General overview 17.3.2016

1. 18.3.2016 1
An overview of the
healthcare, social welfare
and regional government
reform package
17.3.2016

2. 18.3.2016 2
Current situation: social welfare and
healthcare services in mainland Finland
Healthcare services
• Municipalities (local
authorities, 297 in total)
are responsible for
arranging health care
services
• Hospital districts (20 in
total) are responsible for
specialised medical care. A
municipality has to be part
of a hospital district to
arrange specialised medical
care.
• 5 specific catchment
areas are responsible for
arranging highly-
specialised medical care
Social welfare services
• Municipalities (local
authorities) are responsible
for arranging social welfare
services
• Municipalities are members
in joint municipal
authorities of special
welfare districts (15+2
in total) that arrange
services for people with
developmental disabilities.

3. 18.3.2016 3
Why is the reform needed?
• The increasing need for services among the
aging population, the changing variety of
illnesses and wider possibilities for treatment
along with greater expectations from the
population create a pressure for costs to rise
• Slow economic growth and a high total tax
rate when compared internationally are an
impetus for finding new ways to curb rising
costs.
• Inequalities among different areas and groups

4. 18.3.2016 4
Government programme
• The aim of the social welfare and health care
reform is to narrow disparities in health and
manage costs
• The reform will be implemented with complete
integration of services and by strengthening
the carrying capacity of service arrangers
• The Government is strengthening the
sustainability of public finances by
implementing structural changes
– Social welfare and healthcare reform´s share EUR 3
billion by the end of 2029

5. 18.3.2016 5

6. 18.3.2016 6
Solution for arranging the services
• 18 autonomous regions (counties) will be established.
Counties will have responsibility for social and health
care services
– Also some other duties will be under the
responsibility of the counties
• Centralizing on specialized operations and emergency
duties on fewer counties
• Counties will be managed by elected councils

7. 18.3.2016 7
Production of services
• Each county will provide the necessary healthcare and
social services itself or together with other counties,
or may use the services of the private sector or the
third sector
• Indicators for efficiency and quality of services will be
created
• Wider freedom of choice for customers

8. 18.3.2016 8
New structure of healthcare and social
welfare services
Finnish Government
Decision on the organisation of healthcare and social welfare
services, national work division, division of duties over the
county boarders, policies for providing services, public service
promise, broad-based investments, other measures needed to
safeguard the availability of services
Other joint support
services
• Joint purchases
• Expert assessments of
the quality and
effectiveness of own
provision compared
with other ways to
provide the services
• Premises caretaker
services
• HR and finance
services
• ICT services
• Research coordination
services
• Potentially: equipment
infrastructure services
•Expert
assessmen
ts of the
quality and
effectivene
ss of own
Municipalities
• Promoting health and welfare
JointICTservices
Autonomous regions (18 counties)
5 university hospitals
and 7 other units operating
on a broad basis around the
clock
Municipalities (promoting
health and welfare)
Counties
• Healthcare and social welfare
services
• Rescue services
• Duties of Regional Councils
• Developing of regions and their
business life
• Potentially: environmental
healthcare
•Duties of
Regional
Councils
•Developing of
regions and their
business life
•Possibly also
environmental
healthcare

9. 18.3.2016 9
Healthcare and social welfare reform –
a functional change
• Focus on people and effectiveness
• Customer-oriented, integrated services
– customers get appropriate, sufficient and timely services
– the service chain works smoothly for the customer
– various measures and expertise within healthcare and social
services are combined in a flexible way
– the service and care chains are managed as an entity, and
information is transferred smoothly between the different
operators
– in this entity with several providers, the service chains need
to be cross-organisational.

10. 18.3.2016 10
Reform process and formation of
autonomous regions (counties)
• Track 1: organisation reform
– the organisation and funding of healthcare and social welfare
services will be separated from municipal services
– in April, the Government will set guidelines for the Government
proposal and a draft of it will be sent to a consultation round
• Track 2: freedom of choice and funding
– Rapporteur working group (chaired by Prof. Brommels) has started
their work
– Working group’s preliminary report incl. alternatives on 15 March,
Ministry of Social Affairs and Health will inform of the proposals in
April, final report incl. proposals in May 2016
– In April, the Government will plan policies for the organisation
reform and have a preliminary view on how to simplify the current
multisource financing
• => coordination

