Outsourcing in primary health care

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

In the last ten years, Finland has seen the emergence of a new market for small firms which lease physicians to public sector primary health care. While municipalities have had difficulties to recruit physicians, these firms offer better salaries and more flexible working conditions and are therefore an attractive alternative for physicians. Before, the majority of municipalities leased physicians only for out-of-hours duties. Recently physicians have been leased for office hours duties as well.

Purpose of health policy or idea

In Finland public primary care is provided by municipality owned health centres. Municipalities can either have their own health centre or join with the neighbouring municipalities to have a joint health centre. There are altogether 249 health centres in Finland, 65 of which are joint health centres (2006, without Åland islands). Traditionally physicians have worked as salaried personel like other municipal employees. Medical students have the right to work as a physician substitute under supervision after completing the first four years of their studies.

In the last ten years new markets have emerged for small firms which lease health care professionals (mainly physicians and medical students) to public sector primary health care. It has been easier for these firms to recruit physicians than for municipalities. Working for such a firm is attractive for physicians as it includes the possibility of better salaries and more flexible working conditions.

There are currently about ten such firms. They have been founded in the last ten years, but the real business started after 2000. The turnover of the companies is about 6-8% of the expenses of municipal sector primary care. The majority of municipal health centres used to lease physicians only for out-of-hours shifts. In 2004 5% of Finnish physicians worked in these firms (especially younger physicians are interested in the positions). So far the largest firms providing these services are owned by Finns (mainly physicians themselves). Firms which are providing private health care services for private patients have not entered this market.

In recent years the importance of this market has increased. Physicians have received contracts for longer terms and have been leased by municipalities not only for out-of-hours shifts but also for office hours. Even whole health stations have been outsourced. The city of Lahti, for example, entered a contract with the largest company (MedOne) hiring them to provide all the services of one of its health stations in 2004. The personnel of the health station were transferred to the private company. More recently similar ways of outsourcing have been performed for example in the cities of Kotka and Kouvola.

Main points

Main objectives

While Finland suffers from a shortage of physicians, small private companies leasing physicians and medical students have eased the recruitment of physicians to public sector primary care. The development has improved salaries and working conditions of physicians.

Type of incentives

Shortage of physician work force, physicians' dissatisfaction with salaries and working conditions

Groups affected

Physicians, Medical students, Municipalities

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral

The concept of workforce leasing in the health care sector is new in Finland. Tradtionally the private sector has not been hired for municipal health services because it has been thought to have a negative influence on public sector health care. However, presently there is controversy among politicians about the role of the private sector as especially right-wing politicians no longer see outsourcing as so negative a  phenomenon.

Political and economic background

A major shortage of physician workforce emerged in the mid 1990s. During the economic recession of the early 90's, entrance places in medical schools were reduced as a decreasing need for medical doctors was predicted. When the public sector later recovered from the economic recession, the employment situation changed and a significant shortage of physicians developed, especially in rural municipalities. In order to rectify this situation the yearly intake of medical students was increased from 365 to 627 in the years 1995-2005. However, this measure needs a long time to take effect and there is still lack of physicians in Finland. In October 2006 there was a 9% shortage of physicians in health centres. In the Kainuu-region (in northern Finland) 26% of posts were without a physician. However, it is estimated that the situation will improve in the next few years.

The shortage of physicians has led to municipalities having considerable difficulties to recruit physicians, especially in rural health centres. As a consequence, new firms emerged to lease workforce to health centres. For municipalities this is an easier way to recruit physicians, while on the downside in many cases labour expenses rise because of the practice. Furthermore, frequent changes of physicians related to this leasing system increase the time that has to be spent on familiarisation and can have a negative effect on the physician-patient relationship. In addition, tender procedures and occasional lawsuits related to tendering can increase the administrative burden of municipalities.

For physicians this system offers the opportunity of better salaries and more flexible contracts than being employed by public organisations like health centres. Especially younger physicians are interested in more flexible contracts. In addition,  physicians can use this system to partly evade income tax which is rather high in Finland. The practice of leasing physicians for out out-of-hours shifts improves the situation of physicians working directly for municipalities on a long-term contract as they can concentrate on working during normal office hours.

