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

Ministry of Social Affairs and Health 29.6.2016 14.23
Press release 101/2016

Municipalities' and joint municipal authorities' large and long-term outsourcing projects and major investments in health and social services will be restricted through fixed-term legislation. This Act will enter into force on 1 July 2016 and will be in force until 31 December 2019. The Government proposed approval of the acts and the President of the Republic ratified the acts on Wednesday 29 June.

The Act restricts 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 concessions and significant investments in the health and social services sector are restricted.

The purpose of the Act 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 counties were to be tied for a long period to the obligations of municipalities' earlier contracts or construction projects.

A termination clause must be included in all agreements related to rentals and other concessions that municipalities or joint municipal authorities contract between 1 July 2016 and 31 December 2018. The clause must also be included in agreements with private service providers contracted during the same period where the anticipated value during the contract period exceeds 50 per cent of the municipality's or joint municipal authority's health and social services expenditure and where the contract period is five years at the minimum. If a municipality or joint municipal authority enters into more contracts with the same private service provider while this Act is in force, the termination clause must be included in all the contracts if the overall value of them exceeds the above-mentioned 50 per cent threshold.         

While the act is in force, it also places restrictions on large construction investments. The investment restriction would not apply to investments totalling EUR 5 million or less. Special dispensation accorded by the Ministry of Social Affairs and Health would allow large investments too, if they are justified on the grounds of the objectives of the health and social services reform and from the viewpoint of the whole county. The provisions also enable repair investments in annual maintenance work and construction investments that are considered necessary on the basis of authority inspections. 

Special dispensation must be also sought for actual construction investments that exceed EUR 5 million that municipalities and joint municipal authorities, where the financial model takes the shape of a rental or other concession. If special dispensation is granted for such investments, the financing of the contract does not need to include a termination clause.

Applying for special dispensation in investment

The application form for special dispensation in construction investments can be accessed at stm.fi/lomakkeet from the beginning of July. The application must include for instance a project plan, master drawings, cost estimates or cost calculations and financing plan, estimated schedule for the project and estimates for possible interruption of the project. The application form gives more information on all the appendices that are needed. The Ministry of Social Affairs and Health reserves the right to request additional accounts for reaching a decision.

The applicaion should be submitted as early as possible to the Ministry of Social Affairs and Health at: Ministry of Social Affairs and Health, PO Box 33, FI-00023 GOVERNMENT

Act on temporary restriction of certain legal transactions by municipalities and joint municipal authorities.

Inquiries

Ms Päivi Salo, Ministerial Counsellor, Ministry of Social Affairs and Health, tel. +358 295 63113, [email protected]
Anne Arvonen, erityisasiantuntija, Ministry of Social Affairs and Health, tel. +350 2951 63285, [email protected]