Spire Healthcare Group and Bupa UK have announced a renewed long-term agreement for six years from April 2015.
The agreement includes improved affordability and measures to improve standards of quality of care and customer experience at Spire hospitals, which it is hoped will increase customers.
All of Spire's existing hospitals are included in the agreement, and Bupa will support Spire's plans for future growth.
The agreement will begin on 1 April 2015 and run until 31st March 2021, with a minimum term of four years and prices agreed throughout the whole six year period.
At present Spire has 39 hospitals and 13 clinics across Great Britain and in 2013 treated over 236,000 patients, performing the most knee and hip operations in the UK.
A new Quality Framework has also been included in the agreement which will aim to improve quality of care and treatment experience for Bupa's customers, and will involve a rolling programme of initiatives during the agreement.
Dr Damien Marmion, managing director of Bupa Health Funding said: "We are very pleased to have reached a groundbreaking agreement with Spire. We believe that the new arrangements provide a solid basis to address the affordability of private healthcare while maintaining and surpassing current standards of high quality care for our mutual customers. Going forward, we will be looking to work with other hospital providers in a similar way."
Rob Roger, chief executive of Spire Healthcare, said: "We are delighted to have concluded this new agreement with Bupa. Following on from the conclusion of the CMA review of the independent healthcare sector, it represents a decisive shift to a more partnership-style approach, the aim of which is to build on the current excellent working relationship between Spire and Bupa, in order to drive volume growth in independent patient numbers, based on affordable healthcare and great clinical outcomes."
Commenting on the agreement, Claire Ginnelly, head of healthcare at Premier Choice Group said: "This is excellent news for customers. Any move by insurers and providers of healthcare services to work together to control costs has to be welcomed by the market. The cost of PMI continues to be the biggest barrier to entry. We all need to work together to help grow this market and to make it more sustainable. "