Up to 1,000 private beds are to be freed up for public patients, Minister for Health Mary Harney told the Dáil.
She said it was high time to start changing the system of reserved, subsidised private beds in public-funded hospitals.
"When the private sector is willing to finance the facilities, to manage the service, and to fund the running costs 100 per cent, why stop it," said Ms Harney.
"What compelling reason is there for the State to insist that the public sector must pay all the capital cost of reserved, private beds in public hospitals and more than half of the running cost?"
The HSE was now undertaking the procurement process to select a consortium to build and operate a private hospital on each of the 10 public hospitals.
"The site will be made available to the successful bidder at the full market value. Each proposal will undergo a rigorous value-for-money assessment; the public interest will be fully protected and each proposal will fully adhere to public procurement law and best practice."
Responding to a Labour Private Member's Motion opposing the privatisation of the health services, Ms Harney said that the Government's policy was to achieve the best for all patients using the mixed public/private system.
She was committed to ensuring that private practice within public hospitals would not be at the expense of fair access for public patients.
Ms Harney said there were over 13,000 beds in the 53 public hospitals, 2,500 of which were designated for use by private patients.
"The figures I have given the House before show that in most public hospitals the designated ratio of private work - approximately 20 per cent - is greatly exceeded, sometimes accounting for up to 40 per cent of in-patient activity. This means that some public hospitals are increasingly being run as private, fee-earning opportunities.
"Changing this is the very opposite to privatisation. It is reclaiming public beds and public facilities for public patients."
She said that, far from creating a new, two-tier system, the new facilities would be required under the Finance Act to offer their services to the State for purchase at a discount.
She said that operators of the new facilities would have to take all the financial risk. There would be no guaranteed State contracts, and any service arrangements with the State would be competitively-priced.
"It is a financially-sound proposition. Only the most contorted logic - and there has been some - could suggest that it is more cost-effective for the State to continue to meet 100 per cent of the capital cost of private beds and half the running cost."
Labour health spokeswoman Liz McManus accused the Government of glorifying the market to a ludicrous degree.
"The leopard does not change its spots because of any glossy, soft-focus marketing of private healthcare. The objective is to make money, pure and simple."
