Public health care providers and market competition: the case of Finnish occupational health services

As reforms in publicly funded health systems rely heavily on competition, it is important to know if and how public providers react to competition. In many European countries, it is empirically difficult to study public providers in different markets, but in Finnish occupational health services, both public and private for-profit and non-profit providers co-exist. We studied possible differences in public providers’ performance (price, intensity of services, service mix—curative medical services/prevention, productivity and revenues) according to the competitiveness of the market.

The Finnish Institute of Occupational Health (FIOH) collected data on clients, services and personnel for 1992, 1995, 1997, 2000 and 2004 from occupational health services (OHS) providers. Employers defray the costs of OHS and apply for reimbursement from the Social Insurance Institution (SII). The SII data was merged with FIOH’s questionnaire. The unbalanced panel consisted of about 230 public providers, totalling 1,164 observations. Local markets were constructed from several municipalities based on commuting practices and regional collaboration. Competitiveness of the market was measured by the number of providers and by the Herfindahl index. The effect of competition was studied by ordinary least square regression analysis and panel models.

The more competitive the environment was for a public provider the higher were intensity, productivity and the share of medical care. Fixed panel models showed that these differences were not due to differences and changes in the competitiveness of the market. Instead, in more competitive markets public providers had higher unit prices and higher revenues.