHS offers to UK citizens, this is about how we can exploit the brand of the NHS internationally David Stout, Deputy chief executive, NHS Confederation

'Benefit patients'

It would mirror schemes such as that of Moorfields Eye Hospital in London, which in 2007 built a unit of the same name in Dubai. Children's hospital Great Ormond Street also has interests abroad.

In 2010, Labour's Health Secretary Andy Burnham set up NHS Global to help the health service make the most of the global market for healthcare and the coalition now wants to build on this.

A source close to current Health Secretary Andrew Lansley emphasised that hospitals would be able to pay for their investments abroad using only revenue generated from their private patients in the UK.

How it works Healthcare UK will link up British hospitals wishing to expand overseas with foreign clients who want the new services

This could include everything from setting up and running new hospitals to advising on aspects of healthcare

Funding for such ventures would come from private investment, not NHS cash, and any profits would be used for UK services

London's Moorfields Eye Hospital already runs an outpost in Dubai which generates a return for its UK site of £500,000 a year

Great Ormond Street Hospital makes a profit from providing training, education and support in the Gulf region

But experts say these profits are a drop in the ocean compared to the £100bn annual running cost of the NHS

And only a handful of the UK's hundreds of hospitals would be in a position to start offering services abroad

Some argue problems at home, such as the scandal at Mid Staffordshire over "appalling standards of care", could damage the NHS brand

Any profits made overseas would be ploughed back into the health service and so benefit NHS patients, the source added.

The Health and Social Care Act, which was passed by Parliament earlier this year, eased the way for hospital trusts to expand their work in the private sector.

Health Minister Anne Milton said: "This is good news for NHS patients who will get better services at their local hospital as a result of the work the NHS is doing abroad and the extra investment that will generate.

"This is also good news for the economy, which will benefit from the extra jobs and revenue created by our highly successful life sciences industries as they trade more across the globe.

"The NHS has a world-class reputation, and this exciting development will make the most of that to deliver real benefits for both patients and taxpayers."

Moorfields medical director Chris Canning said no taxpayers' money had been spent on its Dubai venture and it had been in profit for the past three years while "raising the reputation and profile" of the NHS and the hospital, and making money to reinvest in UK health services.

David Stout, deputy chief executive of the NHS Confederation, which represents organisations around England, denied the scheme would divert attention away from health services and said an international exchange of ideas could in fact improve local services.

Media playback is unsupported on your device Media caption Dr Chris Canning said Moorfield Eye Hospital's Dubai branch did not use any taxpayer funds

"This is not about distorting what the NHS offers to UK citizens, this is about how we can exploit the brand of the NHS internationally," he told BBC Radio 4's Today Programme.

When asked if the NHS could end up under-funded by taxation because of increasing funds raised abroad, he said: "We are not talking about completely skewing the way the health service funding comes in - this will be marginal in the scheme of a £100bn organisation organisation in the NHS."

'Rampant commercialisation'

However, the move was criticised by the Patients Association.

Media playback is unsupported on your device Media caption Anne Milton MP: This is great for our NHS... for taxpayers... for patients

"The key and only focus of an NHS hospital should be to provide treatment to patients on the NHS. We would be very concerned by any moves which would see commercial ventures, which are naturally going to be important for hospitals because they need to use them to raise revenue, would simply result in the attention of the hospitals being taken away from the core purpose - to treat patients in the UK and instead be focused on these hospitals abroad," said Michael Watson, of the group.

Media playback is unsupported on your device Media caption Andy Burnham, Labour: "The government's plan fundamentally alters the character of the NHS"

Labour began the initiative while in government, but shadow health minister Jamie Reed criticised the coalition's plans.

He said: "At a time when staff are losing their jobs and waiting times are rising, the government's priority should be sorting out the mess it has created in our NHS.

"Under David Cameron we're seeing a rampant commercialisation of the NHS. He needs to get a grip and start focusing on patients, not profits."