Summary of Professor Martti Kekomäki’s Lecture on 6th April 2016

Social Welfare and Health Care (SOTE) Reform; Finally, Functional Steering by Contracting?

As Professor Kekomäki states in the beginning of his presentation, there is nothing new about the actions taken at the moment.

Medaffconin asiakasilta

Martti Kekomäki

For example, in the US, producing comprehensive health benefit in different Managed Care Organizations has been common practice for a long time, but transfer from the current Finnish model to the new operational model is not all easy and trouble-free. Finding a suitable model is difficult, options to be considered vary on a daily basis and the implementation of the future selected model is likely to be even more difficult.

Integration or Competition?

The entire address could be summarised in one laconic statement and a derived question: “we are good at treating but bad at curing – and how on earth are we going to finance this in the future?” Effectivisation is naturally in order, but how is it done? The offered solution is either integration between health care units and levels or free competition, but there are no clear proofs of neither individual option to be solving the problems.

Plenty of Problems

Finland is still the black sheep in health care equality and we have a lot of people with limited possibilities to have effective treatment. In addition, our service system is shattered and does not contribute to managing the complexes of health production. Component-based optimisation through looking after own interests is everyday business and the multi-channel nature of the distribution of costs increases difficulties in decision making, often leading to fairly surprising sub-optimisation. In addition, welfare promotion, which is the basic principle of health production, is often dwarfed by health care. Moreover, we are still in a situation, where one part of the country has too much health care professionals, whereas the other is struggling with recruiting problems, i.e. we are struggling to make demand and supply meet. How do we solve all this?

There are at least two solutions

The EU’s solution model is based on an idea of competition between producers, which relies on the user-based demand of basic services, not on integration. This sort of solution is in use e.g. in the Netherlands, where treatment results are good, but the cost development is in its own rank compared to other EU countries. The main reason for the sharp rise in costs is probably “indemnity insurance”-type insurance model, where the patient first chooses an insurance company, then chooses the service provider (usually a general practitioner who in principle works as a gatekeeper), and thereafter all the invoices are paid without further questions. Kekomäki does not consider this model reasonable, because it enables to patient to have treatments that are not rationally necessary or justified.

The most effective Managed Care Organizations (MCOs) in the US, which are one model of the social welfare and health care reform, are based on the principle that all activities are tightly integrated into well-functioning complexes, the possibilities of choice for all parties are restricted to target-oriented ones, and financing is based on capitation funding. This means that there is a certain amount of money to be spent on producing the welfare (not only health care) of each individual, the MCO spends it in the manner that is deemed suitable and answers for the end result directly to the customers. There will be no more money even if it was not enough, and if there is surplus, the MCO spends it in the best deemed manner in order to produce further welfare. It is thus the responsibility of the MCO to trim its production process to meet the requirements (of the legislators, buyers and patients) and the competitive situation. This sort of guidance leads, through the requirements of the environment, to constant development and the implementation of best and most effective models, and is likely to produce better end result with less costs.

Patients’ needs

Kekomäki presented a study conducted by Kaiser Permanente (US MCO), according to which 65–80 % of patients only need self-care and functional basic health care, 20–35 % need standardised treatment programmes and little support and only 5 % of patients need a case management (CCM) system. When the system is thus constructed to meet needs, better treatment results can be achieved with 20 % less cots and better treatment quality assessment, according to studies. Kekomäki chose to compare this with a good football team that only works according to an agreed “playbook”, acts systematically in all situations instead of focusing on impressive tricks in the corner of the field. Therefore, we need a system which takes into account the needs of the customers, is effective and target-oriented and extremely well integrated.

Levels of Integration

Integration can be defined at three different levels of the service hierarchy: macro, meso and micro levels. At the macro level, common targets and common money is managed, meso level manages jointly agreed operational models (treatment chains, treatment models), and the micro level realises an operational model that supports the patient/customer individually, i.e. how each individual is being treated as a result of activities in the social welfare and health care. At the micro level, the role of knowledge and expertise is accentuated, each patient must be familiar and each patient should have their own “case manager” responsible for the suitability of the chosen “case management” model for the treatment of this particular patient. Furthermore, all information needs to be available for all, i.e. the role of information systems in managing processes and activities is further highlighted.

Horizontal and Vertical Integration

The aim of horizontal integration is to combine the support provided by social welfare and health care in the most effective manner so that the individual copes better in everyday life.

