Potential Cost Benefits That Can Be Derived from the Development of Service Functions
All areas of the reform will entail structural changes that aim to improve conditions for the
modernisation of services. However, it is the functional reform that will ultimately ensure the
attainment of the objectives, that is to say, improved and more effective services and the reduction
of long-term sustainability deficit of public finances. The intention of this memorandum is to
evaluate whether the development of new practices will make it possible to achieve the goal of
curbing the expenditure growth. The backbone for this evaluation will be provided by the draft for
the TEAS-project of the NHG (Nordic Healthcare Group), dated 2 May 2016. Due to the limited
length, the terms ‘savings potential’ and ‘savings effects’ are used throughout the text to refer to the
reduction of the costs that result from ageing of the population and the increase in service needs.
The term savings potential describes savings that may become possible through the reform. For the
savings potential to turn into actual savings, several simultaneous measures in all service sectors are
required.
The policy lines and details for the social and health care’s freedom of choice scheme and multiprovider model are not yet known. Therefore, only a provisional and imprecise assessment of their
financial impact can be made.
This memorandum does not yet include e.g. the financial effects of the common service centres of
the counties. According to the first estimates, joint procurement (among other things) should make
it possible to achieve notable cost reductions. Another thing not yet included in this memorandum is
the Government’s key projects that support the objectives of the reform. The reason for their
exclusion is that there are no assessments available of the financial effects of the measures related to
them.
The assessment of the financial impact is based on the breakdown of costs shown in Figure 1. The
analysis is mainly based on the exploitation potential offered by the current best practices as well as
the scientific and survey data on the effects of different interventions and mechanisms.
Additionally, this memorandum will outline the mechanisms that affect the differences in cost
incurrence. This assessment does not take into consideration the developments in health
technologies (et cetera) that will take place over the next decades. Because the assessment is based
on the current best practices, it would be possible, in principle, to achieve a significant portion of
the described potential changes even without any structural changes. However, it is realistic to
expect that structural changes - such as the transition to fewer organisers - will make it easier to
bring about the greater change.
When compiling this memorandum, the intention has been to systematically go through all the
service bundles shown in the Chart below.
Figure 1. The net expenditure on social and health services financed by the municipalities in 2014.
Breakdown of Costs, 16.7 billion euros in total
Health Services
Persons with Intellectual Disabilities
Addiction and Mental Health Services
Older People
Children and Families
Other Social and Health Services
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The contents of the service bundles
Health services = specialised somatic health care + outpatient care insofar as it is included in basic
health care (addiction care not included) + acute care in general wards insofar as it is included in
basic health care (addiction care not included)
Older People = services for older people + long-term inpatient care for patients aged over 75 insofar
as it is included in basic healthcare
Persons with Intellectual Disabilities = costs of services for people with intellectual or other
disabilities (includes residential services)
Children and families = placement of children + other services for children and families + child and
adolescent psychiatry
Addiction and mental health services = addiction services + psychiatric care + residential care +
inpatient and outpatient care insofar as it is included in basic health care
Other Social and Health Services = other social services + regulation of the activities of providing
social and health care
The identified maximum savings potential is around 3 billion euros in total (see Table 1). The core
mechanisms have to do with:
1) Reduction of expensive residential care and hospital activities. This could be achieved with
integrated preventive services on one hand (including e.g. child protection), and by adopting
less burdensome outpatient services on the other hand (e.g. services for older people and
persons with intellectual disabilities).
2) Boosting the productivity of basic level public services (e.g. home care, oral health care)
3) Improvement of productivity, effectiveness and quality of expensive specialised health care.
This can be achieved by integration, by bringing together the necessary know-how and by
rethinking the division of labour (e.g. emergency services, surgical activities)
4) Reduction of resource needs across the system with the aid of digitalisation and eServices.
The effects of the freedom of choice scheme and the multi-provider model may reduce the
savings potential.
Table 1. Savings potentials and how they are distributed through the social and health services
RIVI KERRALLAAN, VASEMMALTA OIKEALLE
Area
Savings potential within service production
The target of the savings
Health Services
1354 million euros in total
Emergency services (including obstetrical services and night-time surgery) 135 million euros
Surgical activities* 235 million euros
Conservative, elective activities 364 million euros
Outpatient care insofar as it is included in the basic health care 450 million euros
2
Oral health care 170 million euros
Services for Senior Citizens
936 million euros
Reducing 24-hour care by increasing home care 500 million euros (the net financial impact)
Boosting the productivity of home care 394 million euros
Acute care in the general wards of health centres 42 million euros
Services for Persons with Intellectual Disabilities
210 million euros
Replacing institutional care with less heavy services 70 million euros
Development of other housing services 140 million euros
Services for Children, Adolescents and Families
410 million euros
Placement of children outside the family home - availability of outpatient services will be increased
instead 360 million euros (net savings)
Psychiatric inpatient care for children and adolescents 50 million euros
Addiction and Mental Health Services
100 - 200 million euros
The costs of inpatient care will be reduced by 129 million euros. The costs of outpatient care will
increase by 20 million euros.
It has been estimated that an additional savings potential of around 100 million euros still exists, but
its mechanisms have not yet been identified.
*Part of these savings (320 million euros) will arise from legislative changes related to emergency
and specialised care already from 2017 onwards. Their portion has been deducted from the figures.
