Major private healthcare providers are facing calls to be broken up as they await the findings of a Competition Commission investigation into the £5bn sector.

Some insurers believe hospitals and doctors are making excessive profits and pushing up prices, adding to pressure on the NHS.

They are calling for the commission to take firm action to improve competition between providers, possibly including the break-up of large hospital groups that dominate the sector.

The Office of Fair Trading (OFT) referred the industry to the commission for an in-depth investigation last year after it found that it “could work better for patients”.

The OFT said some parts of the country have only one private hospital and there are “significant barriers” to new companies entering the market, currently dominated by five players. The commission is expected to publish findings later this month.

Insurance provider Bupa has long called for an inquiry, saying the cost of private healthcare was becoming unsustainable.

But hospital group HCA has said that major insurers are dictating the delivery of clinical services and limiting patient choice.

Insurance industry sources argue that the market appears to be in a slow decline, with the proportion of people covered by private medical insurance at 11 per cent, the lowest level in two decades, with high costs deterring many of those who would like to be covered.

They say this has been spurred by the costs charged by hospitals more than doubling and those for doctors rising 65 per cent, caused by weak competition in the market.

The majority of those covered by private insurance have their premiums paid by employers but those who pay themselves, who are mainly older, have increasingly been priced out, it is claimed, with 700,000 people leaving the market since 2010.

It is argued that while doctors and hospital groups can boost short-term profits in this way, it will shrink the market in the long term - making more people dependent on the NHS at a time when it is facing major funding concerns.

“There is scope for the Competition Commission to take meaningful action and strong action and that that is what we will be pushing for,” a source said.

As hospital groups have built up their size and increased their negotiating power, the commission could take similar measures to those used in the airport sector when it ordered the break-up of operator BAA, it is argued.

“That sort of action would go a long way to increasing the ability of the insurance companies to negotiate good prices,” the source said.

Insurance industry sources also argue that more transparency about results delivered by hospitals and doctors in the private sector is needed to drive up quality and help convince patients that it is worth paying for a service that might otherwise be provided for free on the NHS.

The OFT’s report last year found that General Healthcare Group, Nuffield Health Hospitals, Ramsay Health Care UK, Spire Healthcare and HCA account for three-quarters of the market.

It said that in some parts of the country such as Edinburgh, Exeter and Hull, there is only one private hospital or healthcare facility.

Even in areas where choice was available, it could be difficult to compare price and quality of different providers accurately, it added.

However, in a submission to the commission probe, HCA sought to turn attention to the behaviour of the private medical insurance providers, which it said were “increasingly dictating the way in which clinical services are delivered” .

It argued that their strategy for managing care was “severely limiting patient choice”.

The company said the OFT had given little attention to the concentration of 90 per cent of the PMI sector among a handful of providers and that there was a “lack of effective competition”.

HCA said major insurers had a “significant negotiating advantage” since new private healthcare facilities needed to be included on networks controlled by them to be financially viable.

It also said PMI companies were controlling patient referrals by making their own choice of consultant used for treatment rather than leaving the decision with GPs.

Insurers had also imposed “arbitrary” de-listing on consultants, as well as pricing caps, and proscriptive requirements about patient care including the length of hospital stay, HCA added.

It rejected claims that the concentration of the private healthcare market was producing higher prices and lower quality of service.

The General Healthcare Group has also criticised the OFT report and said the role of private medical insurance should not have been excluded from the probe.