Operating environment

Target markets

Demand for healthcare services in Finland was strong in 2024, especially among corporate and insurance customers.  The supply and booking rates were at a good level. The autumn flu season started earlier than usual, and morbidity was higher than normal. This led to some increase in visits. The overall employment situation in Finland is good. Demand for out-of-pocket dental care services and massage services was dampened by weaker consumer confidence and purchasing power. Only smaller tenders for digital services were seen in the publicly funded market.

In Sweden, the demand for occupational health services was at a satisfactory level, while demand for organisation and leadership consultation and harmful use rehabilitation services continued to be weak. The termination of public sector contracts at the beginning of 2024 reduced revenue.

Terveystalo continued to invest in the recruitment of professionals and was successful in steadily increasing supply. To strengthen supply, development efforts have been increasingly shifted towards solutions that enhance the work and productivity of professionals.

 

The long-term growth prospects for Terveystalo’s addressable markets in Finland and Sweden are solid; the underlying demand is strong, and megatrends, such as the ageing population, digitalisation of healthcare, and lengthening queues in public healthcare, support growth in the future. As one of the most preferred employers, Terveystalo is well-positioned to drive growth going forward, supported by its strong market position.

 

The impacts of inflation

Inflation levelled off during the year. Terveystalo actively negotiated with its suppliers to limit the impact of inflation on costs. Also, electricity prices levelled off from the comparison period. One of the key areas of the profit improvement programme was to mitigate the impacts of inflation and reduce costs in selected product and service categories.

During the spring 2024, a new two-year collective agreement was negotiated for the private healthcare sector for the period 1 May 2024 - 30 April 2026, covering the largest group of employees at Terveystalo, nurses. In 2024, salaries were increased by 2.4 percent with a general and scale increase on 1 September 2024, plus there was a one-off payment of 500 euros in December 2024 and a local instalment of 0.4 percent. In 2025, from 1 May 2025 to 30 April 2026 (12 months), salaries will be increased by a general and scaled increase, the amount and timing of which will be determined by the salary increase in certain benchmark sectors.

In other professions, wage inflation is also present. Most of the physicians who work in Terveystalo are private practitioners (approximately 96 percent), who are not in employment with the company. At the beginning of 2024, Terveystalo introduced a new remuneration model for private practitioners in occupational health, which enables more effective inflation management.

In addition, Terveystalo has implemented commercial initiatives to mitigate the effect of inflation as a part of the profit improvement programme.

From 1 September 2024, the general VAT rate in Finland went up from 24 percent to 25.5 percent. The increase in the VAT rate is estimated to increase Terveystalo's costs by approximately EUR 2 million annually.

 

The treatment queues and regulatory environment in Finland

The contraction of non-urgent care during COVID-19 restrictions resulted in a significant treatment gap for other illnesses. According to Finnish Institute for Health and Welfare (THL), at the end of August 2024, more than 166 000 patients were waiting for non-urgent specialist care in the well-being services counties, which was 4000 more than in April 2024. In August, almost 18 percent, or more than 31 000 patients, had been waiting more than six months for access to treatment. The number grew by almost 4 000 patients during the summer 2024. Valvira (The National Supervisory Authority for Welfare and Health) has ordered 14 wellbeing services counties and the HUS Group to make access to non-urgent specialised care legally compliant by 31 March 2025 at the latest. At the beginning of 2025, the maximum time limits for access to primary care were extended, i.e. the guarantee of care was relaxed. The guarantee is now 3 months for outpatient primary care and 6 months for dental care. The maximum time limits for follow-up visits to doctors, dentists and specialist dentists were also extended. At the beginning of the year, the Health Care Act was amended to allow public service providers, such as well-being areas, to procure surgery from the private sector to a greater extent. The amendment will be complemented by a decree at the beginning of 2025. The decree will specify the services that can be procured from the private sector.

The government programme published in summer 2023 aims to increase cooperation between private and public healthcare to improve the effectiveness and cost-efficiency of the service system. The government has already followed up on its programme by increasing Kela reimbursements from 1 January 2024 (https://www.kela.fi/sairaanhoito). On 9 October 2024, the Government outlined that the Kela reimbursement system will be completely reformed in 2025 (Government to reform Kela reimbursements - The Ministry of Social Affairs and Health (stm.fi/en)). The reimbursement of fertility treatments will be increased, most likely during the spring 2025. Reimbursements for ophthalmologists, gynaecologists, dental care and mental health services will be reformed and increased. Also, reimbursement for physiotherapy and visits to oral hygienists will also be developed. The changes are planned to come into force during the first half of 2025. A freedom of choice pilot for people aged 65 and over will be launched in autumn 2025. A personal doctor model will be explored, and trials will be launched. In total, 500 million euros is planned to be allocated to all the above reforms during the government term, of which 335 million euros will be provided by the state. By reallocating reimbursements, the government aims to promote access to services and freedom of choice. The government also intends to remove other legal barriers to the use of private providers in the wellbeing services counties. The measures are expected to support the growth in demand for private services and create new opportunities for the delivery of publicly funded and privately provided services.

 

Impact of the global political situation and conflicts

The direct impacts of political tensions and conflicts, such as the war in Ukraine, have been minimal to Terveystalo. The company does not have business operations in or with Ukraine, Israel, or countries that are subject to sanctions. The indirect financial impact arises from inflation and potential disruptions in the supply chain and financial markets. The indirect economic impacts are visible in weakened consumer confidence and purchasing power. The impacts may also have a delayed economic impact through declining employment, which could negatively impact the demand for Terveystalo’s services.