Leasing physicians to health centres has increased rapidly during this decade although an outsourcing of workforce has not been the purpose of any explicit national level or local level policy and many authorities on municipality and state level have considered it a worrying development.

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Origins of health policy idea

For a long time, different kinds of networks have existed to recruit young physicians and medical students for out-of-hours shifts. The quickly worsening problems of many municipalities to recruit physicians provided an opportunity for some innovative physicians. They founded firms to organise out-of-hours responsibilities better than the managers in municipalities had done, mainly by using more flexible work contracts and better salaries. At first leasing was very profitable for physicians (and expensive to municipalities) as there was no real competition, but in recent years the number of firms has increased and competition has risen. Physicians have been discontent with their salaries in the public sector for a long time, also resulting in a national strike in 2001.

Initiators of idea/main actors

• Government

• Providers

• Others

Approach of idea

The approach of the idea is described as:
new:

Stakeholder positions

The firms leasing medical workforce to municipalities have been founded by physicians. The majority of Finnish physicians hold a rather positive attitude towards these companies as they are perceived to improve physicians' working conditions. The Finnish Medical Association has been cautious about the new situation but have so far reacted rather positively towards this development. The Ministry of Social Affairs and Health (MSAH) has opposed it because they see the increasing privatization of public sector health care provision as a negative development. On the other hand the Ministry of Trade and Industry is supportive, voicing the opinion that Finland needs increasing entrepreneurship in health sector.

Municipalities are divided on the matter. The new development helps them with the recruitment of physicians but it also increases labour expenses. However, some municipalities have decided that it can be useful to recruit physicians by this kind of system even when there is no physician shortage. The Association of Finnish Local and Regional Authorities has encouraged municipalities to learn about competitive tendering processes and to consider purchasing services from external organizations if they are more cost-efficient than their own production. Presently there is controversy among politicians about the role of the private sector in public sector health care: left-wing politicians oppose and right-wing politicians support outsourcing.

Actors and positions

Government
The Ministry of Social Affais and Health	very supportive		strongly opposed
Ministry of Trade and Industry	very supportive		strongly opposed
Providers
Municipalities	very supportive		strongly opposed
The Association of Finnish Local and Regional Authorities	very supportive		strongly opposed
Physician profession
Finnish Medical Association	very supportive		strongly opposed
Physicians	very supportive		strongly opposed

Influences in policy making and legislation

This policy development has not required a legislation change.

Legislative outcome

n/a

Actors and influence

Government
The Ministry of Social Affais and Health	very strong		none
Ministry of Trade and Industry	very strong		none
Providers
Municipalities	very strong		none
The Association of Finnish Local and Regional Authorities	very strong		none
Physician profession
Finnish Medical Association	very strong		none
Physicians	very strong		none

Positions and Influences at a glance

Adoption and implementation

Municipalities are the key stakeholder in this development as they choose to lease physicians from private firms. Existing legislation gives municipalities the freedom to choose how they provide health care services.  At least from the perspective of the firms and physicians the development has been successful.

Monitoring and evaluation

No evaluation is planned so far.

Review mechanisms

n/a

Results of evaluation

There is no evaluation available yet.

Expected outcome

This development has forced municipalities to calculate the real expenses for different components of primary care service production. Furthermore, they had to improve the working conditions of physicians and to reform organization and management systems. The development could therefore have a beneficial effect on primary health care.

It is expected that the shortage of physicians diminishes in the next few years as the intake of medical schools has been increased significantly in the last ten years. The markets for leasing physicians might therefore be reduced again, although it is expected that leasing physicians for out-of-hours duties is a lasting development. At the moment it is rather difficult to preedict the long-term impact on primary health services.

Impact of this policy

Quality of Health Care Services	marginal		fundamental
Level of Equity	system less equitable		system more equitable
Cost Efficiency	very low		very high

This development may have some impact on the quality and cost-efficiency of health services. However, at this point it is rather difficult to estimate if the imapct is positive or negative.

References

Author/s and/or contributors to this survey

Lauri Vuorenkoski & Hennamari Mikkola, STAKES

Suggested citation for this online article

Lauri Vuorenkoski & Hennamari Mikkola, STAKES. "Outsourcing in primary health care". Health Policy Monitor, April 2007. Available at http://www.hpm.org/survey/fi/a9/3