Classification problems and the dividing line between government and the market: an examination of NHS foundation trust classification in the UK

Scientific evaluation of the impact of privatization on solidaristic health care goals is virtually non-existent. In this paper it is argued that an important cause of the poverty of evidence is researchers? reliance on national accounting categories in comparisons of public and private sector performance. These categories are based on perfect market assumptions derived from microeconomics and provide highly restricted grounds for distinguishing between government and market sectors. In practice, definition of the public sector is made without reference to the attainment of substantive public policy goals such as universality. Therefore governments? loss of ability to pursue solidaristic goals is not treated as a defining characteristic of privatization. The argument has important consequences for nonprofit providers. Whilst nonprofits are often classed as public sector their introduction can nonetheless reduce equity in health systems by eroding government control over resource allocation. National accounts sectoral classification cannot address this consequence of public sector reform and therefore it is often overlooked. The argument is illustrated with an example taken from the UK?s National Health Service.