Feature / French Lessons

IN 2000, THE FRENCH healthcare system was ranked number one out of almost 200 countries by the World Health Organisation. It is established on the principle of ‘solidarity’, paid for in proportion to income and delivered in proportion to need. Patients have the freedom to choose their doctor and the facility in which they will be treated and there are no waiting lists or waiting times. There are huge investments in hospital infrastructure as part of the Plan Hôpital 2007 investment plan (see box, over) and 10% of the GDP relates to healthcare (compared with 9.3% in the UK).

However, the increasing healthcare expenditure, shrinking budgetary resources, an ageing population and increasing medical and pharmaceutical costs have led to two-thirds of hospitals having deficits. The French government has, therefore, implemented reforms of healthcare insurance and introduced a payment by results-type scheme to put the brakes on expenditure while maintaining the high level of care.

The French system is centralised, with hospitals supervised at the national level by the Department of Hospitals and Healthcare Organisations and at the regional level by 22 regional hospital agencies (RHAs). The RHAs, which consist of representatives from central government and health insurance organisations, serve as regulators, plan healthcare provision and authorise investment projects in each region.

The past decade has seen networks of hospitals being established to provide care to the population of each region. The different types of hospitals include regional university hospitals, acute/secondary care hospitals, local hospitals providing primary care, and specialised hospitals providing, for example, psychiatric services.

The healthcare sector can broadly be divided into: those that receive public financing (77%), including public-sector hospitals and some private hospitals, mostly not-for-profit institutions; and those hospitals that do not receive public financing, mostly for-profit private hospitals (23%). The public-sector hospitals bear the brunt of emergency work while the private hospitals not involved in public service undertake mainly elective work.

The majority of public healthcare funding comes through the social security system. It is made up of employer and employee compulsory contributions and includes all forms of income. The additional insurance is predominantly provided by not-for-profit associations as well as some profit-making commercial firms. Although the state contributes only 1% of the funding, mainly to support the uninsured, it exerts a significant influence by setting health policy and overseeing the negotiations of fees, charges and insurance premiums between the providers, consumers and insurers.

Hospitals (which consume 47% of healthcare funding) are funded through annual allocations from social security, although this is being replaced gradually by a payment-by-results system. The annual allocations will diminish each year as more services are funded via rates set nationally for diagnosis-related groups (DRGs). Inpatients are required to pay a nominal charge per day for the duration of their stay, which may be covered if they have taken out complementary insurance.

Patients have the freedom to choose the doctor and the facility in which they wish to be treated. They pay for their GP/outpatient consultation, drugs and laboratory tests, and are reimbursed by the social security system for a set percentage – for example, 70% of the standard social security rate for fees paid to doctors is reimbursed. The majority of the population takes out additional insurance for the remaining charge called the ‘co-payment’.

Those that are unemployed or on very low income are covered by a universal health insurance known as the Couverture Maladies Universelle.

With the social security system funded through employer/employee contributions, the economic slowdown and increasing unemployment in the 1970s started to put pressure on the healthcare system. And the past 25 years has seen increasing healthcare expenditure and deficits.

This has resulted in measures to limit demand, such as increasing co-payments and limiting supply by regulating the ratio of beds and equipment per head of population and access to medical training. Financial control was restricted to regulating prices and tariffs in private hospitals, and drugs and per diem rates in hospitals. This was gradually extended to include budget-setting and budget targets (ceilings). To balance public accounts, the Juppes reforms in 1996 made these budgets subordinate to the annual budget for health insurance expenditure set by government, with financial penalties for exceeding targets. The financial deficit in the French healthcare system is in the region of €4.7bn (£3.27bn) for 2007, with increasing expenditure in private outpatient care and private hospitals the main contributors.

Further healthcare reforms – Plan Hôpital 2007 – were implemented in 2004, which included the introduction of a prospective payment system to contain costs and reduce deficits by 2007. Some 10% of budgets were financed via this payment-by-results system in 2004, increasing to 25% in 2005, 50% in 2008 and plans for 100% by 2012. The DRG variant in use is the groupes homogenes de maladies, which was originally based on the former US Health Care Financing Administration DRGs with modifications. Currently, it is applied to short-stay elective services in medicine, surgery and obstetrics in the acute sector, but by 2012 it is expected to cover all inpatients and day-case activity. Teaching, research and public interest activities will continue to be funded via lump sums as will ambulatory and emergency care. The government may expand the use of DRGs to finance mental health and rehabilitation in the future.

As with other countries, the French healthcare system faces the challenge of an ageing population. Alcohol consumption and smoking have fallen (though smoking, in particular, remains an issue), but the incidence of obesity has increased. And although communicable disease rates have diminished, there has been an increase in chronic diseases. France, too, is dealing with greater patient expectations.

The general trend since 1971 to restrict numbers of medical students has led to predicted shortages in the workforce. There are also regional inequities in healthcare provision as doctors are allowed to choose where they practice, resulting in a concentration of medical staff in certain areas with a lack in others.

Currently, there are no waiting times or waiting lists. However, the increase in healthcare costs at a higher rate than that of inflation, the relentless advance of medical technology and pharmaceutical products, and the introduction of payment by results to drive efficiency and contain costs is a potential threat to the present state of affairs.

Kavita Gnanaolivu is commissioning and performance improvement accountant at Cardiff and the Vale NHS Trust. She attended the HFMA International Conference and visited the George Pompidou hospital as part of a study tour, part-funded by an HFMA bursary. For more information on HFMA bursaries, contact [email protected]

Capital Investment

The Hôpital Plan 2007 includes huge investments in infrastructure to counteract years of under-investment. As part of the hospital planning process, there has also been a massive reorganisation of services, as in the case of the George Pompidou hospital in the French capital Paris (pictured page 35, which replaced three older hospitals.

It specialises in cardiology and oncology and works in co-operation with a network of hospitals to provide the full range of services to the local population.

Along with its plush modern facilities comprising 90% single rooms, of which 15% have provision for a visitor, it also has 24 operation theatres, a DaVinci surgical robot, three particle accelerators (above right), two MRI scanners, three CT scanners, three gamma cameras and a PET scanner. ‘Turtles’ (robots) carry meals and linen to wards and ‘suitcases’ (conveyor belts) are used to carry blood samples to laboratories.

The unique patient file that is created for each patient and common to all hospitals is integrated into the hospital information system and connected to laboratories and appointment booking systems.

HFMA International Conference

The Paris-based HFMA International Conference 2007 was an opportunity for finance managers from countries including the UK, US, France and Australia to share healthcare experiences and lessons.

Professor Brian Edwards pulled together profiles of various European countries, which revealed the disparity in healthcare between Eastern European countries such as Latvia and countries in Western Europe.

The conference also highlighted the perpetual debate ‘Is healthcare an industry that needs to be managed or regulated?’ There is no right answer to this question as it is dependent on the age and culture in which we live. Hence there is a fundamental need for flexibility among finance professionals to stabilise the shifting sands.

Charles Tilley, chief executive of CIMA, believes we need to move from being a scorekeeper to a business partner and shift from transaction processing to decision support by increasing our business knowledge in line with our financial knowledge.