When does marketisation lead to privatisation? Profit-making in English health services after the 2012 Health and Social Care Act

Abstract

Governments world-wide have attempted to use market mechanisms and privatisation to increase the quality and/or reduce the cost of healthcare. England's Health and Social Care Act 2012 is an attempt to promote privatisation through marketisation in the National Health Service (NHS). While the health policy literature tends to assume that privatisation follows from private-sector entry points, we argue that this is more likely if firms expect to make a profit. This paper examines the link between privatisation and marketisation in England drawing on 32 semi-structured interviews with private-sector and public-sector respondents, campaigners, and other experts conducted 6–10 months after the implementation of the 2012 Act.By generating a theoretical framework on the conditions of profitability we seek a better understanding of the conditions under which marketisation leads to privatisation. We find that significant barriers to profit-making remain after the reforms, including a top-down squeeze on prices, uncertainty in market rules, state dominance of funding and provision, and failures to depoliticise the market. These factors restrict private-sector involvement by frustrating profit-making. Where profits are made they are through reduced unit costs and high volumes by a longstanding incumbent in a particular market segment. This, however, restricts marketisation by reinforcing entry barriers.