GPs at a health centre in York have written to patients saying the NHS will no longer fund minor operations and instead offering to carry out the procedures for a fee, an unprecedented step in the health service.

In a letter obtained by the website nhsmanagers.net, patients are advised that for a number of minor surgical procedures, such as ingrowing toenails, mole removal and chopping out warts and cysts, they would have to go private.

It says: "We are holding your details on a list of patients who require a minor surgical procedure that is no longer paid for by the NHS."

The letter identifies four "local service providers who offer the procedure privately", including HBG Ltd, which it admits is "a company that is wholly owned by the practice". The price list of treatments range from £56 to remove a skin tag to £243 for lipomas.

The letter from John McEvoy, managing partner at Haxby and Wigginton health centre, which serves more than 20,000 patients, claims the NHS will no longer fund some operations. "As a result I am writing to make you aware of some of the options that you have to have the procedure completed as a private patient."

Experts said this exposed a conflict of interest under the government's NHS reforms. "This is a massive conflict of interest here. The GP is earning money potentially from referring the NHS patient to his own private practice," John Appleby, chief economist at the King's Fund, said.

Appleby also questioned whether any GP could claim that the local primary care trust could have "a blanket ban" on procedures. "A GP can always challenge these things," he said. "You cannot ban something – it has to be done on a case-by-case basis."

When contacted by the Guardian, McEvoy said that because the NHS was looking to save £20bn from its budget, the effect on the ground was that health trusts were no longer prepared to fund treatments – so patients had to reach into their own pockets or go without.

"We waited for [the primary care trust] to tell us that the NHS would be funding these operations, but they said no it was over … so we have 30 patients who were waiting for surgery and decided to write to them explaining they could get it done privately. We were not promoting ourselves. Patients want this service." He said little or no profit was made on the procedures offered by the GPs in their private clinic.

Campaigners have long been concerned that as GPs are more involved in commissioning care under government reform plans, they would be able to reduce NHS provision to increase their private income.

The PCT said it had not been seeking to cut operations to save money but merely asked GPs to make the clinical case for patients. It also said it had serious concerns over the case. Dr David Geddes, medical director of NHS North Yorkshire and York, said: "We have some concerns about the activities of the Haxby and Wigginton health centre in York and we will be discussing these issues with them directly as a matter of urgency.

"These concerns are around possible breaches of the Data Protection Act and the accuracy of the information sent to patients. For example, of the eight procedures they list, three are routinely funded by NHS North Yorkshire and York and should be made freely available."