Finland approves welcome changes to its health care system

On 23 March 2014 all the parliamentary parties agreed on the implementation of a comprehensive reform of the Finnish social welfare and health care services. The objective of the reform is to guarantee the provision and financing of vital welfare services and to reduce unnecessary administration and overlapping services. The new model unifies the provision of all social welfare and health care services from primary to special health care. The new model is based on five regional providers (so-called SOTE regions) that will constitute a single tier administration for the organization of social welfare and health care services.

“After the implementation of the proposed reform, Finland will have one of the most streamlined health care service structures in the world. I believe that the reformed health care system is also ready to tackle the demand for high quality care. The new structure also fits perfectly with Finland’s agenda to increase public-private partnerships and investment in life sciences”, says Avance partner Mikko Alkio, specializing in health sector regulation and innovation issues.

The SOTE regions will have legal responsibility for organizing all statutory social welfare and health care services. The regions are large enough to be able to offer the necessary services in terms of the availability and competence of personnel and to guarantee an equal level of services regardless of an individual’s place of residence. Although administration will be concentrated in these five units, many of the underlying services, such as primary health care, home help for the elderly and social welfare services, will continue to be provided at the local level. The aim is that the employees currently providing these services would continue to be employed by the relevant municipalities.

“The administrative model for each SOTE region will be a joint municipal authority. National steering will also be enhanced. This means that the Ministry of Social Affairs and Health will have better tools to govern the system in the future”, Mikko Alkio reminds.

The joint municipal authorities will be financed by the member municipalities on a weighted capitation basis, i.e. the population of the region is weighted with age structure and morbidity. All municipalities will have a statutory obligation to be a part of a social welfare and health care region. SOTE regions will be based on the current specific catchment areas and rely on existing well-functioning structures.

“The reform differentiates the responsibility of organizing and providing health care and social welfare services. Municipalities will continue to participate in the provision of services but their role changes as the organizational responsibility will be with the five SOTE regions. Importantly, this division of responsibility facilitates the production of both public and private services and increases efficiency”, underlines Avance senior partner Ulf-Henrik Kull.

As part of the reform, steering at the national level will also be strengthened in order to ensure regional balance and economic efficiency. This steering will also have various other advantages, including:

  • Reducing areal differences in productivity and efficiency within special health care. According to a new study, such differences between current hospital districts are substantial.
  • Improving the exploitation of new technologies and the sharing of information and research results both between and within the five SOTE regions.
  • Improving national level steering through regulation, as amendments will be easier to implement uniformly within the SOTE regions.

In terms of financing, the reform will enable the funding of health care services through a one-channel model instead of the existing multichannel model. This is consistent with the government’s structural policy program which is aimed at clarifying the funding of social welfare and health care services.

The reform will be implemented through new legislation on the arranging of social welfare and health care services. The aim is to finalize the legislative proposal by the end of May and to circulate it for comments during June. The proposal is to be considered by the Parliament this autumn and the new regions responsible for the organization of social welfare and health care services are to start operating as of 1 January 2017.

For further information, please contact:

Mikko Alkio, partner, +358 50 413 5502
Ulf-Henrik Kull, senior partner, +358 40 769 8229