Private healthcare player drops public service contract

The much heralded public healthcare reform that the present government has been planning for the last 3 years has shown new structural weaknesses this week with the news that one of the biggest private players has decided that they will not make enough profits from the business and have announced that they will pull out of one city where they had originally contracted. 

One of the elements that the Conservative Party has been pushing hard has been a limited “freedom of choice” policy for healthcare where registered patients can choose, once a year, who will be their healthcare provider. A number of pilot projects have been started to test this with the private and public sector.

The City of Jyväskylä is some 350 km north of Helsinki and is a thriving university city with a population of 140 000 people. The City decided to grant public healthcare contracts to private healthcare companies based on their own cost of healthcare for their residents. 

The healthcare reform has set clear standards for calculating the cost per head for the various age groups within the city and regional limits. The city’s own costs were allocated to several private companies with contracts that set out detailed duties and standards of care for patients. These private players are not allowed to turn down registered patients and must provide all necessary healthcare services. 

One of these companies, called Pihlajalinna (“Mountain Ash Castle” in English) has announced that they are not receiving enough cash for the services they are providing and have decided to drop the contract.

Given that Pihlajalinna is one of the most aggressive companies in Finland, and given that the city and the government have invested huge sums of taxpayers’ money to create this reform, one can only wonder if these private firms are really serious in wanting to provide a public services under these contracts. 

It can be expected that they will not be the only company that starts to draw back from providing services, and one can be pretty sure that they will pull out of other contracts in other places here.

The Conservative party has stated clearly that they want the private sector to have a major role in providing public healthcare services ion Finland. They appear to believe that the private sector has a monopoly on efficiency. 

The experiences in the UK and in Sweden have cast doubts on this belief and the present complaints from private sector healthcare companies in Finland appear to confirm this. 

It is difficult to believe that the private sector can systematically operate at the same or lower costs than the well-established public sector. Many of the private companies are owned by private equity investors who simply want to maximise profits and then sell the business at a huge profit.

Readers should recall that, according to one leading independent source, Finland has one of the best public healthcare systems in the world in terms of care and cost efficiency – see FinnishNews article on this topic.

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