In order to reach the savings potential, it is necessary to adopt several parallel development
measures, such as:
• a financing system that takes account of entire care processes in a cost-effective way;
another measure is to strengthen and refine the economic governance
• prevention of the need for continuous 24-hour services
• bringing together the expertise on emergency and procedure type measures and also taking
into consideration the related division of labour
• integration of treatment processes that consist of several different services
• exploitation of the opportunities created by digitalisation
• recognition of the dynamics in the governance of service provision: clients will seek or they
will be directed to the most cost-effective service providers
• development of measures that are related to the Government’s key projects
The National Institute for Health and Welfare (THL) has reached similar conclusions in their
interim report on the ex-ante evaluation of the reform (June 2016). The National Institute for Health
and Welfare states that the draft law provides an opportunity to slow down the growth of social and
health care costs, and it also makes it possible to strengthen the economic steering of social and
health care. Nevertheless, it does not guarantee that the savings target, as outlined by the
Government, will be achieved. The following points provide examples of the report’s findings:
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•
•
•
•
Making a reality of the integration of service organisation and service production along with
the centralisation of management, might slow down the increase in expenditure on social
and health care. Still, uncertainty surrounding the realisation of service integration makes
the assessment of future expenditure development difficult for the time being.
The new form of operation for social and health care, as laid down in the proposed Act on
Organising Health and Social Services, is unlikely to be enough in itself to achieve the
Government’s target of 3 billion euro savings.
Nonetheless, the new form of operation is expected to provide better tools and conditions for
realising economically important structural reforms, such as the centralisation of highly
specialised medical care and the rationalisation of the service network.
In economic steering, it is of paramount importance to take notice of the fact that the needs
for allocation of funding vary from one county to another. Because of the unique
characteristics of the counties, ensuring fairness in financing is something that will require
continuous developing. Also, the criteria for allocation will need regular updates.
The figure below shows how the savings would be sequenced, year by year. By 2021, the annual
savings effect would be approximately 1.7 billion euros when a comparison is drawn to the baseline
scenario. The same figure would be around 2.6 billion euros by 2025, and the annual savings effect
of around 3 billion euros would be achieved by 2029. The calculation is based on service-specific
analyses to which we will return later in the report. The calculation includes e.g. investment costs
linked to the increase of activities. Prior to 2021 the savings potential will be very limited.
Figure 2. The baseline level and the savings scenario from 2016 to 2029, billions of euros.
Health Services
Emergency Services, Treatment Periods Related to Emergency Services, Obstetrical Services
When assessing the effectiveness, quality and costs of emergency care, it is essential to consider the
whole treatment process that only starts from emergency care. In the treatment of emergency
patients, the emergency unit forms an important but small part, when examined from the
perspective of total costs and overall treatment. The cost of the emergency units is around 300
million euros, but a significant portion of inpatient treatment in specialised health care
(approximately 2.2 billion euros in total) and also some of the inpatient treatment in basic health
care (around 400 million euros in total) starts from an emergency unit. The development of
emergency care would reduce the number of avoidable treatment periods in inpatient care.
When looking at cost-effectiveness at regional level, the main focus should be on the steering effect
related to emergency services: how high is the quality and productivity of the initial diagnostics and
guidance to treatment, and do patients get directed to the correct treatment line quickly. For
example, in joint emergency services, the cost of emergency care and the prices for emergency
treatment may have increased, but savings have been made by having to admit less patients to
hospital wards for further treatment, thanks to rapid diagnostics and treatment. Also, the
development of emergency units that utilise rapid diagnostics and treatment has contributed to the
decreasing need for inpatient care.
On the basis of calculations, it can be estimated that by centralising emergency care in 12 units, it
would be possible to obtain a 17 % decrease in periods of emergency treatment. This topic is
discussed in more detail in a draft version for a Government proposal that is currently in the process
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of consultation. The legislative changes would allow for the savings effect to gradually start to show
already from the beginning of 2017 onwards.
By centralising emergency care (including obstetrical services) in 12 hospitals, overall savings of
approximately 270 million euros could be achieved. The largest savings arise from a more
appropriate management of emergency inpatient periods, while part of the savings come from
rescaling the resources. Larger units offer an opportunity to be better prepared for varying care
needs on a 24/7 basis. They also make it possible to ensure rapid diagnostics and begin treatment
promptly in cases where patients require no emergency measures or further examinations.
The legislative changes included in the Government Programme (that concern the reform of
emergency care and specialised health care), will allow estimated savings of 135 million euros in
2017 – 2020. Hence, during the social and health care reform it is possible to save this additional
135 million euros.
Surgical Activities
In Finland, activities related to surgical operations (surgical activities) are rather dispersed. To a
large extent, service provision is based on a model where all units perform almost all possible
medical procedures in order to meet the demands of the population of the region. If measured on the
basis of costs, hospital districts produce approximately 80 % of surgical activities themselves
(source: productivity data of the National Institute for Health and Welfare). The costs of surgical
activities were around 2.5 billion euros in 2014. In addition, basic health care related to surgical
activities had a share of about 0.7 billion euros. Costs for specialised health care break down
roughly as follows: outpatient clinics 20 %, inpatient wards 40 – 50 %, surgical units 30 – 40 %.
The share of staff costs is around 60 % and material costs around 25 % of the overall costs.
If measured in volume, about 40 % of surgical activities are performed as day surgery, 35 % is
performed as surgery scheduled in advance (=electively) and is coupled with care in inpatient
wards, and 25 % is performed as emergency inpatient care. The share of day surgery has been
continually increasing. It is possible to admit the majority of elective patients (=surgery scheduled
in advance) to the hospital in the morning of the day of surgery. The majority can also be released
straight from the hospital that admitted them. As regards to inpatient care, the need for follow-up
treatment in rehabilitation units applies mostly to emergency surgery, in particular hip fractures. To
a lesser extent this also concerns other fractures and elective joint replacement surgery.
