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Finnish healthcare or global health business? |
Achieving Action 23.2.2009
Healthcare is becoming increasingly international business. However, the Finnish Pihlajalinna Oy has remained in Finnish ownership with the help of the Terveysrahasto healthcare fund launched by Sitra.
Before this, the company has mainly been managed by medical doctors, but the Terveysrahasto has brought in business know-how and helped Pihlajalinna network with other companies and the public administration.
In Finland, when you go to a doctor, it is increasingly frequent that the doctor's salary is paid by a healthcare company owned by some international investor. Healthcare is going global at a tremendous pace.
“In many respects, healthcare becoming a business is a good thing. Operations become more efficient, and several bureaucratic twists are straightened out. However, I find the idea of Finnish basic healthcare slipping into foreign ownership a slightly scary thought. Faceless international investors don't see a difference between basic healthcare and vacuum cleaner sales: from both, they need to obtain as high a profit as possible, almost regardless of price. Personally, I still see myself more as a medical doctor than a corporate executive. In healthcare, there should be other values besides turnover,” says Mikko Wiren, CEO of Pihlajalinna Oy, at his office located near the Tammerkoski Rapids in Kehräsaari. He has taken his Hippocratic oath as a Licenciate in Medicine.
Pihlajalinna is responsible for a significant part of the originally municipal outpatient healthcare in the Tampere region, and the company has health clinics in different parts of Finland. Pihlajalinna started its operations in 2001, and the Terveysrahasto fund, launched by Sitra, became a shareholder of the company in 2006.
In addition to an MBA degree in Social and Healthcare, CEO Wiren has experience in “quite standard” physician’s work as a health centre physician. While being interviewed, the former athlete fluently organises a response to a ten-million euro invitation for tenders. So far, it seems that the financial downturn has not greatly affected the healthcare business.
Networking and best practices Pihlajalinna’s business growth has not been held back by adhering to their values and Finnish ownership. In this decade, the company has been one of the Finnish companies with the most rapid growth.
“The Board of Pihlajalinna currently has members who have come from outside the healthcare sector, and they have introduced new approaches. The Terveysrahasto fund has increased our financial know-how and helped us network with different companies and public administration operators," says Wiren.
"Previously, we have been more of a provincial company, but now we already operate at the national level. Also our credibility, as regards decision-makers, has increased as the Board composition and company ownership have extended beyond the previously smaller group.”
The majority of the residents in the Tampere region are very familiar with Pihlajanlinna because the company’s customers include tens of thousands of outpatient healthcare customers from the region.
“For investment targets, the Terveysrahasto fund has sought healthcare companies that would be able to provide best practices. We were able to deliver that in the framework of outsourced municipal outpatient healthcare, occupational healthcare, and basic-level special healthcare implemented particularly in the Tampere region.
Right from the start, Wiren did not expect any magic tricks from the fund, but primarily a new kind of business expertise and an additional boost to the company’s Board work. This has also become a reality.
“Before our cooperation with the Terveysrahasto fund, we had gained many years of experience in the healthcare business. At the time of the cooperation launch, we were a company with a good financial standing, and still continue to be one. This is to say that we did not require massive financing, as capital investors’ target companies usually do."
"Thanks to the good standing, we are able to grow during the existing financial downturn as well, but the growth and recruitment of new labour can't continue in exactly the same manner,” Wiren assumes.
As a trend of the future, he is of the opinion that cooperation between public and private healthcare operators will increase. Jämsän Terveys Oy, established in February 2009, is a prime example of this. The company’s shareholders include the Central Finland Health Care District, the City of Jämsä and Pihlajalinna Oy. Also the Terveysrahasto fund is involved as a minor shareholder.
Improving the image and efficiency of healthcareAccording to Wiren, the biggest challenge for Finnish healthcare is to make the provision of healthcare services more sensible and powerful. It has to be the kind of work that people want to do, which is why the healthcare industry should have a good image. For measuring the impact, better indicators than the existing ones are required.
“The cost efficiency of healthcare must be improved. However, efficiency can't be obtained at the expense of lower patient treatment standards. Sitra might well be the operator which could put the impact of Finnish healthcare in order through new innovations,” Wiren considers.
Text and photo: Kai Tarkka / TrueStory
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