Royal Bournemouth and Christchurch Foundation Trust has spare capacity, but is refusing to take on more work because it believes a PCT owes it more than £6 million. The trust has blocked GP referrals for gastroenterology and will extend this to all services from 23 June.
Tony Spotswood, chief executive of Royal Bournemouth and Christchurch Foundation Trust, said: 'Bournemouth Teaching PCT is refusing to meet the cost of patients referred in for treatment, which contradicts government policy.
'There is a sum outstanding of £6.3 million plus costs and interest.
We have the capacity to treat patients, but we must be funded for the patients we treat.'
But a statement from the PCT said the foundation trust had carried out 'many more operations than had been agreed in its contract'.
'This was not necessary because waiting times across Dorset are some of the lowest in the country and the PCT did not have the funds to pay for additional work,' the statement added.
Crucially, the PCT said it believed it was 'not required to pay for work carried out by the hospital over and above the agreed contracted level'.
Dr Paul French, a Bournemouth GP and chairman of the PCT's professional executive committee, said: 'The foundation trust is pressing ahead in treating patients faster than the health community has agreed under contract.
It is asking for funding that has been committed for other parts of the health community.
'These are all essential services - the hospital is not the only provider of care.'
Wessex LMCs chief executive Dr Nigel Watson said the dispute was a symptom of the failure of current health policy.
'This is one of the problems with foundation trusts and the NHS internal market. This is not the way to run a health service.
Dr Watson said the foundation trust should start a formal NHS arbitration process to resolve the dispute.
'I don't know the rights and wrongs of the financial side, but they should not use patients as pawns,' he said.
Dr Watson said GPs should continue to refer patients and urge patients to write to their MPs if unnecessary delays occurred.
The PCT confirmed that it would do 'everything it can to ensure that patients are offered the same treatment from a range of other local providers' and make sure patient safety was not compromised.
A DoH spokesman said the DoH and the foundation trust watchdog Monitor were discussing resolution of the dispute.
'It is the responsibility of the PCT to ensure that appropriate services are contracted for their patients,' he said.