Yanick Labrie from the Montreal Economic Institute (MEI) points to evidence that despite an injection of new money, Quebec’s health system is even less responsive than it was a few years ago. He describes MEI research into the results achieved through greater private sector participation in health services in France. —Report from a presentation at the 2008 conference of the MUHC-ISAI

The underperformance of our health system in Quebec is hard to deny. In May, 2008, one of Quebec’s daily newspapers revealed that waits in emergency rooms had grown to more than 16 hours, the worst result since 2002-2003. The Fraser Institute found that the average delay between GP consult and appointment with a specialist grew from 7.3 to 19.4 weeks between 1993 and 2007. The MEI itself found that only 46% of operating rooms were in use each day.

These problems are worsening even as spending on health care sees a spectacular increase. Since 2000, Quebec government spending on health has increased by 65%, from $15.5 to $25.5 billion. It is clear that our problems require more than just injections of more money: We need to get more from the system for the money we put in.

Potential solutions are at hand and many have been suggested repeatedly in the different federal and provincial commissions, though no single measure can be expected to act as a miracle cure.

The idea that allowing greater private sector participation in the delivery of medically necessary health services within our public system would improve productivity has been floated in many reports, including the recent Castonguay report in Quebec. Minister of Health Philippe Couillard favoured the idea of giving the private sector a mandate to provide some surgical services in order to reduce wait times in the public system, and public-private partnerships between Montreal’s Sacré-Cœur Hospital and the private Rockland MD clinic were drawn up at the beginning of 2008.

The main debate over this course of action revolves around whether the private sector can actually improve productivity in the provision of health services and whether it can do so without threatening the principles of equity and universality.

The private sector in France

In trying to answer this question, the MEI looked at recent experience in France, where private sector participation in the delivery of health services has been allowed within an almost exclusively publicly financed system and where competition between service providers is encouraged. The MEI sought to answer the following questions in its examination of the French system:

  • What is the magnitude of private participation?
  • Are the principles of universality and accessibility compromised by private participation?
  • What effects are seen on the cost and quality of services?

The private sector plays a very important role in the delivery of health services in France, particularly in hospital services. In 2005, we counted 1052 private for-profit establishments, making up 37% of the French total. These establishments provide 91,191 beds, or 21% of the total. This is twice the size of the private for-profit sector in the US, which represents 15% of all hospitals and 12% of total beds.

Private for-profit French establishments, which specialize primarily in surgery and short-term care, care for about seven million patients each year and perform 60% of all surgeries. The private for-profit sector performs half of all digestive system surgeries, two out of five cardiac surgeries, three quarters of all cataract surgeries, and three out of 10 deliveries.

Strong private sector participation in France does not mean that access to services is only available to those with the means to pay for them. All French citizens seeking medical and hospital services are covered by public health insurance, which reimburses three quarters of all health care expenses and 92% of the cost of hospitalization. The remainder is paid by complementary insurance and by patients themselves. Since 2000, the basic health insurance program has been complemented by Complementary Universal Medical Insurance (or couverture médicale universelle), which provides 100% coverage to those whose income is less than 8644 euros (about $14,000) a year. Half of the 4.8 million beneficiaries of complementary CMU who need to be hospitalized choose private centres.

Universal access, no rationing

Unlike Canada, France manages to ensure universal access to care without rationing services through waiting lists. The French system accomplishes this not by expanding capacity so much as by employing mechanisms that encourage establishments to use the medical resources they have available to treat the greatest number of cases in the shortest possible time.

Mechanisms used to finance hospitals in France provide this type of incentive. Since 2004, performance-based funding — tarification à l’activité (T2A) — has gradually replaced historical funding in public hospitals. The main advantage of the system is that it allows all hospitals to be reimbursed according to the number and complexity of cases they treat, rather than through global budgets. Hospitals now see productivity rewarded with more money and are encouraged to constantly find ways to improve the quality of services.

The logic underlying competitive mechanisms is quite simple. When patients have absolute freedom to choose their health care provider, as they do in France, they tend to prefer centres with better service. And health centres seeking to generate a profit regard patients as a source of revenue. Private clinics and hospitals have no incentive to save money by neglecting the quality of services on offer because, in the end, substandard care leads to fewer clients and less revenue.

Competition in the hospital sector is one of the key factors behind France’s ability to keep growth in health spending at a reasonable level despite the aging of the population (the average annual increase in health spending per capita between 1995 and 2005 was just 2.3%, the lowest of all OECD countries except Germany). France generally achieves better health results than Canada, while maintaining greater control over cost increases. Competition pushes establishments to constantly improve the quality of their services and distinguish themselves from competitors, and forces them to innovate and find ways to reduce costs. The French system was ranked first among 191 countries in 2000 by the World Health Organization thanks to this characteristic.

The French experience shows that health systems, and particularly the hospital sector, can be public and universal even when care is not provided exclusively by public sector institutions and establishments. In a patient-centred system based on continual improvement, a diversified offering of public, private for-profit and private not-for-profit establishments can assure levels of flexibility and competition that greatly benefit all citizens.