Effects of Privatization on the Health Sector

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Privatization of a public company refers to the transfer of ownership, management or control of publicly owned resources to a private company. It occurs when the government sells part or the whole of its shares in the public company to another company that’s privately owned. In the context of the healthcare sector, privatization involves reduced intervention by the government through withdrawal of subsidies, or public control as regards the provision of curative or preventive types of healthcare (Fevzi, 2002, p.5-9). Examples of privatization in the health care sector include contract management, load-shedding and contracting out scenarios.

Question One

There are varieties of benefits and disadvantages associated with the privatization of the National Health Service (NHS) in England. This section focuses on the effects of NHS privatization on the healthcare and insurance sectors respectively.

Advantages of privatization in the health sector

The first benefit associated with the privatization of the NHS is the realization of increased efficiency and savings. Government management of essential services like healthcare is associated with increased bureaucracy and slow decision making even in situations whereby decisions have to be implemented on an urgent basis. Further, decisions to improve the quality of service provision may take too long to implement hence affecting the quality of services provided to the public through the NHS. (Fevzi, 2002, p.5-9)

If for instance, the NHS needs to hire additional staff or acquire new equipment to assist with the diagnosis of patients, such decisions may take too long to implement due to the large number of signatories needed to approve and authorize the implementation of such changes. On the other hand however, there are fewer bureaucratic procedures associated with providing such services through the private sector. As a result, decisions aimed at realizing increased efficiency would be implemented within a reasonable time hence reducing patients’ mortality or other problems associated with slow rates of diagnosis and treatment.

Secondly, privatization of healthcare services provided through the NHS would result in increased savings and better management of publicly allocated funds. Using the example of contract management, the government could outsource the management aspect of the NHS while at the same time maintaining supervisory control of the health sector. Privately hired managers in this case would in this case design and implement proper patient care and management services as and when need arises. Managers in the private sector demonstrate increased levels of professionalism and commitment to improve their work tenure due to the existence of incentives.

On the other hand, those in the public sector only earn a basic salary and lack the incentive to improve or transform departments to which they are assigned. As a result, decisions aimed at reducing costs of operation would be much more difficult to implement under the public sector management as opposed to private sector management. The public through contract management of some aspects of the NHS would, therefore, realize improved savings hence increase the quantity of funds available for investment or allocation into other critical sectors of public expenditure (Fevzi, 2002, p.5-9).

The third benefit likely to accrue from the privatization of the NHS is that patients would have greater discretion in choosing the facilities from which they would like to receive treatment. This would allow patients to choose from either private or public hospitals. Allowing patients to choose their own treatment facilities would increase competition among healthcare provision facilities hence improving the quality of services offered to patients as well as their efficiency. Through increased competition, inefficient public sector hospitals would be compelled to improve their level of service hence resulting in improved healthcare for all sections of the population.

Disadvantages of privatization on the health sector

Despite the many advantages put forward by the proponents of privatizing the NHS, there are disadvantages that require careful consideration before the same is implemented. Firstly, the assumption that privatization of the NHS would result in increased competition, therefore, maximizing the health seeker’s freedom of choice is not true. The health industry does not operate entirely under the provisions of the competitive market. This is because a competitive market requires consumers to be in possession of full knowledge of existing health providers and services, which is not applicable to the health sector (Fevzi, 2002, p.5-9).

Secondly, with increased competition in the health industry, it is likely that healthcare providers would merge to form monopolies with a view to maximizing profits. Within such a framework, government regulation and control would be difficult hence the cost of providing basic healthcare services would rise. Patients in this case would be at a disadvantage.

Effects of privatization on insurance

With the ultimate privatization of the health sector, patients would need to take up insurance policies to cover their healthcare costs. This would prove costly, especially to the unemployed and low-income earning individuals in society who are suffering from terminal illnesses. As a result, patients in this category would miss out on quality services as has been previously enjoyed under the NHS.

Secondly, with emphasis on insurance, it is likely that insurance companies would design policies that are unfair to the low-income earning individuals of the population. This could occur whereby policies designed lower the risks and responsibilities accruing to the providers of insurance hence maximizing their profits on the same. Patients would, in this case, miss out on essential services promised even when they have fully paid the insurance premiums.

Question Two

The privatization of the NHS has attracted a lot of public interest with politicians as well as ordinary citizens participating in the debate. Some of the vocal proponents of the NHS privatization include England Health Secretary Jeremy Hunt, Nick Seddon, former health advisor to Prime Minister David Cameron and Member of Parliament Owen Smith. Those against privatization include the Leader of the Labour Party Jeremy Corbyn, and Labour health secretary Jonathan Ashworth as well as Ed Miliband.

