Private healthcare providers will be compelled to provide greater information on the quality and cost of treatments being offered to private patients and insurers.
Controversial incentives between clinicians and private hospitals will also be banned or restricted, while hospital networks face the forced sale of certain hospitals and stricter controls on the operation of private NHS wings.
The moves form the key remedies recommended by the Competition Commission (CC) following its review of the private healthcare market.
That review found a lack of competition in the market had cost policyholders at least £173m a year between 2009 and 2012.
CC chairman and chairman of the private healthcare inquiry group Roger Witcomb warned that there was a significant lack of transparency within the market for patients and GPs.
“Opening up this market to greater competition is not straightforward. Neither patients nor GPs have enough information, either on price or quality, to make informed decisions, and high costs and demand stagnation mean that new competing facilities are not going to spring up easily,” he said.
“In some areas, sales of hospitals to other operators will be effective in increasing rivalry but in areas with, for example, a single private hospital, a sale would just transfer market power from one operator to another.
“What we can also do is remove the practices and barriers which can prevent a new operator getting a foothold in a particular area and help patient choice play a much greater role in driving competition on both quality and price.”
The provisional decision on remedies proposes the following measures:
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prohibition on or restriction of clinician incentive schemes provided by private hospitals to clinicians that encourage patient referrals to their facilities or for particular treatments or tests;
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requiring the collection and publication of information on the performance of private hospitals and individual consultants and the provision of consultant fee information to patients;
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divestiture of nine private hospitals — HCA should sell two hospitals in central London (London Bridge and Princess Grace) and BMI should sell seven hospitals in Greater/Outer London, Home Counties and the North-West of England. Buyers will need to get CC approval and to have the appropriate financial resources and expertise; and
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the Competition and Markets Authority will review any proposal by a private operator to enter into an agreement to operate a private patient unit in an NHS hospital in a local area where it faces little competition.
The CC report claims that “the proposed divestitures will directly introduce greater rivalry in local markets where a private hospital operator currently controls a cluster of hospitals that are subject to weak competitive constraints. By increasing choice for both self-pay patients and private medical insurers, divestiture would increase competition between operators on both price and quality”.
Hospital groups have reacted angrily to the report and challenged its findings - the CC's methods in producing its original report were successfully challenged in court.
Meanwhile, private medical insurers have welcomed the findings.
The remedies are open for consultation until 6 February with the final report due required by 3 April.
