Financing of hospital care in Finland

In its institutional structure, financing and goals, the Finnish health care system is closest to those of other Nordic countries and the United Kingdom in that it covers the whole population and its services are mainly produced by the public sector and financed through general taxation. However, compared to the other Nordic countries the Finnish system is more decentralized; in fact, it can be described as one the most decentralized in the world. Even the smallest of the 342 municipalities (local government authorities) are responsible for arranging and taking financial responsibility for a whole range of ‘municipal health services’. Another unique characteristic of the system is the existence of a secondary public finance scheme (the National Health Insurance scheme, NHI), which partly reimburses the same services as the tax based system, but also services which are provided by the private sector. NHI also partly reimburses the use of private hospital care. Specialized care (psychiatric and acute non-psychiatric) is provided by hospital districts which correspond to the federations of municipalities. Each municipality is obliged to be a member of a hospital district. In addition to services provided through health centres and hospital districts, municipalities may purchase services from a private provider. In 2008 specialized care comprised 33% of total health care expenditure. There are 21 hospital districts in the country. Each hospital district has a central hospital and in some districts care is supplemented by small local hospitals. There are 15 local hospitals in the country. Tertiary care is given in five university hospitals, which also act as central hospitals for their hospital district. Hospital districts are managed and funded by the member municipalities. Funding is mainly based on municipal payments to hospital districts according to the services used. In 2008, 4.2% of funding came from user charges.1 In addition, governments subsidize hospitals’ teaching and research activities, which are mainly undertaken in university hospitals. The funding of Finnish hospitals is illustrated in Figure 1. As purchasers, municipalities negotiate annually the provision of services with their hospital district. There are different