Proponents of the privatization of the National Health Service argue that with privatization, patients would have greater discretion in choosing the facilities from which they would desire to receive treatment. Owen Smith, for instance, argues that under the current NHS structure, patients are restricted to hospitals which are mostly overbooked. They are, therefore, not able to receive the care and treatment that they would need on a timely basis. Mr. Smith believes that by privatizing the NHS, such problems would be eliminated from the public healthcare system.

Secondly, proponents of the NHS privatization role argue that privatization is essential in that it provides a supportive role to the NHS, hence improving quality and efficiency in service delivery. Under the current NHS system, Milburn argues that patients are exposed to poor-quality service and increased rates of treatment deferrals due to long queues and waiting lists. He argues that privatization has helped to ease these deferrals thus improving the efficiency in the provision of healthcare services.

Thirdly, privatization would increase patients’ empowerment. Proponents of the NHS privatization argue that patients would be empowered to demand better services as well as complain when services offered do not meet the required threshold. Under the current NHS system, Nick Seddon argues that patients are expected to be content with the quality of service provided through NHS-based care. The fact that healthcare services are free makes them less likely to complain about substandard services. However, with privatization, patients are empowered to complain and demand better services since they pay to access them.

John McDonnell, another proponent of the NHS privatization agenda, argues that the NHS as currently mandated is not adequately empowered to conduct research. He explains that government funding is insufficient to cater for urgent research fields unlike that in the private sector. He argues that with privatization, the Medical Research Council would be empowered to consolidate all research activities for the benefit of the public.

Opponents of the privatization of the NHS, such as Ed Miliband, argue that privatization of the NHS has transformed the public health system into an industry driven by increased competition as well as profit-making incentives. He argues that there’s a need for a careful evaluation to restore the NHS into a fully functioning system operating for the benefit of the public. Mr. Miliband explains that the public expects that the NHS is re-instated into a fully owned public company that is run and controlled by the public. He further explains the need for accountability within the service delivery activities of the NHS (George, 2016).

Jeremy Corbyn and Ed Miliband both explain that it is misleading to assume that privatizing the NHS would increase the patients’ discretion regarding the hospitals from which to seek various services. For the above system of choice to work, private healthcare firms would need to avail all comparable service provision information, thus facilitating informed decision making. This is, however, impossible since private health institutions are driven by the desire to uphold commercial confidentiality.

They explain that doing away with the provision that allows patients to choose facilities will integrate healthcare services hence increase government savings on basic transactions such as marketing and invoicing. Further, re-integration of services currently outsourced to the private sector will allow for greater parliamentary scrutiny and regulation. As a result, public health interests will be upheld as opposed to the case under privatization (George, 2016)

The third argument against the privatization of the NHS is that it would result in an erosion of the basic principles underlying the establishment of the NHS. Such principles include equity, fairness, and professionalism in the service delivery activities of the NHS. With the introduction of insurance as is the case in the USA, service delivery would be based on the patient’s ability to pay for the treatment service. This is unlike the current situation whereby all patients, regardless of their economic capacity, are able to access basic services as prescribed by the NHS. Under the NHS, priority is given to those who are most in need as opposed to those who have fully paid up or operational health insurance covers.

Jeremy Corbyn argues that the use of privatization to address massive staff shortages as experienced under the NHS funded healthcare facilities is misleading. He argues that the solution to short staffing and a high wage bill is to ensure additional recruitment activities aimed at easing the pressure on the already overworked healthcare providers. Better remuneration as well as flexible work hours will reduce the likelihood of working in both public and private health facilities hence ensure that patients are able to access basic services as and when needed (George, 2016)

Question Three

Even with the research undertaken as regards the NHS privatization agenda, my initial assessment of the same has not changed. Prior to conducting the above research, I held the stance that it was unnecessary to implement the privatization agenda of the NHS as opposed to implementing reforms within the system to correct current inefficiencies. The NHS as currently constituted can adequately provide quality healthcare services in a timely and efficient manner. However, there’s a need to tackle some issues that necessitate private sector intervention in the industry.

For instance, there’s a need to ensure a re-constitution of the NHS to ensure that issues to do with short staffing, long patient waiting queues, and rising costs of medical care provision are tackled. This is necessary to guarantee equity, fairness, efficiency, and quality in the service provision which would be compromised if the said services were to be outsourced to the private sector. Reforms would eliminate the need for patients to pay for services currently funded by the government through the national budget.


George G. (2016) Jeremy Corbyn, Owen Smith and NHS Privatization. 3rd, August,


(Accessed January 19, 2018)

Fevzi Akinci (2002) Privatization in Health Care: Theoretical Considerations and Real Outcomes. Vol 3(2). [Online] Available at

 http://www.alliedacademies.org/articles/privatization-in-health-care-theoretical-considerations-and-real-outcomes.pdf (Accessed January 19, 2018)

September 11, 2023

Corporations Management

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