Municipalities' investments and outsourcing projects in health and social services are to be restricted on a temporary basis

Municipalities' and joint municipal authorities' large and long-term outsourcing projects and major investments in the health and social services sector will be restricted through fixed-term legislation. The Government submitted its legislative proposal to Parliament on 2 June. It is proposed that this Act should enter into force as soon as possible. It would be valid until the end of 2019.

The proposed Act would restrict the possibilities for municipalities and joint municipal authorities to make long-term or extensive contracts to acquire health and social services from private service providers. In addition, long-term agreements on premises use and significant investments in the health and social services sector would be restricted.

The purpose of the legislative proposal is to ensure that the health and social services reform will progress in accordance with the Government's objectives. The future counties need to be able to organise equitable services and an appropriate service network in a manner that is as cost-effective as possible.  This cannot be done if a county will be tied for a long period to municipalities' earlier contracts or construction projects.

During the period of the fixed-term Act, a termination clause would be included in all extensive and long-term contracts.  According to the clause, the future arranger of services, i.e. the county, would have the right to terminate such contracts when the conditions provided by the Act are met. The proposed regulation would not restrict the possibilities for municipalities or joint municipal authorities to make contracts for as long as they are responsible for arranging the services. Activities agreed on in the contract could also continue if the county considers it appropriate.

The termination clause would be included in contracts whose anticipated value during the contract period would exceed 50 per cent of the municipality's or joint municipal authority's health and social services expenditure, and whose contract period would be five years at the minimum.

When the Act would be in force, large construction investments would also be restricted. The investment restriction would not apply to investments totalling EUR 5 million or less. The proposed provisions would also enable repair investments in annual maintenance work and construction investments that are considered necessary on the basis of authority inspections. Also large investments would be possible subject to a special permit from the Ministry of Social Affairs and Health if they are justified on the grounds of the objectives of the health and social services reform and the respective county.

During the preparation of the health and social services reform, some municipalities and joint municipal authorities have made decisions that are based on their aim of keeping their existing health and social services unchanged and to increase the resources allocated to the municipalities' own services. Those decisions include large investments in properties and large outsourcing projects where the services would be purchased from a private operator on the basis of a long-term contract.

Inquiries

Tuomas Pöysti, Project Manager, Under-Secretary of State, Ministry of Social Affairs and Health and Ministry of Finance, tel. +358 2951 63012
Kirsi Varhila, Director-General, Ministry of Social Affairs and Health, tel. +358 2951 63338
Päivi Salo, Ministerial Counsellor, Ministry of Social Affairs and Health, tel. +358 2951 63113
Minna-Marja Jokinen, Legal Counsellor, Ministry of Finance, tel. +358 2955 30820