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Some basic facts about the French NHS

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.

Interesting diary, Agnès, thanks.
As it focuses on the institutional side, it's an extremely useful complement to the one diary I've kept the link for, which focused more on the perspective from the consumer: Some information on the French healthcare system

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri May 5th, 2006 at 11:42:41 AM EST
Thank you. I appreciate your compliment.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Fri May 5th, 2006 at 11:52:24 AM EST
[ Parent ]
Very impressive survey, Agnes, thanks. May I ask if it was written, wholly or partly, in a professional context?

You principally describe the hospital system and its management through RHAs -- then you move on to the rise in health-care expenditure, the social security deficit, the unlikely future growth targets, etc. But what is the share of hospital costs in the whole? How much does the hospital sector contribute to the deficit, compared to other health sectors?

by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 5th, 2006 at 04:23:04 PM EST
How are health care funds raised? Is it is just part of the general budget, or is from a special tax (like the Medicare payroll tax in the US)? Are the funds disbursed from a special account or is all government spending from the general fund? What role do local governments play?

Policies not Politics
---- Daily Landscape
by rdf (robert.feinman@gmail.com) on Fri May 5th, 2006 at 05:46:03 PM EST
There is a difference between the financing of public hospitals and private for-profit clinics. The private clinics are reimbursed according to the number and kind of medical treatments they have performed (there is a pie list for all the medical treatments), whereas the public hospitals are financed throug a yearly global budget.

There is a big obstacle to rationalisation of the public hospitals : they are big employers (sometimes the biggest in small cities), and the mayor of the city is usually the Chairman of the Hospital's board.  Thus, the elected representatives often strongly oppose on the ground what they have voted in the parliament and the RHAs are often helpless.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sat May 6th, 2006 at 09:23:14 AM EST
mmm;;; a price list (no pie wars, please!)

I must add that the new law plans to gradually introduce the same financing system for both public hospitals and private clinics (according to the treatments performed).

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sat May 6th, 2006 at 09:26:24 AM EST
[ Parent ]
Thank you Agnes for this outstanding diary, and it was good of Jerome to reference back to is earlier diary, I did and it was a refresher.  I find these diaries in healthcare interesting and very helpful.
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.
As you seem to be saying, this limit of 1% in real growth would seem to be a real challenge.  There are so many new technologies being developed in healthcare that save lives and raise the quality of life.  New drugs that, for example, are battling cancer.  And so much more is coming, and can be expected to come, from the human genome efforts.  And new devices that take advantage of microchip technology will soon provide "minitarized machines" that can be placed in the body and kick into action if something goes wrong.  Internal pacemakers and defibrillators are a window to what is coming.

You seem to be saying that this, among other trends, have led to significant growth in the system, and that the 1% target would cut that back.  But if these factors push growth to the 3-5% levels, for example, how would this be managed in the French system?

by wchurchill on Sat May 6th, 2006 at 11:47:39 AM EST
Apologies not to having reverted to you earlier on your questions. I posted this diary shortly before my London week-end.
To answer you question afew (this one is the most straightforward) I did conduct at the beginning of 2005 quite a comprehensive (and lengthy and tiresome) survey of the French health care system and the reforms in store. It was requested by the board of my former, US based employer, who wanted to take a view on the risk and challenges of the French health care sector.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Tue May 9th, 2006 at 10:17:34 AM EST
For all E-tribers eager better to comprehend the maze of French finances, an interesting  link  to the website of the Ministry of Finance (Treasury) and good news, you can browse through it and even grasp some concepts and bits of info without having graduated from ENA and gone through Inspection des Finances. <s>
Enjoy the reading

When through hell, just keep going. W. Churchill
by Agnes a Paris on Tue May 9th, 2006 at 11:01:58 AM EST

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