Four of the top operators . . .Bon Secours Healthcare Group, Mater Private, Beacon Medical Group and Harlequin Healthcare . . . got the green light from the Health Service Executive on Thursday to go forward to the next stage of the tendering process in the two provincial cities.

Bon Secours, Harlequin and Beacon have also been shortlisted to build new hospitals on the campuses of St James's Hospital in Dublin and Cork University Hospital.

Mater Private and Beacon are through to the next stage at Dublin's Beaumont Hospital, while Beacon has also been shortlisted at Tallaght Hospital. Harlequin has made the list at Blanchardstown and Sligo, while Mater Private has been shortlisted in Galway.

It is understood that some overseas players, including an unnamed French hospital operator and BMI Healthcare, a top British player, may still be in the frame to build private hospitals at several locations.

The competition is part of the government's co-location project which aims to ease chronic overcrowding by inviting private operators to build and operate private facilities next to 11 public hospitals around the country. The aim is to shift 1,000 private beds into the new facilities.

The private operators will begin competitive dialogue with the existing public hospitals at their chosen locations in two weeks. The discussions are aimed at allowing the hospital operators to prepare final tenders to be submitted to the HSE by 21 October.

Before any of the new hospitals can open their doors, the private operators will have to negotiate cover for patients with the health insurance industry, dominated by stateowned VHI. This has proved an obstacle in the past with the 101-bed Galway Clinic blaming recent financial cutbacks partly on hardball tactics by VHI, which refuses to offer blanket cover for all new hospitals.

The clinic had difficulty reaching agreement with VHI before it opened and it is understood the deal eventually struck has left the hospital out of pocket. Founder Jimmy Sheehan, who also set up the Blackrock Clinic in Dublin, was quoted as saying: "We have treated 10,000 VHI patients in the last two years since we opened, but we are doing that work at a considerable loss."