The quality of private sector care is generally lower than in council-run facilities, the health regulator has warned.
The Care Quality Commission (CQC) annual report revealed there was a higher level of satisfaction reported by patients receiving treatment at council or voluntarily run organisations.
The CQC also warned that health care and adult social care in the UK was "far from perfect".
The CQC regulates care provided by the NHS, local authorities, private companies and voluntary organisations.
In April 2010, services run directly by councils and those run by voluntary organisations had the highest proportion of services rated good and excellent (91%), but they had a smaller share of the market.
Privately run services had a smaller proportion of good and excellent ratings (81%), although this was a "significant" improvement on May 2008, the report said.
The CQC also found that mental health services varied greatly in how they involved patients in planning care and reviewing treatment.
The regulator said a particular area of concern was that many detained patients who were certified as consenting to treatment appeared to be refusing to give consent or lacked the capacity to do so.
The CQC report said there had been improvements in the care system but there were some areas which had not improved fast enough.
The report found that people have greater control over their care due to more choice in appointment times, location of care and choice of providers, but it warned there was still a wide variation in progress across the country.
There had also been a reduction in the number of people contracting healthcare-associated infections.
There was a 35% drop in reported cases of MRSA between 2008/09 and 2009/10 and reported cases of Clostridium difficile fell by 29%.
CQC chairman Dame Jo Williams said: "There have been significant improvements in outcomes for people who use services and these services should be congratulated for the work they have done.
"However, the overall picture is far from perfect and it will be vital for all parts of the health and social care system to continue this upward trend and consolidate the best of what has worked well for people who use services.
"The next few years will be a crucial time for health and social care in England."
Health Secretary Andrew Lansley said: "Our ambition is to deliver services for NHS patients which are among the very best in the world.
"That means lifting NHS and social care services far above minimum standards.
"We are working with the CQC to ensure their activities support our vision for the NHS by focusing on the things that really matter to patients - safety, choice, results and a positive patient experience."
Mind chief executive Paul Farmer said: "It is disappointing to see that, while there have been recent advances in health and social care services across the board, care standards for people experiencing mental health problems are being left behind.
"These findings reinforce the importance of patient involvement and choice being at the heart of the new cross-Government mental health strategy so that mental health has a 'parity of esteem' with physical health, finally giving the issue the equal footing it deserves."
Louise Lakey, policy manager for the Alzheimer's Society, said: "Two thirds of people in care homes have dementia. It is therefore reassuring to hear that care home provision and quality is improving in some areas.
"Unfortunately, we know this isn't happening everywhere and good general care does not always equate to good dementia care."Reuse content