According to rival insurer Vivas, developers lining up to submit their plans by next Friday's deadline are being stymied by VHI's refusal to discuss terms until the hospitals are up and running.

"The fact that VHI won't be on board up front must mean the state will receive lower bids from people tendering to build these private hospitals, " said chief executive Oliver Tattan, who founded Vivas with the backing of AIB and financier Dermot Desmond.

"It must be a lot harder to get backing for any of these projects when the biggest customer for private hospitals, VHI, refuses to act like a customer. On one hand VHI is owned by the state while on the other it is taking money out of taxpayers' pockets."

As the dominant insurer with 80% of the market, VHI is concerned that more private beds will mean more claims from its 1.5 million members.

"In healthcare, there's undoubtedly supplier-induced demand so that, if there's excess capacity, demand will rise to meet that capacity, " said chief executive Vincent Sheridan.

But Sheridan signalled that VHI would eventually come on board when the proposed private hospitals are up and running. This is because they will transfer existing private beds out of public hospitals rather than creating new capacity.

"The co-location of new private hospitals next to existing public hospitals is a public policy decision and we welcome it, " he said. "There's a big difference between substituting private beds that already exist in public hospitals and the type of tax-driven speculative development that has led to private hospitals springing up anywhere and everywhere."

But detailed negotiations with the new hospitals will have to wait, Sheridan said.

"We won't promise anyone that we'll cover them years in advance, " he said. "We've no problem telling them at this stage what we're looking for but we're not prepared to enter detailed agreements at this stage."

VHI's position has hit international interest in the Irish healthcare market, according to Per Batelson of Global Health Partner, a Swedish consultancy that works with global players in the industry.

Batelson was formerly CEO of private healthcare multinational Capio Group.

"It's unfortunate that the main insurance company has been reluctant to spearhead development in terms of capacity and procedures, " he said. "There seems to be some component of rationing in its behaviour."