Local government's financial data and cost-effectiveness indicators in the steering of health and social services

The audit examined the production of financial data on health and social services provided by municipalities and joint municipal authorities and their utilization in measuring the cost-effectiveness of healthcare and social welfare and in expert assessments by the Finnish Institute for Health and Welfare. Expert assessments are a key tool in the steering of the health and social service system. Therefore, it is essential that the financial data used in them are of high quality. The operating costs of municipal health and social services in 2019 amounted to EUR 21.4 billion.

The audit is also linked to the health and social service structure reform. To support the reform, the Finnish Institute for Health and Welfare has developed an assessment model for the service system. The indirect significance of the assessment model to central government is considerable. The Government proposal on the service structure reform was submitted in December 2020.

The database used in the steering of the finances of healthcare and social welfare is compiled through different channels. The process is also developed from different directions. For this reason, there is a risk that the database becomes fragmented and the process is not coordinated as a whole. The whole is steered by various actors: there is both regional steering and steering by organizations under the Ministry of Finance and the Ministry of Social Affairs and Health. At present, the database is developed mainly in different projects, and therefore the overall management may become more difficult.

Municipalities and joint municipal authorities are obliged to report their financial data regularly to the authorities. The act on the submission and reporting of data was renewed at the beginning of 2020. The responsibility for collecting the data is transferred from Statistics Finland to the State Treasury as from the financial year 2021. Those who produce financial data in municipalities and joint municipal authorities do not always have sufficiently time or competence for this duty, and there is also a shortage of resources. This is problem in terms of the quality of data. Clarity of instructions and communications, well-defined responsibilities, guidance for system suppliers, and effective cooperation networks play an important role in the implementation of the reform. They are also a prerequisite for the high quality of data. If data are not reported in a uniform manner, their comparability and usability will suffer. The National Audit Office considers that financial data should continue to be checked manually during the transition period of the reform in order to ensure the data quality.

A comparable database is needed for effective national steering, but for the time being, the database is still defective. It is possible to make observations on the health and social service system by means of the cost effectiveness indicators and cost indicators used in expert assessments, but the assessments cannot yet be used comprehensively in the overall steering of finances and activities as the service system reform is still under way. An up-to-date database on the costs and operations of healthcare and social welfare requires further development, national guidelines, and new legislation on the health and social service system.