BUPA and PPP Healthcare have welcomed a report from the the Office of Fair Trading which clears the PMI market of uncompetitive practices.

BUPA and PPP Healthcare have welcomed a report from the the Office of Fair Trading which clears the PMI market of uncompetitive practices.

However, the director general of Fair Trading John Bridgeman has asked both major health insurers to clarify immediately patients' rights to treatment.

The slap on the wrist follows a rebuke from the OFT boss last June, when he criticised the lack of information offered to policyholders. This resulted in a pledge by the industry to provide greater transparency and streamlining of product information.

The OFT launched its inquiry into the PMI sector following complaints from consultants and private hospitals.

Its investigations touched on hospital charges, BUPA's and PPP's hospital networks, and BUPA's consultant partnership scheme.

Announcing the results of his inquiry John Bridgeman said: "In this case I find the structure of the PMI market is competitive and that a reference to the Competition Commission is not warranted."

But, he expressed dissatisfaction with the quality and quantity of information available to policyholders.

"Consumers are entitled to clear and well presented information on their rights under their policies – in particular where they can be treated and by whom."

The OFT's report does however, contain some positive news for health insurers. It said the development of hospital networks has been a reasonable response to static demand and rising costs in the PMI market.

And it said that hospital networks have been successful in encouraging hospitals to compete on price and quality.

Meanwhile, the report finds no evidence that insurers are exacting excessive discounts from hospitals.

Nor did the inquiry find evidence that the formation of hospital networks has sparked hospital closures. The OFT expects some hospitals may have closed anyway because of overcapacity. The OFT is also unable to show smaller PMI providers have been disadvantaged by hospital networks.

And it can find no evidence that consultants are encountering obstacles to gaining admission rights to network hospitals.

The competition watchdog is, however, in favour of a code of practice requiring consultants to levy fair and reasonable fees and give advance notice of their charges.

But, the Hospital Consultants' and Specialists' Association whose members work in private hospitals, allege the report ignores issues of patient care and choice.

BUPA and PPP declared themselves pleased with the report's findings.

They have both pledged to review the information they currently provide to policyholders and to improve the transparency of their selection processes for network hospitals.

The Hospital Consultants' and Specialists' Association criticised the report, saying it appears concerned with only the financial aspects of PMI.

It remains of the view that many PMI policies and hospital networks serve to restrict patients' choice.