A number of studies report that when it comes to surgical activities, the volume of specific
procedures per surgeon and hospital is relevant not only to productivity, but also to effectiveness,
quality and costs. A great deal of research has been done on joint replacement surgery, surgical
oncology and other groups of medical procedures that go under highly specialised care. The scale
mechanisms in the operative or surgical units can be achieved especially by the following methods:
specialisation of resources, division of labour and the learning curve. If joint replacement surgery is
used as an example, it can be concluded that large scale units show about 20 % higher productivity
than smaller scale units (source: Torkki 2012). As for materials for example, the buying power
increases as the unit’s material-specific volume grows.
From the point of view of quality, effectiveness and cost of day surgery, it is essential to keep the
whole care process as short as possible. The reason for this is that the patients are often of working
age, and incapacity for work imposes costs that are far higher than the cost of care. Particularly with
health issues that require day surgery, in terms of cost-effectiveness, recent results from
conservative care have been as good as or better than those from surgical care (for example when
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comparing arthroscopic knee surgery to enhanced rehabilitation). Productivity differences between
surgical units are at around 30 % between the least and best performing unit in Finland.
Productivity differences are to a large extent related to operational practices: how well the surgical
teams are resourced, how surgeries are scheduled, how the emergency teams are organised, how
swift is it to move from one operating theatre to another. As the volume of emergency surgery has
grown, there has also been growth in productivity. This is linked to the improved capacity
utilisation as fluctuation in demand has started to die down. The current elective clinic activities
have many components that add costs if you do a comparison to the estimated need for care in an
integrated system. Nowadays appointments at health centres are made over the phone. The first
appointment is followed by further examinations, then a multi-stage referral process, then months
long waiting time for the patient, followed by a clinic appointment at specialised care, followed by
months of waiting, after which the care is finally received. In an integrated system at least some of
these stages could be got rid of, and the waiting time and the costs incurred by it could both be
decreased significantly.
The biggest savings potentials are found in inpatient care. An example of a good practice that can
be applied in emergency care is the hip slide treatment that has been introduced in the Helsinki
University Hospital. This concept has resulted in the overall treatment time (from home to home) of
hip fracture patients to decrease by 24 days. According to the Perfect-data produced by the National
Institute for Health and Welfare (THL), the average treatment time for hip fracture patients in
Finland was 42 days in 2013. Based on the Perfect-data and other productivity data produced by
THL, in the field of joint replacement surgery, large units are about 16 % more effective than small
units. In large units, patients can for example be discharged sooner and there are fewer follow-up
operations. In many other groups of elective procedures, similar results have been recorded.
According to THL’s data, those treatment periods in elective inpatient care that involved surgical
procedures were about 15 – 20 % shorter in units with large procedure volume than in units with
lower procedure volume. If hospitals’ healthcare supply chains and treatment processes would
operate entirely in accordance with best practices, savings of over 200 million could be made in
inpatient care on a yearly basis. The savings would focus predominantly on specialised health care,
but in cases of extensive healthcare supply chains, the target would also be on inpatient care
provided in basic health care.
In day surgery, the greatest savings potential lies with shortening the periods of work incapacity. A
good reference is provided by Omasairaala private hospitals (source: the final report of JyväProject, Aalto University 2016). In day surgery, the differences in patient material are small, if you
compare occupational accident patients with orthopedic patients that receive treatment in public
healthcare units. It is reasonable to assume that similar cost and productivity gains could be made
within public day surgery. In terms of periods of work incapacity, savings of around 100 million
euros could be achieved, if the healthcare supply chains would be organised with efficiency and
quality. If surgical activities would follow best practices, the savings would be approximately 100
million euros every year.
Time would not be wasted on additional doctor’s appointments and the waiting in between, if more
efficient electronic consultation chains would be introduced. Even just a 10 % saving in these
chains would result in a saving of 70 million euros in service provision. More gains could be
achieved through fewer absences for illness and the reduction of other costs related to patients
waiting to get treatment.
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It has been estimated that the legislative changes, as provided in the Government Programme,
would lead to savings of 185 million euros in 2017 – 2020. Once this has been deducted, the
savings potential of surgical activities is 235 million euros.
Conservative Care
Conservative specialised healthcare (does not include surgical care or psychiatry, that is to say, e.g.
general internal medicine and neurology) has the overall cost of around 2 760 million euros. This
includes outpatient and inpatient care in basic healthcare, when it is a part of the same care process
as the specialised healthcare received. Conservative care can be divided into emergency care (this
means inpatient care in practice) which makes up over half of the costs (1 460 million euros),
elective outpatient care that accounts for around 40 % (1 070 million euros) and elective inpatient
care that has a share of less than 10 % (230 million euros). Specialised healthcare represents around
86 % (930 million euros) of elective outpatient care. In conservative care, potential areas for further
development have to do with the improvement of healthcare supply chains on one hand, and the
development of the current approach to outpatient care and boosting the overall productivity on the
other hand.
As regards to conservative acute inpatient care, the most critical healthcare supply chains are those
that start from specialised care and continue to basic healthcare. This is the area where the present
service system poses challenges, and where there are major differences when you compare the
duration of the overall care process between different hospital districts (e.g. for a heart failure or a
stroke) 1.
