They chanted and blew whistles as they made their way through the streets of the Spanish capital, blocking traffic, behind a large banner that read: "Healthcare is not to be sold, it is to be defended".
The Madrid regional government — which is governed by the Popular Party, the conservative party also in power centrally under Prime Minister Mariano Rajoy — plans to outsource the management of six of 20 large public hospitals and of 27 health centres of the 270 in the region.
It argues the measure is needed to secure health services during a steep recession and meet deficit-reduction targets.
But Spanish healthcare workers say private providers will put profits before quality and lead to a deterioration of the public health system.
"What is at stake is a public healthcare system which took us years to build, which works well. We can't allow the system to become privatised," said Esther Granero, a 43-year-old nurse at a Madrid hospital who attended the march with three co-workers.
Spain's public healthcare system was ranked seventh in 2000 on the only occasion when the World Health Organisation compiled a league table comparing healthcare systems around the world.
The march held Sunday is part of a series of demonstrations, dubbed a "white tide" because of the colour of the medical scrubs many protesters wear, that have been held since last year over government efforts to control healthcare costs.
Rajoy's government has slashed health spending by seven billion euros ($9.1 billion) a year as part of a campaign to squeeze €150 billion out of the crisis-hit country's budget by 2014.
Spain is grappling with a double-dip recession with 26 percent unemployment, having never recovered from a real estate crash in 2008.