Can Public Healthcare Afford Marketization? Market Principles, Mechanisms, and Effects in Five Health Systems

• Published date: 01 September 2022
• Author: Nick Krachler,Ian Greer,Charles Umney
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/puar.13388

876This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Research Article

Abstract:Policymakers now have four decades’ experience using marketization to address cost and quality problems

in public-sector health services. While much is known about the challenges, it is difficult to draw lessons because

there remains no agreed-upon definition of marketization. This article contributes a definition that focuses on the

transaction, particularly the effects of funding arrangements on the intensity of competition among providers. Based

on prior literature and 106 interviews with practitioners and researchers in five countries, the authors contribute a

systematization of 12 concrete market mechanisms enacting three market principles. Furthermore, the authors analyze

respondents’ perceptions of healthcare marketization’s effects on costs and quality. While marketization is a multi-

faceted, sometimes ambiguous phenomenon requiring further research before definite conclusions can be reached, most

statements from our respondents about cost and quality effects were negative.

Evidence for Practice

• Examining health systems in five countries, we identify 12 different market mechanisms, i.e. concrete

procedural changes that stimulate competition among service providers.

• While these mechanisms sometimes enable improvements in cost and quality, our respondents identified

many more examples of markets driving up costs and compromising quality.

• A substantial number of respondents also stated that effects were unclear.

• More research is needed to assess the effects of market mechanisms in healthcare, for which the article’s

conceptualization and findings can serve as a basis.

“The market” has become a multi-purpose

toolbox to address quality and cost

problems in public services. In healthcare,

policymakers have allowed commercial organizations

to provide services while making the public sector

more entrepreneurial. However, the consequences of

marketization are uncertain, with much conflicting

evidence relating to its effects on service cost and quality.

Utilizing 106 qualitative interviews, we conceptualize

and empirically evaluate marketization and its effects

in health systems. We include the state-dominated

National Health Service (NHS) in England, the more

privatized French health system, the hybrid systems

of Slovenia, Finland, and Greece, and interviews at

the European Union level. We identify 12 market

mechanisms introduced to promote competition

in health systems, grouped under three market

principles:

• Openness: shifting costs from public to private

sources, financializing infrastructure projects,

and loosening rules excluding non-traditional

providers.

• Competition between public and private sectors:

changes to payment systems or purchasing,

allowing existing providers to fail, expanding

frameworks for performance management

and evaluation, increasing patient choice, and

competitive tendering.

• Management autonomy in the public sector: public

hospital autonomization, internal markets, and

regulatory decentralization.

Our first contribution is to provide a conceptual

starting point for more systematic debate over the

desirability of markets in public services, informed

by diverse experience in health systems. While

prior research has evaluated marketization through

examining specific market mechanisms, our

conceptualization covers a more comprehensive range

of market mechanisms as they appear in five systems.

Many of our respondents’ statements about cost

and quality were negative. They reported many

examples of market mechanisms costing more money

than alternatives, and relatively few cost or quality

improvements. Numerous other statements revealed

Ian Greer

Charles Umney

University of Leeds

Can Public Healthcare Afford Marketization? Market

Principles, Mechanisms, and Effects in Five Health Systems

Charles Umney is an Associate Professor

of Work and Employment Relations at

the University of Leeds. His research

focuses on industrial relations and worker

representation, with a particular interest

in creative industry work, the “platform

economy,” and health and social services.

Email: c.r.umney@leeds.ac.uk

Ian Greer is the director of the ILR Ithaca

Co-Lab and Senior Research Associate at

Cornell University. His research examines

marketization and the intersection of

industrial relations and welfare states

in Europe and North America. He is the

author of several journal articles about

privatization, active labor-market policies,

offshoring, outsourcing, insourcing, and

immigration. Prior to working at Cornell, he

worked in England at Leeds University and

at the University of Greenwich.

Email: icg2@cornell.edu

Nick Krachler is a lecturer in Human

Resource Management at King’s Business

School, King’s College London. His

international and comparative research

program focuses on institutional change

in the care economy through three

mechanisms: workforce innovation through

new roles; marketization; and the regulation

of work and employment.

Email: nick.krachler@kcl.ac.uk

Public Administration Review,

Vol. 82, Iss. 5, pp. 876–886. © 2021 The

Authors. Public Administration Review

published by Wiley Periodicals LLC on

behalf of American Society for Public

Administration.

DOI:10.1111/puar.13388.

Cornell UniversityKing’s College London

Nick Krachler