Regionalisation and competition – Finnish social and health care reform

In Finland, the last Governments have very clearly recognized huge need for reforms in social and health care sector. Mr Juha Sipilä’s current Government has prepared the latest reply to the old challenge: over 800 pages of new legislation draft, issued in the end of June 2016. Markku Mölläri’s article explains the key issues of the government proposal. (Markku Mölläri) Read more…

by Markku Mölläri

The Economist from September 10th 2016 listed many challenges British NHS is facing. Finland shares the need to take better care of people – in situation where population is getting older, technological possibilities are huge and need to better control the economy can be so frustrating.

In Finland, the last Governments have very clearly recognized huge need for reforms in social and health care sector. Mr Juha Sipilä’s current Government has prepared the latest reply to the old challenge: over 800 pages of new legislation draft, issued in the end of June 2016.

Government agreed upon the policy lines that will guide the drafting of legislation on three interconnected reforms:

(1) The reform of the organization of health and social services
(2) Freedom of choice and multisource financing reform, and
(3) The regional government reform, i.e. the establishment of 18 autonomous counties governed by elected county councils. The counties will be responsible also for certain other public duties e.g. rescue services.

The goals of the social and health services reform are to

(1) The objective of the healthcare and social welfare reform package is to curb growth of costs by EUR 3 billion. The goal is to curb growth of health and social services expenditure by approximately 1.5 percentage points per year in the period 2020–2029 – this will contribute to better balance of public economy.
(2) Guarantee equal access to high quality services everywhere in the country and
(3) Reduce regional and social inequities.

The health and social reform is based on a client-centered integration of health and social services as the key measure for narrowing health and wellbeing disparities, improving the effectiveness of the services in an equal manner and bringing cost savings. There will be 18 counties with own budget but a single financial management and they will provide the necessary health and social services on their own, together with other counties, or in collaboration with the private or third sector. Counties will be financed by the central government and the current multisource financing will be simplified – all these things are easy to write, but really challenging to make into reality!

Chart 1 Counties’ duties and new healthcare and social welfare structure 1 January 2019


A purchaser–provider separation will be implemented: counties will ensure that the organization and provision of services are genuinely separated and performed by different organizations. Freedom of choice will significantly promote competition in the provision of services. Integration of information systems will increase information flows between different providers. Consequently, the service chain integration will improve. Essential public health functions, including health promotion and disease prevention, will be ensured for the youngsters and elderly people – this seems to be a very interesting effort to other countries as well!

The government bills on the reform will be passed to the Parliament in 2016 and 2017, and enacted in 2019. Improved cost management will be a key principle when preparing legislation and implementing the reform. Successful and skillful change management will be a prerequisite for achieving the targets and thus will receive particular attention during the reform implementation.

To sum up, ongoing process is a most interesting one. Introducing, in a very limited time, a new level of administration, with solid finance and cost control, change of duties between municipalities and this new level – the Government has chosen an open way – there is an ongoing commentary phase for municipalities this autumn. Different workgroups are currently busy finding their answers to difficult questions – like what are the key indicators in health and social services, how should we make better use of digitalization, how better invest – even with limited resources – on people to make their life better.

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“Regionalisation and competition – Finnish social and health care reform” bejegyzéshez 3 hozzászólás

  1. A sample for other countries

    The Finnish reform of the structure and management of welfare services is a highly debated change. It fits to the new European trends, the concentration of the welfare services. The economy of scale is highly required and the traditional forms of service provision seems to be inefficient. Therefore more centralized and concentrated structures have evolved in Europe. This tendency could be observed in the Scandinavian countries, as well. The first concentration reform was the Norwegian health care reform in 2002 which resulted the nationalization of the former municipal inpatient health care. In Sweden new, urban inter-municipal cooperation evolved.

    The one-tier Finnish municipal system and the broad municipal tasks resulted strong debates on the reform of this welfare service system. It was clear, that the traditional system should be reformed. In the last decades alternative solution have evolved. Firstly, the voluntary health care were encouraged by the central government which resulted a slowly, but evolutionary change. The economic crisis impacted this system and the acceleration of the concentration process was required.

    After 2010 the reform became a hot topic in Finland. Several authors stated that the centralization of the welfare services should be an adequate answer. The municipalities tried to maintain the former system. At the end neither solutions were chosen. Although the concentration of the health care services seems to be a compromise, it is strongly debated. The chosen model is a bit inadequate to the Finnish municipal traditions, the welfare regions are relatively big and the real local governance could prevailed only limitedly – thus the central government does not have the responsibility, but the municipalities have only a limited impact on the system.

    Because the concentration of the public services is a trend in Europe, the results of the Finnish reform are very interesting, because this model could be a sample for other European countries.

  2. Finland is far away

    It is rather hard to assess a complex social and health care reform by reading a brief blog, only. But my understanding of the present coalition government’s reform efforts is that they aim not a simple centralization of Hungarian style. The three year long refom program is more about regionalization of human services and strengthening the new national regulatory, professional advisory and development functions. But as Mr. Möllari wrote, at the same time keeping the purchaser-provider split, that is to allow diversity of competing service organizations. And here the amalgamated municipal governments could play an important integrating role. As we could read the new county governments’ social and health care services will be financed solely by the central budget (details mechanisms elaborated later).

    So this makes the Finnish reform really interesting: how the competing goals of technical service rationale (ecomomies of scale, incentives for savings, equitable service standards) can be matched with the traditional values of local autonomy, transparency or the „old fashioned” NPM values of customer orientation, freedom of choice, etc.

    There is a lot to learn from Finland in this respect – with high hopes that they will have sufficient time, political strength and concensus, economic prosperity to complete the reform process. It seems that the administrative capacity and technical expertise are in place.

    Péteri Gábor

  3. Some elaboration of current work with Finnish reform

    Thanks for excellent comments, Mr Hoffman and Mr Péteri. Our reform is indeed quite a change for our system and debate about it is currently high. The Association of Finnish Local and Regional Authorities has a key role in commenting and also the metropolitan area debate has been active in last few days.

    Discussion has much concentrated on the new regional level and how that is to be done. The discussion about the future role of the municipality has not been emphasized so much in this extend. Our message to the municipalities has been quite encouraging: after transfer of the big tasks in social and health care sector, there will remain still very large and important duties for the local level. Also the economic adjustments of the reform are very positive for municipalities, even though there are fears of the effects – how cutting in municipal income tax percent, equivalent of task transfer, is done right.

    There are several interesting points we really should get it right for success. There should be, also in future, the role for municipality to encourage local business culture and creating new workplaces in the enterprises of the area – in good co-operation with region. The role of municipality in promoting health living, to prevent diseases and social problems is also a highly important one. And of course big duties in education and culture will remain in municipal level.

    We are not very busy promoting amalgamations currently – the last carrot money is given to few amalgamations coming into force from 2017.

    The very important issue that is under development in workgroups is developing indicators for services and economy – very interestingly, the evaluation of objective and subjective need of customer is not an easy task. Indicators are in key role to help ways to better cost and quality control. There is a lot of room for better data management – digitalization is on the top agenda of Government, but finding concrete solutions is a hard work.
    The freedom of selection is an issue that is under political discussion, and that discussion is very interesting.

    Markku Mölläri
    Ministry of Finance

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