The results of the Perfect-project shed light on the savings potential related to the periods of
inpatient care that start from specialised care and continue to basic healthcare. The results show that
in hospital districts where the healthcare supply chain for heart failure is the shortest, the duration of
the overall care process is 17 % below the national average. The same figure for strokes is 27 %,
which puts the difference between the best district and the midpoint at an average of 22 %. Given
that around 25 % of hospital days in conservative acute care within specialised healthcare are spent
on care processes that continue as inpatient care within basic healthcare, and that in basic
healthcare, 50 % of hospital days are a continuation to specialised healthcare, the savings potential
can be set at nearly 200 000 hospital days in total. In terms of costs this means a saving of 73
million euros.
As for inpatient services, the main focus was on the overall number of visits in comparison to the
size of the population, as well as the number of visits and the number of patients in comparison to
the number of staff employed within various (conservative) fields of expertise. If you draw a
comparison between the number of visits and the population size, the difference between the least
visited hospital district and the mean value varies from 15 % to 27 %. When you compare the
number of visits with the staff resources, the difference between the most productive unit and the
mean value ranges between 26 % and 75 %. The number of visits has an estimated reduction
potential of 15 %. This is based on the fact that in different regions, the division of tasks in
specialised care or basic healthcare may be slightly different, and the division of tasks may also
show variation between different specialist fields. In accordance with the principle of prudence, the
estimate for productivity growth is set at 25 %. The savings potential for elective outpatient care is
then 334 million euros.
1
The National Institute for Health and Welfare (THL), the Perfect project.
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Outpatient Care in Basic Health Care
The net cost of outpatient care in basic healthcare is 1.8 billion euros in total. The greatest
challenges of today’s basic healthcare come from long queues to non-urgent treatment as well as
numerous contacts and visits to the health centre that often have to do with comorbidity linked to
aging. The division of tasks between different professions has not been fully successful. In most
cases, the increase in nurse’s appointments has not resulted in fewer doctor’s appointments. What it
has done instead is that the overall number of visits has increased. Monitoring of long-term illnesses
and supporting patient self-management have only been partly delegated to nurses. As the queues
get longer, patients may end up going to emergency services, which unduly overloads the
emergency services and is expensive in terms of total cost.
In general, the operation of health centres has not been segmented on the basis of patient needs. The
need of a casual patient who is seeking acute care is to get good quality treatment fast, while those
with long-term illnesses need continuous and balanced treatment.
A significant number of health centre patients are people with long-term illnesses. Comorbidity has
become more common as the population ages. According to a preparatory study of the National
Audit Office of Finland, the service system that has been divided into sectors causes particular
difficulties to people with comorbidities and to those in need of many different services. Preventive
services are not provided in a sufficient and timely manner for those who would benefit the most.
This means that outbreaks of additional diseases and the accumulation of problems cannot be
prevented in a satisfactory manner. Improvement of quality as well as cost savings have been
achieved simultaneously by implementing the Chronic Care Model, by using a care plan that starts
out from the needs of the patient and is drawn up with the patient, by supporting self-management
and by rethinking the division of tasks between professionals.
Some municipalities have adopted the express clinic model. The express clinic model utilises the
nurse resources and is coupled with minor consultation support from the doctors. The idea is that
nurses see acute patients who come to the health centre without appointment, in the order of the
arrival. Nurses have full access to get consultation support from a doctor.
There no longer is an initial assessment of the need for treatment made by a nurse by telephone.
Instead, patients come to the health centre to see a nurse, and if a doctor’s appointment is required,
the consulting doctor will step in. In this way, one visit to a health centre is enough for a patient that
uses the express clinic.
In addition to what has been mentioned before, eServices will also help to render the visits to the
health centre more effective. The benefits include better access to doctor’s consultation, better
access to timely and suitable health services and more efficient use of the resources. In cases of
individual patients that have an exceptionally pronounced need for health services, the use of a care
plan has allowed cost savings of up to one third in use of services.
The express clinic model has a savings potential of approximately 35 % when compared with the
cost of outpatient care. The saving can be made by replacing 60 % of appointments with nurse’s
appointments (currently the share of nurse’s appointments is around 40 %). Also, the time
management of the resources - and particularly the time management of the doctors - will become
more effective, and as a consequence, it will become possible to increase the number of patients per
working day. With eServices it is possible to save about 15 % within express clinic and list patient
activities. The term ‘list patient’ refers to patients with multiple service needs (e.g. patients with
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long-term illnesses and older patients) that have been listed in order to ensure them better
continuation of care, better adherence to the care plan as well as the prevention of more serious
complications. For list patients, the savings potential lies with the reduction in the frequency of
recalls. This has been estimated to have a savings potential of around 10 %. The overall savings
potential of outpatient care in basic health care is around 450 million euros.
Oral Health Care
The Current Situation
The net cost of the oral health care that is paid for by the municipalities is about 400 million euros
in total. One of the most obvious problems in oral care at the moment is the lengthy queues to basic
dental care. The division of tasks between different professionals has not been entirely successful,
and the treatment processes involve too many contacts. Also the emphasis on doctors is too strong.
In quality comparisons, there are significant differences between different areas and municipalities
when you look at how well fillings stay put or how well teeth recover from root canal treatment
(source: NHG: Dental Care Benchmarking). For example, during a 3-year period of observation,
fillings stayed put in 80 – 85 % of the cases depending on the municipality. From 2008 to 2015 the
development was negative.
An additional issue is that corrective measures are emphasised instead of prevention. Finland is
lagging behind the rest of Europe for example when you compare the number of people who brush
their teeth twice a day (source: WHO - Social Determinants of Health and Wellbeing among Young
People; THL - School Health Promotion Study; THL - Health and Well-being for Residents). Also,
focused prevention should be in wider use than it is today. For example, it is possible to recognise
patients at risk by using the so-called i-index, but the index is not standardised. The study shows an
inability to prevent cavities with more than 50 % of patients at risk (source: NHG: Dental Care
Benchmarking).
