by Agnes a Paris
Sat May 6th, 2006 at 05:25:47 AM EST
A bunch of diaries by Jérôme and myself were posted last year on French Social Security and health care system, but this exciting topic is always worth a bit of memory refreshment, especially in the current ET mood to debate social issues.
The French health care market is dominated by the public sector, with government funding through the social security system accounting for over 75% of total health expenditure.
From the diaries ~ whataboutbob
The public sector is the largest (65% of total bed capacity) and encompasses various types of hospitals that enjoy the same status and financing mechanisms although they may be very different with respect to their size or activities. For understanding purposes, the players on the public health care provision market can be dispatched in two categories.
The first category encompasses the largest public hospitals, in particular the regional hospital centers (CHR, "centre hospitalier régional"), most of them being linked to a university and providing teaching and research (CHU, "centre hospitalier universitaire"). This category also includes the largest general hospital centers, defined as those with a budget above 70 million, as well as two special entities, Assistance-Publique des Hôpitaux de Marseille and Hospices Civils de Lyon (neither rated), which group together several hospitals in Marseille and Lyons.
The second category includes general hospital centers with a budget of less than 70 million, specialized hospitals, and local hospitals, which are often small, single-activity and single-site, and provide basic care.
The private sector is split into not-for-profit and for-profit clinics, representing 15% and 20% of hospital bed capacity, respectively. The not-for-profit entities--generally associations and foundations--enjoy similar financing to public entities.
The private for-profit clinics are commercial enterprises generally specialized in acute care, surgery, or obstetrics. They are key actors in health care provision, since they capture about 30% of total patients (60% of surgery, 45% of cancer treatments, 35% of births). Their funding comes primarily from the social security, although it complies with specific allocation criteria.
Similarly to the private entities, public hospitals have administrative and financial autonomy, as "public health care centers." To ensure access to health care services to the entire population, the state views private and public entities as complementary. All entities are strongly embedded in an environment regulated by the state, in particular through the regional hospitalization agencies (RHAs).
These are key actors on the French hospital market.
Created in 1996, the 26 decentralized RHAs are in charge of organizing hospitals' planning on behalf of the state, e.g. coordinating the activity of public and private hospitals, defining the service to be provided and the funding received, and approving their investment plans. The RHAs have encouraged the consolidation of the sector in the past decade, with the aim of streamlining health care provision, contributing to national savings targets, and fostering synergies between the public and private sectors.
The RHAs issue multi-year organization plans to assess the strategic importance of an operator in its geographic area. Being forward-looking, these plans provide good visibility on an entity's essentiality and medium-term activity. Competition or overlaps between different hospitals in the same neighborhood--both public and private--are also minimized by the RHAs' exclusive power to grant or refuse operating licenses. Independently of its financial performance, an operator categorized as essential to health care provision in its service area will benefit from an oligopolistic position at the local level and will very likely continue to provide its services over the long term. In this case, the tutorship also materializes through the signature of three- to five-year objectives and means contracts, which set out capacity levels and quality criteria.
Conversely, an operator whose essentiality is judged to be low by the regulator has a higher risk of disappearing in the short to medium term.
In the past decade, the consolidation of capacities has already translated into the restructuring of hospitals, mergers, co-operation, or transfers of activity, and even the closing of the smallest, less efficient sites. It has mainly occurred in the private for-profit sector, where the number of clinics decreased by 11% over 1999-2002, to leave the room for the development of groups of national importance. The private sector is thus now relatively well structured and organized on a regional basis.
As public bodies, public hospitals' budgets abide by the accounting framework of the public health care code, and, to be approved, their annual budgets must be balanced--operating revenues must cover at least operating expenditures and debt repayment. The RHAs are responsible for budget approval and control. If the budget is unbalanced, or if a compulsory expenditure (such as debt repayment) is not budgeted, the regulator is entitled to refer the matter to the regional audit board and participates in drafting a restructuring plan.
The RHA is also empowered to change the management of a public hospital if its operating and financial performances do not comply with the defined targets, or if a hospital does not abide by the public procurement code. Tutorship is thus strong, since it would be hard for a hospital to take a decision that had financial consequences without the RHA's consent.
Despite its positive aspects, regulation also limits flexibility, both on the expenditure and revenue sides. The RHA must approve health care providers' financial policies and investment plans before implementation; and define their revenue levels, thus constraining their capacity to extend their activities and diversify or raise their revenue sources or tariffs.
In France, as in most developed countries, health care related-spending consistently and rapidly increased over the past decade, primarily linked to four major trends: a demographic shift, with rising life expectancy; progress in medical technology, with increasingly costly treatments; the need for ever stricter and more constraining security and sanitary norms; and, specific to France, the implementation of the 35-hour working week, particularly in the public sector.
As a result, the social security deficit has increased dramatically (9 billion in 2005), making structural reforms all the more urgent. Looking ahead, these trends are expected to intensify, with expenditures growing structurally 1% to 3% higher than annual GDP, in a context of already weak public finances, calling for further reforms in a national effort to curb global public expenditure growth and tax pressure. This willingness has been stated in the public finance stability program for 2007-2009, which sets guidelines for the preparation of financial laws for 2007 and thereafter. The target includes a maximum growth of health care expenditures by 1% in real terms, which is ambitious (to remain politically correct) in light of recent growth.
So yes, France still benefits from an efficient health care system. And yes, need to adapt smartly (which does not mean focusing on the financial component only) cannot be foregone if the system is to be maintained at current quality standards which will hopefully be a valuable legacy to our children.