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Coronavirus hurting Finland's private childcare industry

A major private provider, caring for 11,000 kids, seeks debt restructuring, partly owing to coronavirus.

Touhulan päiväkoti Helsingin Lauttasaaressa.
Touhula's CEO said the company was already losing money before the virus hit. Image: Jussi Nukari / Lehtikuva

With one leading daycare company filing for debt restructuring this week, concerns are arising as to how Finland's intertwined system of public and private care will function once the pandemic is over.

Municipalities often purchase services from daycare operators to help meet their obligation to provide childcare.

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Touhula, a major private daycare chain, filed for debt reorganisation this week, unable to make up for financial losses due to families following government recommendations to care for kids at home.

Exacerbating the situation is the fact that some municipalities have suspended subsidies for private daycares meant to make up for losses they faced after reimbursing families whose children stayed home for two months between March and May.

A perfect storm

Touhula's 2,500 staff care for 11,000 kids in 65 Finnish municipalities. The company is owned by international private equity firm EQT.

Touhula CEO Minna Elomaa said the firm was already struggling before the coronavirus crisis, with the epidemic worsening an already difficult situation.

Elomaa said some of the chain’s centres have not had enough children--a phenomenon she blamed on Finland’s low birthrate.

All children in Finland are eligible to attend publicly subsidised daycare. Municipalities pay private providers vouchers for kids attending their schools. Elomaa, however, said these payments have not kept pace with expenses.

Parents were informed of the news via the daycare’s own app, Tougo.

"Daycares will still keep running as usual despite the filing," Elomaa said.

Private daycare chains Pilke, which operates in 50 municipalities, and Norlandia, which has centres in 40 municipalities, told Yle they didn’t believe they would collapse under financial pressure stemming from coronavirus.

Private daycare operators, however, told Yle that in some areas interest in their services had waned, with fewer parents applying for spots than usual.

Touhula’s board includes managers from private healthcare giants Esperi and Attendo, whose nursing homes have come under fire for reported neglect.

EDIT 6:06pm: An earlier version of this story said Touhula had filed for bankruptcy when they had in fact sought debt restructuring.

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