Areas for Development
The effectiveness of operations could be improved significantly by changing the appointments
model in a comprehensive manner and making a shift to an “all done in one go” model. There are a
lot of details connected with this model, such as the adjustment of the division of tasks in such a
way that the role of nurses and oral hygienists will grow and more tasks will be delegated to them.
The role of the doctors will be developed towards a model where the labour input of the doctors is
strictly focused on activities where it is necessary or will provide the best added value. The kind of
multiple room model that could be introduced for this purpose requires that patients will be
segmented: approximately 80 – 85 % of the patients would suit the ‘all done in one go’ model, and
the remaining 15 – 20 % could be cared for in the traditional way.
If we consider the matter from the point of view of the whole care process, it would be sensible to
segment the patients on an individual basis into recall intervals. NHG’s benchmarking analyses on
oral healthcare suggest that currently the recall intervals are of a routine nature, and for example in
children’s dental care, more than a third of the recalls are targeted at healthy children.
In order to maximise productivity gains, it is essential to have an operations management system
that has been designed for this specific purpose and has a good usability. In oral healthcare for
example, recording of data takes up a large part of the working time, and when comparing the speed
at which data is recorded, disparities by up to tens of percents have been detected between different
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systems. The operations management system has to support not only the traditional appointment
system, but also a flexible appointment system, and it has to be possible for the patient to make
appointments electronically, without assistance.
Economic Effects
Annual savings of around 130 million euros could be achieved by making changes to the
established approaches and the division of tasks in accordance with the ‘all done in one go’
principal. The savings are based on the patient’s problems being managed at one go (applies to 80 –
85 % of the patients), making the role of oral hygienists and dental nurses more prominent,
introducing an operations management system, and adopting a suggestive appointment system. A
suggestive appointment system makes it possible to use the resources more effectively, as for
example the patients that do not show up will not cause the system to run on empty. The model was
tested in the town of Jyväskylä, and the results of the pilot period were such that the same labour
input covered 26 % more procedures than what was achieved in other units. (source: Nenonen,
Tuomas, Master’s Thesis, Aalto University, 2015). Additionally, queues became shorter and the
customer satisfaction stayed at the same good level as before. A private service provider, who has
tested the model for a longer period of time, reported that their efficiency is about 35 % above the
mean value.
In addition, it would be possible to reduce the number of visits by approximately 10 % per care
process, which would translate into savings of around 40 million euros per year. This is based on
the introduction of individualised recall intervals, where the time of the next recall visit is
determined on the grounds of the findings of the previous visit. This is a sober assessment,
considering that currently over one third of the recalls are targeted at healthy people and that there
are significant differences in the recall intervals as well as the patient distribution between different
regions.
The savings effect of preventive and qualitative factors has not been taken into account in this
report.
Services for Older People
The overall cost of the service provision for the elderly in 2014 is an estimated 4 140 million euros.
This includes informal care support, home care, regular and enhanced residential care, retirement
homes and long-term care in the general wards of health centres. Consideration has also been given
to that part of the short-term care provided by the health centres that is not a continuation of
specialised healthcare. The cost of this care is approximately 163 million euros per year.
The greatest challenge of the services for older people lies in how to make the resources adequate
for the aging population – particularly now that the so-called baby boomers are nearing the age
where they are going to need more services. A prediction model depicting the development of the
number of people using services for older people, as well as the expenditure growth, was prepared
for the purposes of this report (a so-called baseline scenario). The best indicator for the number of
customers each year is the following year’s death rate in different age groups. An exception to this
is made by informal care support (=support for a relative or friend of a person being cared for) for
which the size of the age groups was the best indicator. The baseline projection for the number of
customers for different services is shown in Figure 2.
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Figure 2. The actual number of customers aged 65 or more from 1995 to 2014 and the forecast for
the number of customers until 2030.
The model’s prediction for the number of customers is based on the dependency found in historical
data between the number of deaths in a certain age group and the number of customers from the
same age group. Structural changes that have taken place during the history were taken into account
by bundling together all the 24-hour services. As the figure shows, the actual number of customers
and the predicted number of customers go very much hand in hand. Increase in the number of
customers from 2015 to 2029 will lead to an annual cost increase of 1.8 % on average in services
for older people, if the relative proportions of different 24-hour services will remain at the 2014
level. The figure shows that the expenditure growth will be slower from 2015 to 2024 (c. 1.3 % per
year). After this, the growth will accelerate to approximately 2.5 %.
In services for the elderly, the central areas for development include the prevention of impairment
of functional capacity, rehabilitation and the coordination and management of services. By
developing these fields, it will become possible to reduce the need for 24-hour care and improve the
quality of life of the elderly. Then, there are many ways to make the production of services more
efficient. The most important ones are the flexible tailoring of services to suit the needs of the
customer and the extension of the direct working time (=the worker is with the customer) e.g. in
home care.
There are several examples of the benefits that come from the better coordination and the needbased targeting of services. Kotitori is a service integrator in the town of Tampere. They also tender
out the service provision for public home care in their designated area and also take care of the
quality assurance of service providers in that area. Where Kotitori operates, there has been a
decrease in the use of specialised healthcare by the customers of home care (the annual saving is
around 0.5 million euros) 2. Similar benefits have been obtained by improving the doctor’s support
included in the services for the elderly. This has significantly reduced the use of emergency and
inpatient services, and the periods of treatment in general wards have become shorter 3.
