Many private hospitals in the UK face little competition, leading to higher private medical insurance premiums and charges for private patients, says the Competition Commission.

In its provisional findings on privately-funded healthcare services, the CC also pinpoints incentive schemes, which encourage consultants to choose particular private providers for diagnosis and treatment, and the lack of available information on the performance of hospitals and consultants, as further restrictions on competition.

About 80% of private patients fund their treatment through private medical insurers, very often paid for by employers. The prices charged by operators to insurers are set nationally, but the CC believes that the lack of competition in many local areas, where insurers will have little choice but to use the local operator, results in higher premiums for all patients. Self-pay patients also face higher charges in areas with little local competition.

The Commission has now put out for consultation a range of possible remedies to improve competition, including: - requiring operators to sell hospitals in areas where they derive significant market power from the ownership of local clusters; - a ban on some incentive schemes; - prevention of “tying or bundling,” when an operator might respond to a loss of business in one area by raising prices nationally; - possible entry-enhancing measures; and - the provision of better information on prices and quality for patients.

“The lack of competition in the healthcare market at a local level means that most private patients are paying more than they should either for private medical insurance or for self-funded treatment,” said Commission chair Roger Witcomb, who also chairs the panel’s private healthcare inquiry group.

“The lack of available and comparable information, often less than is available to NHS patients, also makes informed choices – which could help drive competition – for these patients difficult,” he said.

“We’ve also seen the existence of a range of incentives which encourage medical professionals to choose facilities on grounds other than price and quality – and we struggle to believe these can be in the interests of patients,” added Mr Witcomb.

And the CC is “aware of the disquiet expressed by some patients and consultants in relation to the actions of some health insurers,” he noted.

The CC is seeking comments on its provisional findings by September 20. It is required to publish its final report by April 3 2014.