Government says it will 'look carefully' at proposal by firm aiming to sign doctors up to commissioning plan

The government's health service reforms could lead to GP practices being partially floated on the stock market, it has emerged.

Under the health secretary Andrew Lansley's health and social care bill, which is going through parliament, GP consortiums will begin to control £80bn of NHS funds to commission healthcare from 2013.

But in documents obtained by Channel 4 News and passed to the Guardian, one private health firm, IHP, proposes that the commissioning budget for patients be handed over to a private company in which family doctors would own a 20% stake.

IHP is in talks with three GP consortiums to set up a company that would turn underspends in their annual budget – in effect, savings on patient spending – into profits. This company, which aims to list on the stock market in three to five years, would treat patients at 95% of the cost of the NHS. This putative saving, amounting to £40 per patient, would be booked as earnings.

Oliver Bernath, IHP's founder and a former consultant neurologist who went on to work at the management consultant McKinsey, told the Guardian that for the scheme to work it would need to cover at least 2 million patients – with 1,000 GPs signed up.

At such a scale, representing about 5% of England's population, potential annual earnings could be about £80m. With profits as large as this, a share listing could eventually net individual family doctors a windfall of up to £160,000 each. Money raised from the stock market would be used to build hospitals and IT systems – motivating private money to build healthcare facilities that would rival the NHS.

"We are looking to get the first consortiums signed and ready in April with 100,000 patients," said Bernath. "The whole NHS is £80bn in spending and if GPs can take underspends then we can get a large audience fairly quickly. Investors will find it very attractive fairly quickly."

The Department of Health said a national commissioning board and regulator would prevent perceived or potential conflicts of interest.

"GPs cannot 'pocket' savings from their budget. A consortium's commissioning budget must be used exclusively for patient care. We will look at IHP's proposals carefully, but we are clear we will not allow a situation where profits can be made at the expense of patient care or patient choice."

"We have empowered GPs to commission services for their patients as they are best placed to make the right clinical decisions whilst achieving value for money."

The IHP plan works by using a loophole in the legislation that allows a private firm to be handed a GP consortium's commissioning budget by claiming it is a provider as well as a purchaser of healthcare.

Academics and frontline staff have continually warned that the government's bill does not insulate GPs from seeking financial bonuses from underspends.

Kieran Walshe, the professor of health policy and management at Manchester Business School, examined IHP's plans and said they amounted to "privatising NHS commissioning".

Bernath, who has run his plans past the head of the NHS, Sir David Nicholson, says such criticism is misplaced. He says already family doctors "can pocket underspends by not spending the money meant for their practice. If they choose to get a cheaper nurse , it is money for them. I don't understand the emotional arguments over public and private in the NHS. If you ask most people whether they could have private healthcare or the NHS they would choose private."

Peter Carter, chief executive of the Royal College of Nursing, said he did not "want perverse incentives [being created] for the leaders of the new consortiums to underspend. It would send out a mixed message to NHS staff if they are seeing cuts in frontline services in one part of the NHS and bonuses elsewhere."

The news comes at a crucial time for the health bill, with MPs due to vote on whether to allocate the £1.8bn needed for Lansley's radical shakeup of the NHS. The government will announce that 177 groups of GPs have banded together as shadow consortiums – covering two-thirds of England's population – in a step designed to bolster support for the bill.

The shadow health secretary, John Healey, warned that it was " deeply concerning that there is a lack of provision in the health bill to prevent (deals such as IHP) from happening, and we will be doing all we can to block such deals being struck."

"Building in incentives like this could lead to under-treatment in the name of achieving budget underspends, and in doing so seriously undermine patient-GP relations. Patients need to know their GPs are making decisions on the basis of medical need, not financial self-interest."

• This article was amended on 8 March 2011: In the original, it was said that putative budget savings, amounting to £40 per patient, would be booked as "profit". This has been corrected.

• This article was further amended on 21 October 2011. The original headline said "NHS reform could see GP surgeries on stock market". The scenario is for companies holding care budgets, rather than surgeries, to be floated; the headline has been amended accordingly. The sixth paragraph originally gave a figure of £1m for the size of the possible GP windfalls arising from a stock market listing. In an update on 8 March, we inserted a paragraph to clarify this was a speculative calculation by the reporter. As IHP later confirmed the size of any windfall would be up to £160,000, the text has been amended and the qualifying paragraph of 8 March removed. IHP has also written a letter of response.

• Further investigation of NHS reforms can be seen on Channel 4 News at 7pm on Wednesday