1. University of Paris- Dauphine
Managing
Healthcare
A comparative study between the healthcare system in
France and US
Teja Mysore
6-9-2016
2. 1
Executive Summary
Healthcare is a very complex issue involving many stakeholders and it requires a smooth
functioning between all these players to make the system work. Throughout history, there have
been many significant authorities in determining the over-arching model of healthcare. As such,
different countries have adopted different models and have tailored them to the needs of their
population.
US and France can be called two sides of the same coin. There are many similarities
between the two systems, but there are also significant differences. Ultimately, it would
behoove the two nations to learn from each other’s’ successes and challenges.
This paper first delves into the various players in the healthcare industry and gives an
overview of the goals of various nations and WHO-World Health Organization. We then look at
how France and US healthcare systems stack up against each other.
3. 2
Contents
Executive Summary......................................................................................................................... 1
1. Introduction ............................................................................................................................ 3
2. Basic Overview of Healthcare................................................................................................. 4
Components of Healthcare Industry........................................................................................... 4
Building Blocks of a Health System ............................................................................................. 6
3. Healthcare Models.................................................................................................................. 8
The Beveridge Model .................................................................................................................. 8
The Bismarck Model.................................................................................................................... 8
The National Health Insurance Model ........................................................................................ 8
The Out-of-Pocket Model............................................................................................................ 9
4. The French System.................................................................................................................. 9
5. The US System....................................................................................................................... 10
6. France v/s USA ...................................................................................................................... 11
Distribution of Funding Sources for Personal Health Care ....................................................... 12
7. Conclusion............................................................................................................................. 14
References .................................................................................................................................... 15
Table of Figures
Figure 1: Pictorial depiction of various aspects of Healthcare (Cognizant, 2014).......................... 4
Figure 2: Inter-relation between the components of Healthcare industry (Vellanki, 2016).......... 6
Figure 3: The six building blocks and their interaction (Organization, 2007)................................. 7
Figure 4: Table comparing the 4 healthcare models (Reid, We're Number 37!, 2009) ................. 9
Figure 5: Distribution of Funding Sources for Personal Health Care (Kervasdoué, 2000) ........... 12
4. 3
1. Introduction
Healthcare, also sometimes referred to as health care system or health system, is the
organization of people, institutions, and resources that deliver health care and related services
to meet the needs of people.
The World Health Organization defines health systems as follows:
A health system consists of all organizations, people and actions whose primary intent is
to promote, restore or maintain health. This includes efforts to influence determinants of health
as well as more direct health-improving activities. A health system is therefore more than the
pyramid of publicly owned facilities that deliver personal health services. It includes, for
example, a mother caring for a sick child at home; private providers; behavior change
programmes; vector-control campaigns; health insurance organizations; occupational health
and safety legislation. It includes inter-sectoral action by health staff, for example, encouraging
the ministry of education to promote female education, a well-known determinant of better
health. (Eva A Rehfuess, 2009)
As human population continues to make great strides in healthcare, humans are living
longer than ever and are able to reproduce at a much faster rate than ever in history. This
brings us to the cusp of issues that face us today- providing adequate healthcare to all sections
of the population, and by corollary, should the rich pay for the healthcare of the poor.
These aspects make healthcare management a very complex issue involving many
stakeholders and it is imperative to understand the workings of different models and see where
value can be maximized and identify trends and larger industry movement in the healthcare
5. 4
field. This report aims to give a brief overview of the various players in the healthcare industry,
compare and contrast the system and hence challenges in the French and US healthcare.
2. Basic Overview of Healthcare
As a consumer of healthcare, one is exposed to a very limited aspect of the entire industry.
There are many moving pieces that make the entire system work
Figure 1: Pictorial depiction of various aspects of Healthcare (Cognizant, 2014)
Components of Healthcare Industry
In very broad strokes, there are 3 main components of the healthcare industry:
1. Provider: defined as a doctor of medicine or osteopathy, podiatrist, dentist, chiropractor,
clinical psychologist, optometrist, nurse practitioner, nurse-midwife, or a clinical social
worker who is authorized to practice by the State and performing within the scope of
their practice as defined by State law, or a Christian Science practitioner. A health care
6. 5
provider also is any provider from whom the University or the employee's group health
plan will accept medical certification to substantiate a claim for benefits.
E.g.: Doctors, Hospitals, Clinicians, etc.
