The Victorian Department of Health and the Royal Melbourne Hospital have commissioned independent reviews of the APCR Australia Prostate Cancer Centre - a private clinic for men with prostate concerns and other urological conditions.

The centre has been accused of "double dipping" from federal and state health funding for patients, who are sometimes referred there by the Royal Melbourne Hospital under a patient-sharing agreement.

The centre's clinical director Professor Tony Costello AM has described the allegations as "scurrilous" and "defamatory" and said audits of its billing would show no wrongdoing.

Concerns have been raised that some staff who work for both the centre and the hospital are billing Medicare at the same time they are receiving payment from the hospital, where Professor Costello is also head of urology.

There are also allegations Professor Costello has been using junior doctors paid for by the public hospital for private work.

Professor Costello rejected these claims and said the centre had been funded by philanthropy and appropriately by Medicare for patient care.

The investigations are likely to interest many specialist doctors who work in both public and private hospitals, and who sometimes treat patients paid for by private sources in government-funded public hospitals.

While these doctors often find themselves juggling work with the two groups of patients, they can only bill Medicare when a patient is being treated privately. That is, the patient is either paying for their own care or using their private health insurance.

A spokesman for the Victorian Department of Health and Human Services said it had commissioned Ernst & Young to review "the governance and patient referral pathways between the Melbourne Health urology unit and the APCR Australia Prostate Cancer Centre".

"The review has been triggered by a range of concerns raised internally at Melbourne Health," the spokesman said.

"The review will investigate whether the operation of the private urology clinic … is within the terms of the existing service agreement between Melbourne Health and APCR Australia Prostate Cancer Centre; and specifically whether the billing arrangements for patients referred from Melbourne Health to APCR Australia Prostate Cancer Centre comply with the required Medicare guidelines".

A statement from Melbourne Health which runs the Royal Melbourne Hospital said it was taking the issues seriously and had asked a specialist legal firm, Health Legal, to "work through a number of administrative and governance issues such as referral processes, branding and scope of work".

"In response to ongoing, expanded concern about these administrative and governance issues, and to ensure processes occur in line with the service agreement, Melbourne Health recently commissioned an external specialist review … The review, being undertaken by Health Legal, will ensure a timely resolution of these issues," the statement said.

"We have confidence in the current process we are undertaking and we are committed to learning and implementing the recommendations from the external review."

The APCR Australia Prostate Cancer Centre was set up last year by Professor Costello in collaboration with the Royal Melbourne Hospital where he and several of the centre's staff work.

It received charitable donations through Australian Prostate Cancer Research, kicked along by a $6000-a-head dinner for 70 men hosted by broadcaster Eddie McGuire. The night raised more than $650,000.

Professor Costello said the idea was that a multidisciplinary clinic would be set up for men without private health insurance so they could be seen within about two weeks of referral, rather than waiting months for an appointment at the Royal Melbourne Hospital.

He said the clinic bulk-bills patients through Medicare for consultations with GPs, urologists, and other health professionals so patients don't face out-of-pocket costs.

GPs can refer patients directly to the centre, however if a patient's GP refers them to the Royal Melbourne Hospital to see a urologist, they are also given an option to go the centre.

Ordinarily, when patients are referred by their GPs to public hospitals to see specialists, those consultations take place in the hospital and are paid for by the public hospital, which are mostly funded by state governments - not Medicare, which is paid for by the federal government.

Professor Costello said if people attending the centre needed surgery or radiation treatment they could be put on the waiting list for the Royal Melbourne or Peter MacCallum Cancer Centre in the same way as they would if they had never visited the centre and went straight to the public hospitals instead.

Or, he said, they can choose to use their private health insurance, or pay one of the doctors privately for care in a private hospital.

Professor Costello said he was proud of the centre, which was not seeking to make a profit. To the contrary, he said it was making a loss.

The complaints include allegations about inappropriate billing of Medicare; use of other private radiology and pathology companies instead of the Royal Melbourne's publicly funded service; and criticism that a female patient was referred by the Royal Melbourne to the centre even though it primarily targets men.

Professor Costello rejected all of these claims and said both he and the centre, which was backed by funding raised through Australian Prostate Cancer Research, were not doing anything wrong.

He said any pathology and radiology done from the centre was bulk-billed so patients did not face out-of-pocket costs and that while some women did visit the centre, none had reported feeling uncomfortable.

The leading urologist said although some people had accused him of charging high fees for his private robotic surgery, he believed he charged fairly and that some criticism of him was motivated by professional jealousy.

"I've got nothing to hide," he said.

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