Services for the elderly have a savings potential of 892 million euros by comparison with the
baseline scenario shown above. In addition, the estimated reduction potential of short-term inpatient
care at health centres is 42 million euros. The savings potential of the services for the elderly is
based on two mechanisms: streamlining the service structure and boosting the staff productivity. In
all the calculations the overall number of customers is expected to follow the baseline scenario.
One potential source of savings with great significance comes from reducing inpatient care and
replacing it with enhanced residential care. The annual cost of enhanced residential care (net) is
about 37 % less than the cost of long-term inpatient care. However, it should be noted that
customers of enhanced residential care use other services offered by the municipalities more, which
means that around 35 % of the savings need to be spent to cover these costs 4. If two thirds of longterm care was replaced with enhanced residential care, the saving would be about 256 million euros.
Another important source of savings is the creation of a new service in between home care and
enhanced residential care. As an example, the city of Vantaa has developed a home care concept
that is based on the idea that the residents share a property (they live there either as tenants or
2
Heinonen T, Hostikka M, Tuominen-Thuesen M. Aktiivinen kansalainen – kaiken ikäisenä. KPMG report 15.8.2014.
Lindh M. Performance assessment of nursing home medical practice services. Thesis, Aalto-yliopisto, 2015.
4
Leskelä RL ym. Eri rahoituskanavien rooli oululaisten sosiaali- ja terveyspalveluissa. The Finnish Medical
Association 2016;71(11):809–15).
3
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owners) that caters to the needs of older people and also offers common facilities to the residents.
This approach helps with cost-effectiveness, because the resources are utilised in an efficient
manner (the volume of services is based on actual needs) and it is possible to extend direct working
time in home care. In home care, the estimated resource consumption per resident (=the annual
cost) is about 33 % less than the comparable figure for enhanced residential care. By replacing
enhanced residential care partially with home care, the overall saving in the whole country would be
244 million euros.
The most significant savings potential, however, lies in raising the productivity of home care. At the
moment, there are considerable differences when you look at the time the worker spends with the
customer (=direct working time) and compare it to the total working time. Within the
municipalities’ own production, the share of direct working time is on average 49 %, whereas the
best performing municipalities achieved a number as high as 57 %. The corresponding figure from
private service providers was on average 69 %, but it should be noted that private operators do not
have any public authority tasks for example. Assuming that the average of direct working time in
public service provision can be raised to 57 % and that half of the production will be bought from
private service providers, the productivity growth will be about 28 %, which amounts to savings of
approximately 394 million euros.
There are notable differences in the number of days spent in short-term care in a health centre ward
when a comparison is made to the size of population aged 75 or over. This stands even if you take
into consideration the days spent in specialised care. In municipalities that represent the top 10 %
with the lowest number of care days, there were up to 30 % fewer care days than the average, and
even in the top 25 % of the municipalities, the number fell about 12 % below the average. The
result is consistent with the estimate for the savings potential in the healthcare supply chain between
specialised care and basic health care (a potential of 22 %). In this case, the savings potential for
just the inpatient care in health centres would be about 42 million euros. The potential savings are
936 million euros in total.
Services for People with Intellectual Disabilities
The Current Situation
There are approximately 40 000 people with intellectual disabilities in Finland. The total cost of
services for people with intellectual disabilities is around 1.5 billion euros, and about half of this
sum comes from residential care. Personal support, transport services, employment activities and
residential care activities come each with a cost of approximately 200 million euros. The primary
responsibility for organising these services falls on the municipalities.
The Government’s decision in principle on the programme for provision of housing and the related
services for people with intellectual disabilities (2010) and the Government’s decision in principle
on ensuring individual housing and services for people with intellectual disabilities (2012) have set
up a target of abolishing institutional care for people with intellectual disabilities. The process of
deinstitutionalisation has fallen behind schedule. The number of customers in institutional care has
decreased, but in 2014 there were more than 1000 long-term customers in institutions, and the total
number of care days in institutions was approximately 50 000 days.
The main area for development is the abolition of institutional care. The means to achieve this
include acquisition of housing and the development of services within the local community. This
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will require that the needs of the future residents are known before the planning for new residences
gets started.
New service solutions will be developed for the housing as well as the support of people with mild
intellectual disabilities. The solutions are designed to reduce the volume of regular support and are
also meant to extend the customer base for assisted living towards those who need a little bit more
assistance. New service solutions can for example be based on some of the following: social real
estate management, sense of community in living arrangements, assisted living, harnessing of
technology such as the video phone, combination of home care and personal support, or application
of good practices of home care to assisted living and personal budgeting.
There are large regional differences in the amount of family care. A key challenge relates to the
recruitment of family carers. Joint municipal authorities for special care have looked into different
solutions, such as: raising wages, developing support services and organising marketing campaigns.
So far, social work for people with disabilities has mainly taken place at municipal level. Services
for people with intellectual disabilities consist of numerous different services, some of which
require knowledge of several areas of law. The customer base is very diverse and lots of different
factors come to play in customer situations. At municipal level, small volumes have not allowed for
skills, processes and information systems to develop properly. This has led to non-optimal
approaches, inefficiency and quality issues.
In 2014, there were 1117 long-term customers in institutional care for people with disabilities. The
average price for a day in care was 347 euros. If the service was organised as assisted living for 187
euros per day in care (in other words, for a price that is 20 % more than the average price of assisted
living, 156 euros), a saving of 65.2 million euros could be achieved.
