Health Companies Plan for $8.6 Billion Market Opening in FinlandBy
Finnish parliament debating whether to open health care market
Companies argue they can treat patients at a lower cost
Finland’s need to rein in public spending could be a boon for the nation’s private health-care providers.
The parliament this month started a debate on government plans to open up the country’s 8 billion-euro ($8.6 billion) basic health-care and welfare market to private competition by 2019. More freedom for patients to choose their doctor will lead to better results and means everyone can win, according to Pihlajalinna Oyj, a care provider which doubled its sales last year.
“The new market will offer significant growth potential to our business,” Chief Executive Officer Aarne Aktan said in an interview. “The reform will redistribute the health-care market so that the private sector will gain a larger share of the market and the public sector will have less.”
The center-right government, led by millionaire Prime Minister Juha Sipila, says the changes are necessary to cap costs, modernize and improve its service to consumers. It’s still working out some of the details on how to go about increasing competition.
Private health-care providers are positioning for the reform. Terveystalo Healthcare Oyj has been growing its network of clinics for the past couple of years, and is now merging with its smaller peer Diacor Terveyspalvelut Oy. Mehilainen bought Mediverkko in 2015, and Pihlajalinna raised more than 85 million euros in share sales on the Helsinki stock exchange in 2015 to expand operations. Attendo AB, which sold shares in Stockholm in 2015, was Finland’s biggest care provider by sales in 2015.
The private health-care companies argue they can treat patients so much more cheaply and efficiently that they can make a profit while saving taxpayers’ funds, compared with the currently publicly provided services.
“A private provider has a strong incentive -- if you’re not cost-effective, you go belly up,” Janne-Olli Jarvenpaa, CEO of Finland’s second-biggest private health-care provider Mehilainen, said in an interview. “Compared with publicly run health centers, we provide the fastest treatment, refer fewer patients to specialists or hospitals and have the highest customer satisfaction.”
Pihlajalinna targets a “significant share of the market” that is about to expand by 6.5 billion euros. The private health-care market is now about 4 billion euros, of which about 1.5 billion euros are services already provided to the public sector, Aktan says.
Health-care reform has been promised by previous Finnish governments facing a rapidly aging population. It has been cited by credit-rating companies and international institutions, such as the European Commission, as the key for Finland in getting its public spending on sustainable path. The government argues the revamp will help erase 3 billion euros off a projected increase in care costs by 2030.
Medical advances, patients’ growing demand for treatments and aging populations are pushing up spending across the globe and health care will become unaffordable in advanced economies by mid-century without reforms, the Organization for Economic Co-operation and Development has said. Even so, it says Finland’s current system makes it a “leader in value-for-money health care.”
Sweden implemented a patient-choice reform in primary care in 2010. Since then, private companies providing public welfare services have reaped “very good” profits, said a Nov. 8 report commissioned by the government in Stockholm.
While all of Finland’s political parties agree that without a revamp costs will balloon, opposition lawmakers and some experts see major flaws in how the government plans to allow private companies to operate in the market.
It’s “dangerous” because it would lead to “a loss of control,” a fragmented system, weakened services, higher prices and isn’t likely to deliver the sought savings, said Tuula Haatainen, lawmaker of the opposition Social Democrats.
Critics say that companies will be tempted to boost their gains by either over- or under-treating patients or handpicking the most healthy. Aktan says the best way to control excessive profit-hunting is a system where companies cannot choose their clients and where they’re paid a fixed sum per patient.
“If we, private companies, dream of an access to this new market, with that dream comes also a system with fixed prices,” Aktan said.