Bigger, Private and going à la tax-free?

For the last 4 years, the Masters of the Finnish government have been busy giving free rides to big private healthcare companies who have been buying up many the small old people’s homes  for better for worse.

These big companies claim that that they are more efficient. They manage to increase profits for shareholders, a fact that can be seen in their accounts, while they claim to improve services for patients, a fact that a number TV programs appear to dispute and some of the big companies operate from low tax havens outside Finland.

These same big companies have also been aggressively buying healthcare centres from many municipalities. The public sector is pleased to get rid of a cost centre for some extra cash and let patients sit in private healthcare centres. The economic logic for residents is often lost because either the cost savings through efficiency go to shareholders or the standard of care is lowered. If you want to believe that the standard of care improves and costs fall then fine – you are free to experiment! But there is no going back if you are not happy and please tell the patients that they can always complain to the municipality! Your call will be answered, but that may be all…

Whatever the truth, doctors and owners are happy with the increase in profits and higher salaries, while the former owners of care centres can now happily retire with a nice fat sum in their bank account. 

While this consolidation has been going on the government has been trying to reform the public healthcare system. 

However, the privatisation process mentioned above has eaten away at the very basis for the healthcare reform because many municipalities have entered long-term contracts with these private sector players, and these cannot be changed without massive penalties. If the government wants to have an efficient integrated system with huge cost saving, then this is not the way it was meant to happen. The big cost savings are now going to private shareholders who were smarter than the Prime Minister, Mr. Sipilä and his long list of Health Ministers Mr. Rehula, Ms. Risikko, Ms. Räty, Ms. Mäntylä, and Ms. Pirkko Mattila. The ministers change regularly because it is hard to try to get a failing reform through Parliament! So far it has taken over a decade.

Now the same government is opening up the taxi market to competition. Prices have fallen but so have the number of players. Older driver-owners are retiring and the private sector (read low tax haven boys) are moving in. The largest group of taxis that has been offering a clean and efficient service called “Taksi Helsinki” is probably going to be sold to HIG’s group called Cabonline. The company is based in Luxembourg and that means they have Mr. Juncker’s tax benefit that PWC, KPMG, EY, or Deloitte have so carefully crafted. So much for fair competition!

If Cabonline’s offer makes the owners of Taksi Helsinki wealthier then that is fine, but do not hold your breath for lower taxi fares. In the end the bigger the player, the more the fares increase…

… and that is what this government wants with the healthcare reforms, their transport reforms and their new wonderful New Counties. The last one is the third layer of government that Finland does not need – the Centre party are planning to get many elected seats out of an expected total of over 1000 newly elected officials! We already have over 300 municipalities, with 9764 elected officials, and a Parliament full of 200 MP’s. Believe it or not, the same elected officials in Parliament and in the municipalities can also be elected to the New Counties! It would be useful to know why we need so many extra levels of government if the same faces appear at every window!

The government appears to get what they want with these three huge reforms, but you do not always get what you wish for. The unintended consequences of these reforms appear to be that the polls are saying that the next election will not be a happy experience for the present parties in government.  

Cartoon: Dave Brown, 2014

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