There is variation between regions in the cost per recipient of Kela disability benefits, and at
national level, this means a difference of about 370 million euros in terms of overall costs. Based
upon more detailed analyses, it has been concluded that out of this 370 million, around 210 million
euros corresponds to variation in approaches and the related structural and practical differences. The
remainder is explained by differences between regions or for example the use rate of subjective
services. Majority of the total savings potential of 210 million euros relates to the development of
the structure of residential care.
Services for Children and Families
The total cost of services for children and families 5 is an estimated 1 300 million euros. The sum
consists of institutional and family care related to child protection (640 million euros), child and
adolescent psychiatry (270 million euros) and other services (390 million euros). Other services
include e.g. child protection (services that do not include accommodation) and other services for
families. On the basis of the analyses by the NHG, the largest part of the costs consists of the costs
of these services, in particular child protection and psychiatry.
The current service system for children and families is fragmented and compartmentalised. The
focus is on corrective measures, such as custody and institutional care, and not on services that are
preventive and support self-management, such as home care services, family care services and
5
The service bundle for children and families includes the services for children and families and also the child and
adolescent psychiatry. Student and school health care as well as somatic health care for children and adolescents have
all been placed under health services, which is why they are not included in this bundle.
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social guidance. Customer data is scattered across different documents and registers already in a
single municipality.
It would be essential to develop services for children and families in a way that would help to
streamline the current service structure. This could be achieved if the emphasis inside the child
protection services would be shifted from foster family care to community care, and from child
protection services (as provided for in the Child Welfare Act) to family care services (as provided
for in the Social Welfare Act). There are several development measures that could be introduced to
shift the focus from corrective measures to preventive services and early support and care. These
measures include unifying the fragmented system, developing the targeting of services, improving
timely availability and customer orientation, developing early intervention services (e.g. guidance
and counselling), and integrating services (including social and health services, early childhood
education, primary education, services for parents, as well as services that target leisure activities
and family living conditions in order to promote reconciliation of family and work).
Digitalisation will offer cost-effective solutions for early support, customer direction and service
provision.
In child and family services, the greatest savings potential is found in custody and institutional care.
The number of children under 18 placed outside the home has increased by more than 50 % during
the 21st century 6. In recent years, however, the growth has been halted. If the number of placements
could be brought down to the average level of the best performing municipalities (0.9 children
placed outside the home per 100 children under 18), the theoretical savings potential would be
around 150 million euros. This would require that an investment of c. 50 million euros would be
made in services without accommodation, and that the so-called ‘family centre model’ would be
launched and applied in different regions. In this way, the level of the year 2000 could be reached.
The integrated service system is expected to enable improvements even from the level of the year
2000. This assessment is supported by the results from e.g. the towns of Lappeenranta, Imatra and
Raisio that have continued to show positive development still in 2014 and 2015, and the peak level
has not even been reached yet. The estimate is based on the assumption that changes will start to
occur in the space of 2 – 3 years. Nevertheless, it will take 5 – 10 years before all the benefits from
the integration have been attained. The objective of the integration model is to reduce the number of
placements outside the family home to 0.5 % of the age group. The intention is also to develop the
structure away from the institutional emphasis towards a family home type of arrangement. Under
the assumption that the benefits of the integrated model will be fully achieved, the savings potential
will be an estimated 410 million euros.
Addiction and Mental Health Services
The estimated total cost of addiction and mental health services in 2014 is 1 200 million euros. This
includes basic addiction and mental health services, outpatient and inpatient care of adult psychiatry
as well as residential care and other institutional care. In relation to full costs, the proportion of
institutional care is around 640 million, residential services is around 315 million euros and
outpatient care is around 240 million euros. This means that the share of outpatient services, that is
to say preventive and less burdensome services, is only 20 % of full costs.
6
SOTKAnet
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Currently, addiction and mental health services are divided into basic health care (e.g. appointments
to a psychiatric nurse, substitution treatment), social services (e.g. addiction services and residential
services) and specialised care (adult psychiatry). It follows that also the customer data, care plans
and service plans are scattered in many different places. In some municipalities there has been an
effort to integrate the basic level services, or integration has been tried to carry out inside the basic
level services and also the specialised level services of mental health care. Regardless of this,
service provision continues to be marked by separation into addiction services and mental health
services. The use of purchased services in outpatient and residential care adds to this already
fragmented structure. An investigation has also revealed that the resources allocated to addiction
and mental health services in different regions do not reflect the need for services, but are based on
other factors 7. Consequently, the availability of services varies according to the region considered.
It can be further concluded that by focusing resources to suit the actual needs, significant savings
could be achieved.
In addiction and mental health services, important areas of development are related to the
integration of service provision and focusing the allocation of resources on home services and
services without accommodation instead of institutional and residential services. On the basis of
previous investigations, an approach that puts emphasis on community care and local services
improves the effectiveness of the services: the number of suicides has decreased in the regions that
have followed this approach in Finland 8.
A number of development measures will be required, if the “inverted pyramid of resources” is
meant to be turned the other way around. Firstly, the operating principles of the service system need
to be changed into a more customer oriented direction. In practical terms, this means that individual
goals will be determined for each customer, and those goals will provide a framework for the
service plan as well as the services provided. The effectiveness of services will be estimated in
relation to how well the objectives have been achieved. Secondly, when planning the services, the
aim should be to opt for the least burdensome services. Patients should be admitted to wards only
when there is no alternative way for treatment.
In the context of services without accommodation, customer orientation denotes wide availability
amongst other things. Assessment of the need for treatment must be easily accessible at any time.
