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Act on free choice systems (lag om valfrihetssystem, LOV), 2008

Country of implementation
General short description of the innovation
the Act on System of Choice in the Public Sector (LOV), a new act regulating the outsourcing process in line with EU legislation. The act came into effect in 2009, facilitating the introduction of consumer choice models without a process of competitive tendering and procurement. The act is intended to function as a voluntary tool for municipalities and county councils that want to introduce consumer choice in services provided in-house. The proposed act is an alternative to the Public Procurement Act (2007:1091) and can be applied to health care services and social services. LOV can be applied for basically all social services, home based as well as residential, including those provided in accordance with the Social Services Act, the Act concerning Support and Service for Persons with Certain Functional Impairments (LSS) and the Health and / Medical Services Act (HSL) (Meagher and Szebehely 2013). / Key elements of the Act are that the municipality or county shall advertise openly a call, approve and sign contracts with those bidders that live up to the required standards. All performers are reimbursed in the same way and so compete only with quality. Individual citizens can than freely choose from all approved providers. The municipality or county council retains overall responsibility for the business. / Applications to become an approved provider are open to all legally recognised organisations, including for-profit companies and non-profit organisations. The tender documents must be published on an ongoing basis at (the Choice Web). Suppliers thus compete for the customers in the arket and not by the price of the market. If users are not satisfied with the service or the quality of service / they are able to choose a new performer. LOV stipulates that local authorities must have a system for assigning a service provider to users who do not make an active choice, but does not regulate how this is to be managed. Of the municipalities which had introduced a system of choice in eldercare in accordance with LOV by December 2012, 49% had their own operations as the non-choice alternative, 45% had applied a system of rotation among the authorised providers and 6% used a proximity principle or some other decision model (Meagher and Szebehely 2013).
Target group
Disabled - Older Workers
Policy Field
  • family
  • social
Type of Policy
  • private for profit
  • public
Scope of innovation
  • Scope: structural
  • Budgets: see above
  • Spatial coverage: national
General description of (intended) objectives and strategies
Giving older people and persons with disabilities more opportunity to choose their provider of social services from a list of approved providers in a / system of choice. The basic idea behind the reform is to ensure that users can exert influence over the services they receive by being able to switch provider if services are not satisfactory. It is presumed that this system will promote competition between different providers. Another aim is to introduce a customer-choice (voucher) system and a further argument for introducing LOV was to eliminate differences between the various local authorities with regard to how customer choice was organized.
Nature of the innovation-long-term perspective
long term
Type of ideal-typical strategy for the innovation
  • liberalisation
Type of innovation
  • new form of policy implementation/delivery
  • new policy, practice or measure
New outputs
  • governance
  • regulations of the labour market
Clarification of intended mechanisms, outputs and outcomes (optional)
The local authority determines the level of compensation that is equal for all providers, with the goal of creating a form of quality competition which puts the focus on how companies describe the quality of their services. The system provides a shift from price competition. In contrast to the outsourcing model, the / providers, who have established themselves with the support of LOV, have no guaranteed customers. Further, private providers can offer various forms of supplementary services that the senior citizen can buy at market price to ?top up? the subsidised eldercare services they receive (see Section 2.4). According to / the Local Government Act (1991: 900), municipalities are not allowed to offer these additional services that would compete with private operators in the market (Meager and Szebehely 2013). / It is not possible for the procuring authority to restrict the number of providers to be approved. Following the principle of proportionality, the requirements on providers are not to be unduly high. In the Government Bill preceding the Act, it is also stressed that high requirements would have a negative impact on competition: ?the higher the requirements are set, the fewer external providers will be interested and able to meet the requirements? (Government Bill 2008/09:29, p. 73). According to LOV, it is the users who choose a supplier and for those who do not choose there is a no-choice alternative, which may be the local authority, a specific private provider selected in a competitive procurement process or a set order between all providers (with the goal of distributing customers equitably between them). The local authority is obliged to inform users about the providers they can choose from. The information must be objective, relevant, comparable, easy to understand and easily accessible (Meager and Szebehely 2013) / / Other legislation has in recent years additionally opened the door for services being provided in other ways than just through a decision on entitlement based on needs assessment: / Although local authorities are not permitted under LOV to offer additional, non-needs assessed services to senior citizens choosing a public provider, they are permitted to provide some services to older people by the Act on Certain Municipal Powers (Lagen om vissa kommunala befogenheter, 2009:47, ?7). According to the Act, local authorities may provide services (not personal care) without an individual needs assessment in order to prevent accidents for people over the age of 67, without cost to the user or may charge reasonable fees which cannot, however, exceed the costs to the local authority of providing the services (e.g. help to change light bulbs or to put up curtains). However, services that would compete with private / domestic services, such as window-cleaning, are not normally included in the offering (Meager and Szebehely 2013). / / The introduction of tax deduction for household services (Lag 2007:346 om skattereduktion f”r hush†llsarbete). This reform interacts with eldercare services in that the tax deduction (in many municipalities) makes it cheaper for older people with higher incomes to buy services in the private market / than it would be if they used the needs assessed home care services ? at least if they have minor care needs. (see sheet on that).
Intended target group
municipalities and users of Health care and social services
Actors involved in policy-making/implementation and/or evaluation
  • central state
  • private for-profit organisations (commercial)
  • private not-for-profit organisations (e.g. Third Sector organisation or NGO)
Clarification of the role of various actors
the Act on System of Choice in the Public Sector (LOV) does not regulates in detail how competition and choice models are to be adopted by the individual local authorities. To implement the legislation, a number of authorities have not only been given a monitoring and supervisory role to ensure that competition / works, but also a role in encouraging companies to set up operations in the care sector. For an overview see Meager and Szebehely (2013). /
Intended output
  • governance
  • regulation of the labour market
  • services
Clarification of outcomes in terms of impacting resilience and labour market inclusion
Comment to Q 28 use of personal service / The overarching aim of Open Comparisons is to improve service quality by providing information to local authorities and individual services users in order to enhance competition and drive change. A review of international research on quality measurement systems shows, however, that there is a risk of negative side effects such as levelling (adapting to the average), or that organisations may focus too much on the quality indicators themselves, so that those measures shape the objectives of their operations. There are indications that these side effects also exist in Sweden Lindgren et al., 2012). E.g. local authorities have changed their eldercare objectives to make them measurable with indicators from Open Comparisons or / used the average score on certain quality indicators in order to set objectives for their own operations (Meager and Szebehely 2013). / / It was hoped that competition and private alternatives in eldercare would reduce costs and improve quality. The Swedish Agency for Public Management (Statskontoret 2012) has investigated the consequences of the Act on System of Choice in the Public Sector (LOV) on costs and productivity in eldercare. They found no evidence of reduced costs in local authorities which had implemented the Act, but instead weak evidence of a higher growth rate in costs in those which had introduced free choice at an early stage. LOV requires more work on the administration of contracts, compilation of information, the / enhancement of quality assurance and more invoice processing and controls of providers ? undertakings which increase the costs. / / Other outcomes: higher levels of structure quality and lower levels of process quality in public home care when compared to private home care (Meager and Szebehely 2013). / / Q 32: / In 2007, the newly elected conservative government commissioned the National Board of Health and Welfare to work with SKL, the Swedish Association for Local Authorities and Regions, to develop a national monitoring system for Open Comparisons of eldercare services. The aim was to create better / preconditions for the control and development of care services and to make it possible to compare the quality of services, both over time and between various providers and local authorities (Socialstyrelsen 2010c).
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