This article is part of a series on value-based hospitals.
Terveystalo is the leading private health-care service provider in Finland, employing 6,500 health-care professionals in a nationwide network of 150 health clinics, of which 18 also provide some of the specialized care found in a typical hospital. About 900,000 patients, roughly 17 percent of the total Finnish population, receive some or all of their health care at Terveystalo clinics. Terveystalo has been a leader in the adoption of outcomes metrics and using a value-based approach to manage the company. Recently, BCG senior partner Stefan Larsson spoke with Terveystalo’s CEO, Yrjö Närhinen, about the company’s approach.
What role does Terveystalo play in the overall Finnish health-care system?
About 82 percent of Finnish health care is provided by the public system. We represent about one-third of the remaining 18 percent of care provided by private providers. About half of our revenues come from the approximately 19,000 Finnish companies that have contracted with us to deliver primary care to their employees. The rest comes from private care, where individuals pay out-of-pocket, or from contracts with insurance companies. We even occasionally get contracts from the public system itself—for instance, in situations where the system has long wait times and is striving to shorten delays for certain kinds of care.
As the CEO of a company that aspires to lead on quality care, how do you think about “value” in the health care context?
Value often means different things for different constituencies in the system. For patients, it’s the quality of the care. For clinicians, it’s the ability to practice good medicine and do the best for their patients. For payers, it’s minimizing not only the direct costs of insurance but also the indirect costs of sickness.
For us, the idea of value has always been connected to the customer. We always need to be able to demonstrate that it’s worth it for a company or an individual to spend the money on our services. For example, if we can help employers reduce sick leave for chronically ill patients, that’s value to the customer. What we’ve discovered over time, however, is that making improved value the common “currency” across all stakeholders leads to improvements in medical quality and health outcomes as well.
What have you done at Terveystalo to improve outcomes and deliver better value?
We have an advantage over other players. Because most of our customers are companies that want to see what value they are getting from our services, we have always had to provide data. In the early days, the issue was, Can we reduce the number of sick days that companies have to pay for, or help them avoid disability-related pensions? Those concerns provided a “backbone”—the fundamental need to develop reporting systems and documentation. It also helped inspire our focus on prevention, annual checkups, and the like.
Take the example of diabetes. Finland has very good national treatment guidelines for diabetes, but there is remarkably little data on how well providers and patients adhere to those guidelines and the outcomes achieved. We developed some data showing that more than 9 percent of the total Finnish working population has either prediabetes or diabetes, and that many of the diabetic patients were incompletely monitored according to the guidelines. And yet, those who were properly managed had on average ten fewer sick days per year.
So, we developed a program to make sure our diabetic patients were monitored and managed better. My chief medical officer, Juha Tuominen, working closely with our clinicians, created a scorecard that allows our physicians to see which of their patients have diabetes, whether their disease is on balance or off balance, whether they are missing any key tests, and so on. Our physicians can also compare their performance by clinic or across regions or with the Swedish and Finnish averages, using data from internationally recognized diabetes registries.
By making the data visible and using it to shape our care model, we are able to more actively manage this specific population of patients. As a by-product, we also get data that we can report back to the payer. It’s good for the payer because it limits time off from work. It’s good for the physicians because it helps them treat their patients better—which is what they care about, why they became doctors in the first place. And, of course, it’s great for the patients because they are getting better care and having better health outcomes.
You say that quality and impact of treatment are Terveystalo’s competitive advantage. How are you trying to “compete on outcomes”?
We feel there is always a customer who can choose. If companies aren’t happy with our services, they can always go elsewhere. Therefore, we always have to be improving and demonstrating the value we create. When we can show value, it takes the pressure off of price. And it differentiates us from our competitors.
Take the example of breast cancer screening. In Finland, local municipalities are legally required to provide mammograms for women over a certain age. Despite the law, however, not everyone was getting a mammogram. Since we have a nationwide network of health clinics, we developed a national screening process. The screening itself is highly decentralized. We even take mobile equipment to isolated villages in the north of Finland so that women don’t have to travel. But the analysis of the screening data is highly centralized so that we can follow a rigorous scientific process and take advantage of scale efficiencies, not only to minimize costs but also to improve our capability to identify early signs of cancer. As a result of this conscious effort to improve diagnostic quality, we now do 85 percent of the mammograms conducted in Finland.
You don’t have a medical background; you worked in consumer goods at Procter & Gamble. What are the challenges of management in the health care setting?
Health care is a highly specialized service business. Which means it’s a trust business and a respect business. That makes the task of management extremely complex. Health care is in the midst of such a transformation now that being successful requires many different skill sets. We need to learn one another’s languages and respect each other’s expertise. We have to balance among the needs of payers, of individuals, of experts. No one has all the answers. It’s about dialogue, teamwork, looking at problems from multiple perspectives and angles.