The Office of Fair Trading (OFT) has referred the privately funded healthcare market to the Competition Commission for investigation.
This follows the OFT's provisional decision to make a market investigation reference when it published its private healthcare market study in December 2011.
The OFT then undertook a public consultation on its findings which closed in January 2012.
Having considered the responses submitted during the consultation process, the OFT said it believed the private healthcare market could work better for patients, and that there are reasonable grounds for suspecting that there are features of the market that prevent, restrict or distort competition.
The features identified by the OFT are:
• A lack of easily comparable information available to patients and their GPs on the quality and costs of private healthcare services.
• There are only a limited number of significant private healthcare providers and larger health insurance providers at a national level.
• There are pockets of particularly high concentration in some local areas where private patients have a limited choice of hospital.
The OFT added that there were "significant barriers to new competitors entering the market and being able to offer private patients greater choice."
Examples given were that some larger private healthcare providers can impose price rises or set other conditions if an insurer proposes to recognise a new entrant on its network.
There also appear to be certain incentives given by private healthcare providers to consultants, such as loyalty payments for treating private patients at a particular facility, which could raise those barriers further.
Commenting, John Fingleton, chief executive of the OFT, said:
'The private healthcare sector is likely to continue to be of growing importance to the nation's population and economy and so it is important that the market works well.
"Yet private patients and their GPs face difficulties selecting private healthcare providers on the basis of quality or value for money, and this may ultimately result in patients paying higher prices, or receiving lower quality care.
"Following extensive consultation, 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."
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