11. 18.3.2016 11
Basic guidelines for funding
• The Government set the following guidelines for further
preparation of funding:
– Municipalities cannot have any significant responsibility for
funding the healthcare and social welfare services. Main
responsibility for funding would be in conflict with municipal
autonomy.
– Funding of the new autonomous regions (counties) will be
prepared mainly on the basis of state funding.
– In an alternative model, part of the funding would be based
on the counties' right to levy taxes.
• A more detailed funding model will be prepared and
included in the Government proposal in April 2016

12. 18.3.2016 12
Basic guidelines for funding (2)
• Total tax rate must not increase and labour
taxation must not be tightened at any
income level.
• The principle of equality in the Constitution
must be taken into account
• Taxation models and a change of income
taxation, municipality-specific calculations

13. 18.3.2016 13
Funding alternatives
• Funding of healthcare and social welfare services
and counties
– A) revision of current income taxation categories and
reduction of municipal tax
– B) state tax for healthcare and social welfare: tax tables
from municipal taxation, and lower municipal taxes
– C) combination of state tax (for healthcare and social
welfare) and county tax and reduction of municipal tax
• Municipalities will reduce their tax rates
– the reductions correspond to the funding transfers
– maximum taxation level for a fixed term may be used

14. 18.3.2016 14
Comparison of
the main funding alternatives
• State funding
– easy to steer in theory, a rather simple taxation system
– promotes equality
– risk of moral hazard, potential problems with joint terrain
– top-down rules result in weak spending discipline
=> clearly a problem of soft budgetary control
• Model partially based on counties' right to levy taxes
– "own" taxation only enables part of the funding, due to differences in
the counties' carrying capacity (less than a half)
– perspectives of fiscal federalism
– balance between powers and responsibilities, incentives for own
economic management
– coordination of the tax system becomes more difficult
– Risk of tax rates rising too much
– Who will compete: municipalities/cities, or counties, or both of
them? How does this affect municipalities' position?

15. 18.3.2016 15
Property arrangements – starting
points
• Property transfers will be made in line with
duty transfers
• Single taxpayer principle
– Public finances will be considered as a whole
• Property items will be paid for only once
• Several alternatives will be considered

16. 18.3.2016 16
Solutions supporting effectiveness (1)
• Provision of healthcare and social welfare services will
be made more versatile
– Each county will provide the necessary healthcare and social
services itself or together with other counties, or may use
the services of the private sector or the third sector
– The organisation and provision of services are separate
duties within the county organisation, and expert services
support this arrangement
– Systematic comparisons of different production patterns will
be made more often, and competition will be promoted
• All data on public and publicly financed private healthcare
and social welfare services must be public in order to
enable transparent comparisons
– Private sector and transparent comparisons expedite public
production

17. 18.3.2016 17
Solutions supporting effectiveness (2)
• National joint procurement unit owned by the counties
– handles the tendering process for procurements decided by counties
– supports the organising of a strategic procurement system and innovative
procurements
– participates in the assessment of the effectiveness of counties' in-house
services and county economy when in-house provision is compared with
outsourced services; a more profound assessment may be made by the
National Institute for Health and Welfare, for example
• Joint support services owned by the counties
– premises, caretaking services
– potentially: equipment infrastructure services
– financial and personnel administration
– ICT services aiming at perfect integration of data
– probably a limited liability company
– good practices from state, large cities and municipal cooperation will be used

18. 18.3.2016 18
Reform of the operational network
• The number of units operating on a broad basis around
the clock will be 12 (hospital incl. a unit for emergency
social services)
• Other central hospitals continue to operate on a narrower
basis around the clock, supported by the 12 units operating
on a broad basis and the prehospital care system
– This will safeguard the availability of 24/7 emergency services
in all parts of the country, with regard to the distances and
other regional characteristics

19. 18.3.2016 19
Wider freedom of choice for
customers
• As part of the reforms, a new legislation on freedom of
choice will be enacted: customers can choose between
public, private or third sector service providers.
– the freedom of choice will be the main principle at the basic
service level and also in specialised services where
appropriate
• The legislation simplifying the multisource financing and
widening the freedom of choice will come into force on 1
January 2019
– basic level services will be strengthened and swift access to
care will be safeguarded
– freedom of choice will be supported for customers by bringing
in uniform quality principles for services and by disseminating
public information that helps people make their choices about
the services
• High-level preparation (Rapporteur working group) and
practical preparation were started in 2016

20. 18.3.2016 20
Timetable
• 4/2016 Circulation of the new bill for
comments
• 11/2016 The bill will be presented to the
Parliament
• 7/2017 Enactment of the new legislation
• 2017 - 2018 Elections
• 1/2019 Responsibility for the organization
of healthcare and social services will be
transferred from joint municipal authorities
and local authorities to the counties