8 June 2016
The Finnish Competition and Consumer Authority (FCCA) has studied the realisation of competition and its effects on public social welfare and health care services. The report indicates that the cost management, quality and effectiveness of these services can be improved by applying competitive means to service coordination. Competition can also encourage service providers to create new, innovative services that respond to the versatile needs of citizens and contribute to their welfare.
The FCCA has assessed the realisation of competition and its effects on public social welfare and health care services particularly from the viewpoint of citizens' choices. In the case of simple services such as dental care and housing services, citizens' freedom of choice concerning their service provider can result in a broader selection and higher quality of services. In more complex services such as heart surgeries and care services for the elderly, citizens need comprehensive information, support and expert opinions to make a choice.
In order to reap the benefits of their freedom of choice, citizens need to be motivated, active and prepared to make the right choices for their personal health. To ensure this, the FCCA suggests that a customer centre be set up for public social welfare and health services. This watchdog would ensure that citizens' viewpoint is taken into account and that they receive guidance when they need to make a choice.
To ensure that freedom of choice is used optimally, it is important to encourage citizens to improve their personal ability to function and their situation in cooperation with public players, thus enabling each citizen to compile and use a set of services that best suits their needs. Personal budgeting would be a suitable tool for this kind of development. The necessary preconditions for this tool should be created during the reform of Finnish social welfare and health care services.
Service coordination ensures the benefits and prevents the risks of competition
In public social welfare and health care services, competition can occur on two levels: in the public procurements of public service providers and in citizens' choice of services. In all services which do not constitute exercise of public power, competition can take place in the procurement market or the consumer market.
To ensure that competition has positive effects, it is important to prevent the centralisation of the public social welfare and health care services of the future while maintaining appropriate opportunities for SMEs to enter these markets and succeed in them. This can be addressed by creating a suitable steering and regulation system. This can be an efficient means to prevent competition-related risks and ensure that the efficiency and quality targets of competition are met.
Legislation will define the main policies and principles of Finland's reformed social welfare and health care services – including the amount of public financing and the services it covers, the tasks of public service providers and leeway in the organisation of services, and the steering and monitoring system of the renewed market. In addition to general competition regulations, the reform of the social welfare and health care system needs to be supported by special, sector-specific competition rules and consumer protection rules. Fruitful competition also requires monitoring of public procurement and a quality and authorisation monitoring that applies equally to all players.
The new organisation of social welfare and health care services will necessitate constant learning and renewal. All players – service organisers, producers, citizens and the authorities in charge of monitoring – must learn to operate in new ways. These ways must be consciously created and incentives should be put into place to encourage their creation.
The opportunities and prerequisites of competition in social welfare and health care services, KKV's report 5/16 (in Finnish)
Further information: Research Director Martti Virtanen, tel. +358 29 505 3338, Senior Research Officer Helena Tuorila, tel. +358 29 505 3653