The Office of Fair Trading yesterday confirmed that it would refer the private healthcare market for in-depth investigation by the Competition Commission.

OFT chief executive John Fingleton said in a statement that the lack of comparable information about the quality or value-for-money of private healthcare providers “may ultimately result in patients paying higher prices, or receiving lower quality care”.

The watchdog’s 2011 private healthcare study had also found “significant barriers” to new competitors entering the market. Some larger providers were able to “impose price rises” if an insurer proposed to work with a new entrant, and some consultants received “loyalty payments” for treating patients at specific facilities.

It warned that ‘partnership’ deals between private providers and NHS private patient units could also restrict competition, if the private provider already worked in the PPU’s market.

It suggested this might be remedied by advising NHS and foundation trusts not to form partnerships with private providers who have “more than a certain share of the local market”.

Mr Fingleton said: “We have concluded that an in-depth investigation by the Competition Commission is the most appropriate means of investigating and potentially remedying the market problems we have identified.” 

Wayne Pontin, chair of the Association of Medical Insurance Intermediaries, said he welcomed the move. “We feel it is a sensible decision and will ultimately benefit consumers.

“At present there is no transparency of costs for services and treatment,” he said. “We also welcome the OFT recognition of non competitive practices of loyalty bonuses being paid to private practitioners which goes completely against freedom of choice.”