French government puts on the squeeze

The French government has said it wants to limit rises in its €185bn healthcare budget to 1.75% a year,  down from 2.5%. Meanwhile, all sectors are on tenterhooks ahead of the announcement of the new healthcare tariffs in early March 2014. None are so desperate as the private hospitals. Their trade association, FHP-MCO, claims the key MCO (Medicine, surgery and obstetrics) tariff has risen by a total of just 1.17% over the entire eight years to 2013. That is against general inflation for the period of 11.82%. We hear that the state now wants to CUT the tariff by 0.5-1% !

Stephan Pichon at Your Care Consult reckons that the planned limit of 1.75% on healthcare spending is achievable. “The public sector is demonstrably inefficient and France has been slow to switch to generics, so it should be possible to achieve this.” The reduction is part of a bigger plan to cut public expenditure by €50bn over three years, which should reduce public sector expenditure of GDP from 57% to around 53-54%. The Cour des Comptes estimates €5bn could be saved by raising the proportion of outpatient surgery from the current level of 40 per cent of operations to the European norm of 80 per cent. But with health sector inflation notoriously difficult to control, annual spending in real terms will continue to grow by 2.4 per cent, according to government targets.

In any round of cuts, private sector players can expect to be squeezed until the pips squeak. Labs and homecare are likely to be hard hit.

We hear from a reliable source that the government told the FHP-MCO, the French trade association, which represents acute private hospitals, that it wanted to CUT the tariff in January by 0.5-1%. We are told that negotiations are now taking place. FHP-MCO wants a 2% rise, pointing out that the private sector MCO under-fulfilled its allocated budget by €240m in 2013. It has threatened to drop nurse training in all private hospitals, which together account for half of all surgical procedures in France.

Meanwhile, it is clear that many of the regional health agencies which should coordinate care, are routinely favouring public hospitals at the expense of the private sector. Christophe Bouteloup, head of corporate affairs at Vitalia, the big private hospital chain, has been driven to vehemently expressing his disgust to the regional press after the ARS at Saint Brice backtracked on plans.

The hope was that partnerships which brought together public and private hospitals under one building would see more cooperation and efficiency. Bouteloup told us that while this used to happen in the rural areas where Vitalia is strong, it has stopped since the Hollande government gained power. “We’ve got four projects and none of them have suceeded so far since then.” He is particularly angry about St Brice, where the plan was that the state would spend €7m on a joint project, which would deliver a saving of €500,000-1m a year. He says doctors in the public hospital felt threatened, so, at the last moment the project was shelved and the ARS agreed to spend €10m on more infrastructure in the public hospital

So bad is the situation that the FHP-MCO says it is planning to take some of the regional agencies to the Autorité de la Concurrence, France’s national competition regulator.

Pichon says that the private sector responded early to the shift to ambulatory. He notes that in Dijon, Generale de Sante is replacing its three local private hospitals with a single unit with 300 beds. “It is not building a cathedral-style building but something which is capable of handling very large volumes of ambulatory operations.”

He (and others) say that this is the future. Capio France moved early to day surgery and has found that although tariffs are far lower it can make higher margins.

Our Analysis: At one level the French state is right to put the boot in. UK and German payors could learn a lot from how it handles private sector players. But there is no getting away from the invidious position that private hospitals face as they compete with the feather-bedded job creation schemes that make up much of the French hospital system.

Labs and homecare, the other two big sectors of French private healthcare, are fortunate in not facing such unfair competition – the public outpatient lab sector barely exists and homecare is almost entirely in the hands of private and not for profit players.

In the Netherlands, the UK and Germany private sector management is being brought in to privatise or run failed public hospitals. Vitalia and other private hospital groups constantly suggest such experiments in France. But the sad truth is that nothing will happen under the present government. Nor is it clear that the right is more pro-private sector. The National Front, in particular, is very statist.

The only ray of comfort is that the state is dependent on the private sector for 6 out of ten operations and that surveys show that the French want to continue to have the choice they get from the mixed system.

Source: Healthcare Europe / February 21st 2014

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