Nine private hospitals are being given more than $4 million to collaborate with public hospitals to perform about 2100 elective surgery procedures over the next five months.

The move has angered the opposition and worried private health insurers, which fear it could undermine the value of private health insurance because public patients will be operated on in private hospitals.

The nine private hospitals, which include Epworth Eastern and Melbourne Private, successfully pitched for their share of $9 million on offer under the government's Competitive Elective Surgery Funding Initiative.

The scheme, which also includes $35 million for public hospitals, invited all health services to tender for the work so the government could test how efficiently surgery could be done for the lowest price.

Victorian Health Minister David Davis told Fairfax Media that the first $35 million had been allocated to public hospitals to provide about 8300 operations for about 5 per cent less than standard surgery costs. The private hospitals' involvement was saving the government about $1.3 million, he said.

It means hundreds of public patients waiting for surgery will be operated on in private hospitals between now and June. They will not be able to choose their surgeon or the time of their procedures, but may get access to better facilities such as private rooms.

While Australian Private Hospitals Association chief executive Michael Roff applauded the initiative, saying private hospitals were well placed to help governments cut elective surgery waiting lists, private health insurers are concerned it could undermine perceptions of the value of private health insurance.

A spokesman for Private Healthcare Australia said that although the scheme acknowledged the efficiency of the private sector, it would be concerned if access to beds and treatment for people with private health insurance was diminished in any way. A spokeswoman for Medibank echoed this view.

In the past, surgeons have criticised governments for funding private hospitals for public patients because they also wanted to maintain the exclusivity of private hospitals. However, the chair of the Victorian regional committee of the Royal Australasian College of Surgeons, Robert Stunden, said he personally supported the Victorian project.

Dr Stunden said that although some surgeons would still baulk at the idea of public patients being treated in private hospitals, any effort to get the most out of limited health funding was a good idea.

It comes as the state government is trying to pressure the Commonwealth into overturning an unexpected cut of $107 million for Victoria's health system this year. This coincides with the state government cutting $616 million from its last two health budgets.

Victorian hospital chiefs say the recent federal government cuts are forcing them to close beds and operating theatres and sack staff. About 200 positions are expected to go.

On Tuesday, St Vincent's Hospital became the latest to reveal the impact on its services, saying about 30 beds would be closed until June.

While the previous Labor state government paid private hospitals for elective surgery at times, opposition health spokesman Gavin Jennings said it was ''bizarre'' for the Coalition to be giving private hospitals money over public hospitals this year.

''Public hospitals need every single cent they can lay their hands on at the minute,'' he said.

Mr Jennings said the state government should invest $66 million of the GST revenue it recently received from the Commonwealth into Victoria's health system to protect it from further service cuts and job losses.

''They should use any money available to them to support public hospitals, which are clearly in crisis,'' he said.

When asked if the state government would invest more money into the system to prevent services being cut, Mr Davis did not answer the question and said he was focused on trying to get the Commonwealth to reconsider its funding cuts.

jmedew@theage.com.au