Purchaser-provider splits in health care-the case of Finland

The purchaser-provider split (PPS) is a service delivery model in which third-party payers are kept organizationally separate from service providers. The operations of the providers are managed by contracts. One of the main aims of PPS is to create competition between providers. Competition and other incentive structures built into the contractual relationship are believed to lead to improvements in service delivery, such as improved cost containment, greater efficiency, organizational flexibility, better quality and improved responsiveness of services to patient needs. PPS was launched in Finland in the early 1990s but was not widely implemented until the early 2000s. Compared to other countries with PPS the development and implementation of PPS in Finland has been unusual. Firstly, purchasing is implemented at the level of municipalities, which means that the size of the Finnish purchasers is extremely small. Elsewhere purchasing is mostly implemented at the regional or national levels. Secondly, PPS is also applied to primary health care and A&E services while in other countries the services mainly include specialized health care and residential care for the elderly. Thirdly, PPS in health and social services is not regulated by any specific legislation, regulative mechanisms or guidelines. Instead it is regulated within the same framework as public procurement in general.