Raimo Pakkanen: Social welfare and health care reforms, one after another


Last year, the reform of the Finnish social welfare and health care services (also dubbed a mess) became a household topic in national political debate. After many twists and turns, an unforeseen political consensus was eventually reached on a new social and health care service system model, although it hit a wall of constitutional problems. The new Finnish Government will be faced with the task of completing the reform.

When measured in numbers, Finland's social welfare and health care sector is massive. The total costs of social welfare and health care is about 40% of GDP. The sector employs almost 400,000 people, one-third of whom work in the private or the third sectors. The services are used by all citizens from birth to grave.

Ensuring equal, high-quality services for citizens is a crucial issue, as the demand for services will inevitably rise as the number of elderly in the population increases. Public funding of services will become more difficult, as forecasts suggest that economic growth will remain low in the near future, and it is not viable to raise taxes to obtain more funding. Labour shortages can also be expected.

It is likely that the social welfare and health care sector will be led by the public sector in the future, but businesses and the third sector will have ample opportunities to produce and innovatively develop services. These opportunities can be enhanced by supporting the consumers' ability to choose, for example by implementing a service voucher system or by outsourcing services. The procurement of services support innovative solutions, and procurement should be grouped into larger units where expertise on different procurement models could be centralised.

An extensive digitalisation is finally taking place in the social welfare and health care sector, albeit falteringly. Digitalisation can generate significant productivity gains and costs savings. What we need now is new applications. Electronic prescriptions are a great practical example. The remaining services of the National Archive for Health Information should also be made available for electronic use.

Not as much public attention has been paid to new business opportunities linked to the social welfare and health care sector. Although lack of investment by companies is continuously making the news, Finland and other Nordic countries are currently experiencing a wave of investments into hospitals, worth billions of euros. Everyone who has visited the Meilahti or Jorvi Hospital in Helsinki has seen this in practice. These investments open up plenty of business opportunities for many kinds of companies, not forgetting references that can support future internationalisation. Finland's industrial exports have taken a worrying downward turn in 2015 so far, and Finland's trade balance is in deficit. A delightful exception to this is the export of health technology products that has seen a rapid growth and now constitutes a significant percentage of Finland's high-tech exports. Last year, the value of health technology products was EUR 1,8 billion, with an 8.3% growth since the previous year. Exports amounted up to 95% of total production.

The social welfare and health care sector is often seen as a bottomless pit that only swallows money, although hardly anyone would be willing to cut services. Although the sector remains largely public, versatile opportunities for innovative business have emerged. Tekes has been supporting these through various programmes, most prominently through Innovations in Social and Healthcare Services, Bits of Health and the Future Health theme of the INKA – Innovative Cities programme.

Raimo Pakkanen
Programme Manager, Innovations in Social and Healthcare Services

The Innovations in Social and Healthcare Services programme aims the reform of social welfare and health care services via innovation activities and the creation of new business. Tekes granted a total of EUR 19.2 million in funding via the programme in 2012‒2014, for 40 projects by companies, 26 by cities, municipalities and hospital districts, 35 by universities, universities of applied sciences and research organisations, and 7 by non-profit organisations and foundations. The programme will continue until the end of 2015.

Pia Mörk
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