In contrast, the aim of vertical integration is to produce treatment in such a way and in such an environment that it can be done with optimal safety and efficacy.

When integration is realised at different levels both in horizontal and vertical manners and it is ensured that each patient will be treated in the necessary manner and by such organisational and health care professional who knows the patient completely, it is possible to make the operation more effective and gain savings. In such operational model, customer contacts are employed to produce added-value (health benefit) instead of constantly reviewing basic issues, the need for special health care is reduced and the saved resources can be used to set up long-term employment contracts. As a contrary example, Kekomäki presented the current “backpack physician” practice, where the patient is not familiar and the time is spent to learning patient information instead of producing health benefit, and instead of producing added-value, the physicians return to square one and waste enormous amount of time and valuable resources.

Funding Solution Aims

The first and perhaps the most important aim for the new funding solution, according to Kekomäki, is that it takes attention away from the production and the service volume and shifts it towards welfare result. In other words, we do not pay for performed tasks but achieved results. Integration and implementation of best treatment models is required and standards and transparency should be highlighted. The general objective is to reach a more comprehensive and unified productising where the producing party has a clear responsibility for the entity and the result, and payment is at least partly based on received quality. More open competition also creates better opportunities for peer development, provides unified indicators for the productivity of different units and forces the actors towards better cost-management and development of internal accounting.

But who is responsible for funding?

In the early phase, funding and responsibility for funding is unlikely to change dramatically, but within some time, Kekomäki deems that responsibility for funding will be at least partly transferred for SOTE-regions when it comes to targeting the money. However, he considers capitation funding a necessity, in order for us to learn to pay for other issues than scuffing the hinges. Instead, we start paying someone for taking a risk and for the achieved results. At some point, Kekomäki deems it possible that there will be individual risk-assessment, whereby a personal risk assessment is determined for a patient, and the service provider is paid according to the assessment for realising the treatment.

Kekomäki has a clear vision of two-channel funding; KELA should be abolished and the money should be transferred to SOTE-regions. Money and decision-making should be in the same place, in order for the actors to decide what is the most effective and influential treatment for a patient. All other solutions lead to more or less sub-optimisation, which we cannot afford.

Cost-Management Tools

There are simple tools for managing unit costs; process analyses can examine the effectiveness of different processes, and accounting can count their costs. Treatment volumes (which are mainly caused by physicians’ pens, according to Kekomäki) can be managed with PROM (patient-reported outcomes measurement) thinking, whereby the treatment response and benefit of patients is monitored and measured in real-time and connected to cost data.

Overall, he considers electronic patient data the most important guiding tool, which needs to be more effectively utilised in decision-making. Currently, operations are managed with archival data, through which it is more difficult to find causal data on what went well or badly. When information is available in real-time, it is possible to conduct active analytics and faster correction measures.

SOTE and Equality

The intention is not that all receive same services and not all need them. All post-industrial societies are faced with the same, so-called 5/68 % problem. This means that 5 % of patients cause 68 % of costs. At the level of Finland, this means that approximately 250,000 patients cause costs amounting to EUR 10 billion. In order to achieve at least 10 % effectivisation, the savings would be up to a billion, i.e. a major share of the productivity leap of Mr Sipilä’s government. It is also important to take care of the group (approximately 10 %), which is in danger of falling into the most expensive five percent. They need to be drafted a cooperation strategy by a multi-professional team in order to evade the escalation of costs.

Role of IT and Accounting?

IT is the strongest support of the entire change. The most important input channel of the whole data management is the welfare record of an individual, collecting all health data in one place. Such a system enables timely monitoring of data, quality assessment, impact assessment and knowledge management.

In contrast, accounting provides a possibility to employ the combined welfare data of individuals for the determination of costs and cost-effectiveness. Unfortunately, the use of accounting is still at its infancy, but luckily more effort has been put into this lately.

SOTE and Management

According to Kekomäki, all such change must be based on strong and equal management. Currently, there is strong political support and momentum for change, but we need to remember that the major change is made at local level and that knowledge and inspiration must be found where the work is done. Fortunately, all political parties have so far committed to change and Kekomäki believes that as long as party leaders hold onto the agreement they have signed, SOTE-reform will be realised. As his sincere wish at the end of his speech, Kekomäki hoped that the leaders would not tear the paper, since the change is at its course and progressing at a good pace.


There is thus hope, and everything depends on the realisers and holding on to the decisions.