2. Payer: defined as entities other than the patient that finance or reimburse the cost of
health services. In most cases, this term refers to insurance carriers, other third-party
payers, or health plan sponsors
E.g.: Insurance companies, Employers
3. Patient (Consumer): defined as any actual or potential recipient of health care, such as a
patient in a hospital, a client in a community mental health center, or a member of a
prepaid health maintenance organization. (Vellanki, 2016)
E.g.: You and me, sections of populations
There one other major stakeholder in this equation
4. Government: the role of government varies from country to country and is an evolving
entity. Some of the possible roles that exist around the world are: Minimal Role, Safety
Regulator, Purchaser and Partial Provider of Health Care Services, Marketplace
Regulator, Primary or Sole Provider of Health Care, or some combinations of these roles
There are certainly other important constituents, such as pharmacy benefits managers
(PBMs) or benefits managers, but these four groups are the tent poles that define the
healthcare industry.
7. 6
Figure 2: Inter-relation between the components of Healthcare industry (Vellanki, 2016)
Building Blocks of a Health System
In order to compare and try to improve a system, one must first analyze the current
systems. WHO has laid out 6 guiding principles, called the building blocks, on the basis of whose
performance, various systems are compared. A health system consists of all organizations,
people and actions whose primary interest is to promote, restore or maintain health.
1. Good health services are those which deliver effective, safe, quality personal and non-
personal health interventions to those who need them, when and where needed, with
minimum waste of resources.
2. A well-performing health workforce is one which works in ways that are responsive, fair
and efficient to achieve the best health outcomes possible, given available resources
and circumstances. I.e. There are sufficient numbers and mix of staff, fairly distributed;
they are competent, responsive and productive.
8. 7
3. A well-functioning health information system is one that ensures the production,
analysis, dissemination and use of reliable and timely information on health
determinants, health systems performance and health status.
4. A well-functioning health system ensures equitable access to essential medical products,
vaccines and technologies of assured quality, safety, efficacy and cost-effectiveness, and
their scientifically sound and cost-effective use.
5. A good health financing system raises adequate funds for health, in ways that ensure
people can use needed services, and are protected from financial catastrophe or
impoverishment associated with having to pay for them.
6. Leadership and governance involves ensuring strategic policy frameworks exist and are
combined with effective oversight, coalition-building, the provision of appropriate
regulations and incentives, attention to system-design, and accountability. (WPRO,
2016)
Figure 3: The six building blocks and their interaction (Organization, 2007)
9. 8
3. Healthcare Models
All over the world, there are four main healthcare models
The Beveridge Model
Health care is provided and financed by the government through tax payments, just like
the police force or the public library. Most doctors are government employees. Even the few
private doctors get paid by the government.
You never get a doctor bill. These systems tend to have low costs per capita, because
the government, as the sole payer, controls what doctors can do and what they can charge.
The Bismarck Model
It uses an insurance system — the insurers are called “sickness funds” — usually
financed jointly by employers and employees through payroll deduction. health insurance plans
have to cover everybody, and they don’t make a profit. Doctors and hospitals tend to be
private.
The National Health Insurance Model
This system has elements of both Beveridge and Bismarck. It uses private-sector
providers, but payment comes from a government-run insurance program that every citizen
pays into. Since there’s no need for marketing, no financial motive to deny claims and no profit,
these universal insurance programs tend to be cheaper and much simpler administratively
10. 9
The Out-of-Pocket Model
Most of the nations on the planet are too poor and too disorganized to provide any kind
of mass medical care. The basic rule in such countries is that the rich get medical care; the poor
stay sick or die. (Reid, We’re Number 37!, 2009)
The Beveridge
Model
The Bismarck
Model
The National
Health Insurance
Model
The Out-of-
Pocket Model
single payer national
health service
non-profit “sickness
funds” or a “social
insurance model”
single payer national
health insurance
“market driven”
health care
UK, Spain, New
Zealand, Hong Kong,
Cuba
Germany, France,
Belgium, the
Netherlands, Japan,
Switzerland, Latin
America.
Canada, Taiwan,
South Korea
Sweden, in some
aspects. Rural
regions of Africa,
India, China and
South America
Figure 4: Table comparing the 4 healthcare models (Reid, We're Number 37!, 2009)
4. The French System
The French system boasts of features such as: There are very short wait times. There is
significant assurance of quality care while keeping the costs relatively low, and simplified
administration. There is also very tight regulation of insurance, often sold on a non-profit basis,
not a necessary condition though. All claims paid. Period. There is no concept of challenging a
claim. And perhaps the most significant factor, there is no exclusion for pre-existing conditions,
11. 10
a change that Obamacare tried to bring. The state fixes prices for most procedures but there is
encouragement of private hospitals and physician practices.
On the flip side, because of embracing a socialized system, there are greater costs and much
less efficiency. While physicians benefit from a free education, and have virtually no
administrative overhead costs, and (very significantly) are rarely sued, they also earn less than
their American counterparts.
