Making markets work in the interest of patients
The Finnish health and social care system ranks high in international comparisons. However, like in many other European countries, owing to the ageing population and increasing health and social care needs, health expenditures are soaring and adding to the pressure to improve productivity in the provision of care.
The Finnish government is determined to reduce health and welfare disparities between regions and individuals through greater resourcing of public services over the coming years. At the same time, the government seeks to promote innovation across the economy, including in health and social care. The Ministry of Employment and Economic Affairs asked Copenhagen Economics to examine whether and how other countries have succeeded in using market-based systems as one of the ways of enhancing innovation and productivity whilst preserving a high standard of publicly funded health and social care services.
Our headline findings are summarised as follows:
- International examples show how ‘market-based mechanisms’ are not limited to the outsourcing of health and social care to the private sector. Indeed, incentives to respond to patients’ choices, and to perform well in comparison to other providers, have been created to encourage and reward public providers of health and social care.
- The use of choice and competition as levers of improvement require careful design and recognition of the market failures inherent to these services. A finding cutting across all aspects of our study is that reliable information of patient outcomes, performance and costs is a salient prerequisite for organising health systems regardless of how market-mechanisms are used.
- First, patients’ ability to make informed choices over where they receive care necessitates transparent information.
- Second, commissioners (e.g. public payers) cannot assess the needs of local populations and secure services from the best possible providers without information on patient outcomes and on provider performance. Further, systematically collected information on patient outcomes is a prerequisite for commissioners’ ability to design funding models that reward high quality of care.
- Third, providers and health professionals employed by them benefit from comparative information to identify opportunities for improvement.
- Fourth, regulators need up-to-date evidence for monitoring the quality of care provided.
- It may be unrealistic to assume that all small local commissioners (e.g., small municipalities) could independently resource the complex prerequisites for active, evidence-based commissioning. International examples demonstrate how central government bodies can play a role in supporting local commissioners and providing a consistent framework for providers across regions.
The study is commissioned by the Ministry of Economic Affairs and Employment of Finland.