The new health care financing and steering system

The new health care financing and steering system

The challenges to our health care system include issues such as inequality, focus on supply rather than demand and the lack of coordination, incentives and transparency of the treatment chain. The current system focuses on the treatment of illnesses and does not support the promotion of health.

Sitra's model for the new health care financing and steering system presents an alternative way of adjusting the health care system and solving the greatest and most complex challenges of the current system.

The multi-channel financing model lies behind all Finnish social and health care problems. Most of the funding responsibility is divided across more than three hundred municipalities. Municipalities produce social and health care services steered by their budgets, which does not encourage them to develop the services in a customer-oriented and cost efficient manner. The main point of the model is that the services are ordered and funded by KATIRA, a national body for health care and the care for the elderly, allowing the commissioning and provision to be separated.

The objective is to provide the entire population with at least as good health care as the occupational health care sector is currently offering to the working population. The model clarifies the division of responsibilities and defines explicit incentives for the various parties involved in the promotion of health and cost-efficient treatments. It serves to remove boundaries that have formed within the system.

The annual cost of Finnish health care is EUR 18 billion. In the health care financing and steering model proposed by Sitra, the basic health care funds would be distributed based on the service choices that an individual health care user makes. People who are unable to make choices or decisions would have dedicated support structures. For special health care, a national unit would be established for purchasing and organising the services.

With the alternative model presented in a report published in summer 2010, Sitra has encouraged the renewal of the health care system and extensive social debate on the issue. For further information on the new health care financing and steering system, see the report: Uusi terveydenhoidon rahoitus- ja ohjausjärjestelmä.

The new model in a nutshell

• Meets the health care needs of the entire population equally. Defines the responsibilities of the various parties and removes the disadvantages of supply-oriented approach and multi-channel funding.
• Encourages service providers to find cost-efficient forms of treatment by using the negotiating power of a large-scale purchaser and the competition between service providers, and by supporting the prevention of illnesses.
• Removes the boundaries hindering the increase of productivity. Encourages the general public and the health care service producers to promote health and prevent illnesses.

The structure of the model

The model consists of four parts and covers basic and special health care and the care for the elderly:

 1) Demand

• Customer's responsibility for his or her own health
  And to balance the responsibility:
• The customer's freedom to choose the service provider

2) Supply

• The party ordering the service is separated from the party producing the service
• Free competition between service producers at fixed prices
• Incentives for service providers for promoting the customers' health

3) Funding

• National single channel funding for the system
• Funding tied to the risk of illness, not the services produced

4) Supervision

• Monitoring and supervision based on a national information system

  Benefits to the general public

• More freedom of choice
• Better availability of services
• Better equality of services
• Higher quality of services
• Easier monitoring of your own health and treatments
• Lower tax burden caused by health services

 Benefits to municipalities

• The role of the municipality will be clearer
• Lower tax income and state subsidies, higher sales income
• Less responsibility for organising the services
• Structural change of the municipal health care production system
• Municipal decision-makers begin to solve new kinds of questions

 Benefits to the society

• Freedom to choose the service provider
• Service providers' access to the business will be less strictly regulated
• Skills and negotiating power of the national purchasing organisation in relation to service producers
• A more efficient system provides for shorter sick leaves
• On the other hand, bringing the health services of all population groups to a level equal to that of the current occupational health care will increase the costs of the system in the early stages
• In the care for the elderly, institutionalisation will be reduced as a result of the patient (supported by the family) choosing a lighter degree of service.