The actual services also need to be quickly available, when necessary. Under this kind of approach,
situations will not turn into a crisis and the need for acute inpatient care will decrease. When
customers begin to trust the service system and know that they can rely on getting into contact and
getting help when necessary, the number of contacts will decrease in the long run.
In residential services, a target-oriented approach means that the rehabilitation of the customer will
be set as a central objective, and by the means of steering by contract, also the providers of
purchased services will be encouraged to pursue this objective.
In the future, digitalisation will make it easier for customers to remain within services without
accommodation. It will also support customers in making the transition from residential or
institutional services to independent living, because it will become possible to offer a more varied
7
Ala-Nikkola T, Pirkola S, Kontio R, Joffe G. ym. Size Matters – Determinants of Modern, Community-Oriented
Mental Health Services. Int J Environ Res Public Health 2014, 11, 8456–74.
8
Pirkola, S.; Sund, R.; Sailas, E.; Wahlbeck, K. Community mental-health services and suicide rate in Finland: A
nationwide small-area analysis. Lancet 2009, 373, 147–153.
Pirkola, S.; Sohlman, B.; Heilä, H.; Wahlbeck, K. Reduction in postdischarge suicide after deinstitutionalization and
decentralization: A nationwide register study in Finland. Psychiatr. Serv. 2007, 58, 221–226.
15
range of professional support, starting from distance services from a psychiatrist. The mental health
service Mental Hub is an example of a novel, internet-based service, and customers have found it to
be useful 9.
At national level, the cost effects of the development measures targeted to mental health services
are approximately 100 - 200 million euros. The estimate is based on several different calculations
which are summarised below.
Ala-Nikola et al (2014) examined the resources of addiction and mental health care within the
specific catchment area of the Hospital District of Helsinki and Uusimaa, and came to a conclusion
that the resources did not correlate with the mental health index of the area. For example, the
resources of Eksote (South Karelia Social and Health Care District) were 22 % lower than they
should have been according to the mental health index. Still, services were widely available and
customers were happy 10. If the resource consumption could nationally be brought to 22 % below the
prediction of the mental health index, the cost saving would be 267 million euros.
The largest identified savings potential lies in the reduction of psychiatric inpatient care. From 2010
to 2014, psychiatric inpatient care has decreased approximately 21 % at national level 11. However,
in some of the hospital districts that have done decisive development work on addiction and mental
health services, inpatient care has decreased 30 – 40 % (South Karelia, Helsinki and Uusimaa,
Tavastia Proper). If the rest of the country would have achieved the same level of reduction, the
cost saving would have been 79 – 129 million euros.
Typically, deinstitutionalisation calls for financial efforts for residential care and services without
accommodation. Yet, the development of the number of residential services over the same period in
the aforementioned three areas has been such that the number of residential services has grown less
(3 – 6 %) than the national average (7 %). It can therefore be assumed that the estimated reduction
potential for institutional services could be reached without having to add residential services. There
is also the possibility to carry out a transition from 24-hour residential services to more limited
services, which would help to reduce the costs of residential care. It has not been possible to verify
the magnitude of this effect, however.
Services without accommodation have increased in South Karelia and the Helsinki-Uusimaa region
considerably more than the average for the country (c. 20 % versus 9 %). If the number of patient
visits goes up throughout the country in a similar fashion after the reduction of the number of places
in institutional care, the additional contribution needed will be an estimated 20 million euros. It is
possible, however, that there is no need for any additional contributions, because staff productivity
can be increased by clarifying job descriptions. Also, the new digital services will decrease the
number of visits per patient.
Well-functioning addiction and mental health services should bring savings also in adult social
work, the total cost of which is around 600 million euros. When a customer of addiction and mental
health services is rehabilitated and becomes a part of the society, the need for employment services
9
Hyppönen H, Hyry J, Valta K, Ahlgren S. Sosiaali- ja terveydenhuollon sähköinen asiointi - Kansalaisten kokemukset
ja tarpeet. Report of the National Institute for Health and Welfare 33/2014.
10
Mirola T, Nurkka N, Laasonen K. Etelä-Karjalan sosiaali- ja terveyspiirin asiakastyytyväisyystutkimus:
mielenterveys- ja päihdepalvelut. Saimaan ammattikorkeakoulun julkaisuja, Sarja A: Raportteja ja tutkimuksia 34,
2013.
11
National Institute for Health and Welfare (THL), SOTKAnet.
16
and income support decreases. Nevertheless, it is a challenge to try to estimate the magnitude of
these savings.
Freedom of Choice
The impact freedom of choice will have on the costs cannot yet be assessed, because the policy
lines and details on the implementation are yet to be published. A special characteristic of Finnish
social and health care is that households make a reasonably large contribution towards the costs.
This is done through deductibles attached to private services. According to the calculations made by
the social insurance institution Kela, the share of deductibles of doctor’s fees, medical examinations
and treatment is 822 million euros in total per year 12. If in the future, all the people concerned
would opt for services that are within the freedom of choice scheme and are funded by the counties,
the aforementioned sum total would need to be financed in some other way. Also, it is possible that
the publicly funded model would attract people who now are customers of occupational health care
as well as families with children that have insurance. Improved access to health care could result in
increased demand as the hidden demand could surface.
Table xy. The share of deductibles in medical examinations and treatment, 2015, euros.
Cost in euros Cost in euros Deductibles
Doctor’s fees
Oral care
Medical examinations and treatment
Total
As part of the preparation work, a study has been launched on the experiences of other countries
and the effects freedom of choice has had on costs (particularly in Sweden).
12
Mikkola H. Raha seuraa asiakasta –näkökulmana valinnanvapaus ja integraatio. Tampere 13.5.2016
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