Leading Indicators for Healthcare Consulting: Looking to France for Changes in the U.S.

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December 9, 2012 by Mark Chanel

By Mark Chanel, MSc in Management Consulting 3 student

The healthcare systems of France and the United States share certain similarities, but can also be radically different. This makes it difficult for Management Consultants to apply a cookie cutter approach when discussing the two, or when looking for patterns. However, trends in France, with a centralized payer system, should be seen as leading indicators that consultants should take into account and prepare for when looking at the US market.

For years, Healthcare Consulting in the United States has focused on finding ways to increase revenues through innovation or price increases. This has contributed to a system where the total health expenditure per capita is the highest in the world, with little evidence to show that Americans are actually any healthier. In comparison to France, the US spends nearly double the amount on Healthcare per person.

Healthcare consultants in the US are aware of the trend, along with changing demographics due to an aging population and political realities due to “Obama-care”. This is one of the reasons so many Management Consulting reports out of the US are focused on efficiency as sources of increased profits, and not on increased Revenues.

In France, the need to control Healthcare costs is also important. While there are a number of initiatives to accomplish this, most of the burden seems to fall on the pharmaceutical industry where there is a push to not only reduce the amount of prescription medications taken, but also the price the government is willing to pay for drugs.

Heavy regulation and government involvement make these types of broad changes possible in France. However, that doesn’t mean that the Healthcare Consulting industry in the United States cannot prepare for similar pressures and trends. Prescription drug prices in the US are the highest in the world with more people entering the medical system every day.  Does anyone really believe that this trend can continue? Pricing pressures on prescription drugs will have a profound impact across the US Healthcare system that Hospitals, Insurance Companies, and Pharmacies need to prepare for now.

Another leading indicator out of France would be the desire to tackle, or at least adjust, the Fee for Service model that exists in the Hospital System. In France, Public and Private Hospitals have often been reimbursed for each service they provide, la tarification à l’activité (T2A). The new Health Minister, Ms. Marisol Touraine, has called the effects of this system “inflationary” and has vowed to adjust the structure, much to detriment of Private Hospitals who traditionally operate as profit centers. If successful, how will this change the Healthcare Consulting industry in the United States?

The healthcare industry will undergo extreme change in the years to come. Both France and the United States are on paths to austerity where they are trying to cut costs without sacrificing quality. If France is able to further widen the healthcare cost-per-person gap that exists with the United States, Management Consultants need to seriously consider how to apply those changes in the United States. If the United States is able to develop new service models, without the benefit of a central payer, those changes also need to be examined. The role a Management Consultant on both sides of the Atlantic is to draw conclusions from two divergent systems and develop models to help their clients. The data and methodology is there. All we need to do is figure out how to apply it in innovative ways.

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