5. The US System
The US has elements of all 4 basic healthcare models in the very fragmented national health
care apparatus. When it comes to treating veterans, the US is Britain or Cuba. For Americans
over the age of 65 on Medicare, US is Canada. For working Americans who get insurance on the
job, Germany.
For the 15 percent of the population who have no health insurance, the United States is
Cambodia or Burkina Faso or rural India, with access to a doctor available if you can pay the bill
out-of-pocket at the time of treatment or if you’re sick enough to be admitted to the
emergency ward at the public hospital.
The United States is unlike every other country because it maintains so many separate
systems for separate classes of people. All the other countries have settled on one model for
everybody. This is much simpler than the U.S. system; it’s fairer and cheaper, too.
12. 11
6. France v/s USA
France USA
Disability-Adjusted Life Expectancy 3 24
Distribution of Health in the Population 12 32
Fairness in Health Care Financing 6 54
Responsiveness 16 1
Health Care Spending per capita 4 1
Overall Rank 1 37
The WHO rankings, however, do not mean that the French system is unequivocally superior
to the American. In fact, both systems could profit from an understanding of the other’s
strengths.
France and US have the same basic principle of medical care- the idea of Private Health Care.
Other similar principals are:
- Patient choice of physician
- direct access to specialists
- patient payment of fees (with subsequent reimbursement)
- physicians’ freedom of diagnosis and prescription
- fee for service
- ultrahigh levels of medical confidentiality
13. 12
Distribution of Funding Sources for Personal Health Care
Figure 5: Distribution of Funding Sources for Personal Health Care (Kervasdoué, 2000)
U.S. private insurers account for nearly three times the share of total expenditures than
their French counterparts do (35% versus 12%) and Americans pay more out of their own
pockets than the French (17% versus 13%) for personal health care spending. The federal and
state governments in the U.S. play a substantial role in health care, mostly through Medicare
and Medicaid (43%). But even this large fraction is dwarfed by France’s quasi-public insurance
funds, which account for almost three-quarters of total health care spending.
14. 13
Access constitutes the most striking difference between the American and French health
care systems. 16% of the U.S. population lacks health insurance altogether and many possess
insurance with such high deductibles that they forego medical needs for financial reasons. A
large number of uninsured puts additional strains on a health care system. In order to
recuperate the costs of uncompensated care, providers raise the price of services for the
insured, thereby creating a vicious cycle, since higher insurance premiums ultimately lead to
more uninsured patients. (Dutton)
15. 14
7. Conclusion
Despite significant differences in the nature of the systems and the over-arching aim of the
medical field, the US and French systems share several common principles. The two nations
must leverage these similarities and foster an atmosphere of sharing of ideas and policy.
French insurance companies and government officials should seek the latest innovation and
technological advancement in medicine and the business of medicine. They must also focus on
efficient provider management tools. Holding down doctor’s fees, an aspect of the system that
France is so dependent on, is not a sustainable model.
The US senate can be inspired by the successes of France- reduction of administrative and
operational costs, particularly of insurance and France’s achievement of universal coverage for
its citizens.
Incredible breakthroughs in science and especially pharmacology, have ushered a new
era of human life expectancy and lifestyle in the world, especially in the western world.
However, the advancements will not translate into ground reality without effective measures to
contain the ever-increasing medical costs.
16. 15
References
Cognizant. (2014). Healthcare Industry in Transition Analysis: Overview. Retrieved from
Youtube: https://www.youtube.com/watch?v=M7rMg351NtM
Dutton, P. V. (n.d.). Healthcare in France and The US: Learning From Each Other. THE
BROOKINGS INSTITUTION.
Eva A Rehfuess, N. B. (2009). More health for your buck: health sector functions to secure
environmental health. Retrieved from World Health Organization:
http://www.who.int/bulletin/volumes/87/11/08-059865/en/
Kervasdoué, J. d. (2000). Le Carnet de santé de la France en 2000. Blue Cross Blue Shield
Association, 30.
Organization, W. H. (2007). Strenghtening Health Systems to Improve Health Outcomes.
Geneva: WHO Document Production Services,.
Reid, T. (2009). We’re Number 37! Physicians for a National Health Program.
Reid, T. (2009). We're Number 37! Penguin Press.
Vellanki, M. (2016). Who Are The Key Players In The Healthcare Industry? Retrieved from
Mahesh-vc: http://www.mahesh-vc.com/blog/understanding-whos-paying-for-what-in-
the-healthcare-industry
WPRO. (2016). The WHO Health Systems Framework. Retrieved from World Health
Organization- West Pacific Region:
http://www.wpro.who.int/health_services/health_systems_framework/en/