Impact of the new resource allowance system for the french public hospitals IV FRENCH CHINESE BIOETHICS CONFERENCE « ETHICS AT HOSPITAL » Bordeaux - 8 & 9 th april 2010

Legal reminder: The hospital is a corporation The hospital owns its assets The hospital is responsible for its benefits State supervision Control by health insurance The hospital is responsible for its organization and its means Public procurement ( bids for each significant expense ) Work organisation The hospital is responsible for its outcome

The history of hospital funding Financing on a « day-in » basis until 1983: The misdeeds of funding for the day: each price comes from an in-house calculation Inflationnist system in term of length of stay Very strong heterogeneity of rates between regions System is questioned as not associated with acts

Historical reminder: global budget from 1983 Two systems for financing health care facilities in France: Public hospitals and PSPH (private acting as public) The « global budget » (Edict from 11 August 1983; till 2003), paid by 1/12 th and calculated based upon the number of n-1 year entries Private sector Pricing based upon the day-in and the performed acts (framed by the national quantified targets « OQN »)

The misdeeds of the global budget A logic of justification of the means by directors A ratchet effect: conservation of resources obtained without questioning the basis of the results System had frozen the inequalities between hospitals The establishment of PMSI has highlighted these obvious imbalances ( PMSI: program of medicalization of the information system: aimed at describing medical activity )

The PMSI as a complement to the funding model: the medicalization of the information system Created to describe the medical activity in hospitals Aims at better describing the produced medical activity; initially presented as an evaluating tool of practices A classification by HGP (homogeneous group of patients) Method of calculating stay rates: estimate of real costs derived from « pilot » hospitals The limits of this sample ( too small )

A budgetary reform: « Activity- based pricing » applies since 2005 The inversion of the logic of hospital funding: The credits should anticipate the projected level of revenue To encourage by the pricing policy to a convergence of costs Investment not simply conditioned to the approval of a project, but is now contingent upon the production of regular savings: self-financing capability

Is the « Activity-based pricing » an ideal attempt of financing? The objectives of the reform: Gradual introduction of the A-B pricing Increased medicalization of funding A stakeholder accountability A convergence of public and private fares The development of quality management tools and cost accounting Reform plan announced in the "Hospital 2007 » plan ( associated with an investment support )

DCFDCF Evolution of activity-based pricing T2A 10% T2A 25%T2A 35 % T2A 50 % T2A 100 % DACDAC DACDAC DACDAC DACDAC 100 % 90 % 75 % 65 % 50 % 0 % DGFDGF

Key steps in reform application : public and private sector with same rates 25 % 35 % 100 % 50 % 2012: Fully act-based invoicing to Helthcare system (and not on a monthly basis) 10%

Stays (days in) Outpatient clinic, emergency, technical acts Drugs, Devices (prothesis) Annual package Ticket modérateur, forfait journalier Healthcare insurance Direct payment and mutual insurance company Fix Variable part 100 % Invoices Detail of resource allowance

MERRI (Fixed) MERRI (variable) MIG AC Subsidiary activities Healthcare insurance External customers Annual fixed allowance Invoices Detail by subtype of resources DAF

Conclusion: pros of the reform A closer look at direct and indirect costs An attempt to anticipate revenue and a careful look at the management of the patient The goal remains the overall financial balance with the maintenance of all disciplines, including public health Integrating market share analysis leading to strong competition, even between public hospitals

Conclusion: cons of the reform A national price-volume regulation implies lower rates of stays (-3% in 2009 and 0% in 2010) Difficulties in anticipating revenue because of the rapid changes in groups of patients A protective status for staff of preventing effective management of staff costs. Hospitals: deficits resulting into debts; inability to invest Medical domains to be supported ( e.g. obstetric… clearly in deficit but highly needed )

Overall conclusion: future of the heath care system in France? The end of dual system, towards a single model of funding: hospitals run like american foundations? The French health system is often praised for its quality of care, hence the desire to continue the reform, wih some amendments