Hospital reform in France: We must stop penalising private non-profit hospitals, says a new study from the Institut économique Molinari

Media release / June 30, 2010

Paris, 30 June 2010 – According to French Health Minister Roselyne Bachelot, public hospital reform is on the right track. Public hospitals, presented as the sole custodians of “public hospital service,” are generally contrasted with private for-profit clinics. But there is a third category of establishments – private non-profit hospitals – that provide this “public service” in much the same way as public hospitals.

Although private non-profit hospitals are managed less rigidly and are more likely to adapt to the future health care needs of society, they are generally ignored in public debate, at the expense of French patients, states a new study from the Institut économique Molinari.

Serious and prestigious establishments

In terms of their capacity to receive patients, they account for nearly 28% of all hospital establishments, 14% of beds and 18.4% of places in France (2007).

On average, they even treat more serious cases than a great number of public hospitals!

They are also at the leading edge of medical practice in France. In the annual ranking of the magazine Le Point, private non-profit hospitals come out on top in a number of specialties. For example, two of them, the Institut mutualiste Montsouris and the Groupe hospitalier Diaconesses/Croix-Saint-Simon, rank first in three different specialties.

Establishments that are penalised

These performances are achieved despite regulatory obstacles that have put private non-profit hospitals at a disadvantage in recent decades compared, in particular, to public hospitals.

-Social security contributions that are 27% higher: With labour costs generally accounting for about 70% of a health care establishment’s total costs, private non-profit hospitals are penalised by compulsory social security contributions that are higher than those applying to public hospitals. This contribution differential averages 27.1% for all private non-profit hospitals together in the employment of medical staff, for example.
-Deferral of charges (i.e., covering expenditures with appropriations for the next fiscal year): Commonly practised at least until 2006 by public hospitals, this was prohibited to private non-profit hospitals. Nearly 2.2 billion euros in charges were deferred altogether between 2002 and 2005. This enabled public hospitals to go further into the red without having to make cost or staff cuts.

These obstacles have impeded the development of the private non-profit hospital sector in France. Without these obstacles, their share of the health care supply would be more substantial and would not be declining to the benefit of public hospitals in need of reform.

The cases of Alsace and the Netherlands

The only exception to this situation is Alsace where, in 2004, they accounted for more than half of hospital establishments.

The role played by private non-profit hospitals is even greater in the Netherlands, where 90% of hospitals fall into this category. The Dutch example also shows the dangers of public cost containment in health care spending for private non-profit hospitals just as clearly as the opportunity they present in achieving an authentic health care reform, like the one initiated in 2006.

Prior to this reform, private non-profit hospitals bore the full brunt of fallout from public cost containment, which caused them to lengthen waiting lists for patients. The cost in loss of well-being, income and productivity as well as long-term handicaps, etc., was estimated at 3.2 billion euros a year, or 6.1% of the country’s total health care spending that year!

Abolition of the existing public health insurance monopoly covering two-thirds of the population – a taboo subject in France – along with the responsiveness and flexibility of private non-profit hospitals provided, on the contrary, for a reduction in waiting lists, which are no longer perceived as a problem. This was achieved even with total health care spending increasing less rapidly after the reform (up 5.3% per year on average from 2006 to 2008) than before the reform (up 7.6% annually from 1998 to 2005).

Private non-profit hospitals provide more flexible management and do not suffer from the rigidities implied by civil service status. The government should give priority to ensuring that all obstacles choking them in France are removed, the Institut économique Molinari concluded.

Titled Private non-profit health care establishments in France, the study is available at: https://www.institutmolinari.org/non-profit-health-care-hospitals,970.html

The Institut économique Molinari (IEM) is an independent, non-profit research and educational organization. Its mission is to promote an economic approach to the study of public policy issues by offering innovative solutions that foster prosperity for all.

Information and interview requests:

Cécile Philippe, PhD

Director

Institut économique Molinari

+33 6 78 86 98 58

cecile@institutmolinari.org

www.institutmolinari.org