14. The public hospital crisis in France: The failure of a deleterious reform
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The purpose of the French hospital reform was to introduce a lump-sum payment per stay to improve hospital efficiency. However, its actual implementation has distorted the targeted mechanisms. Instead of computing rates based on a yardstick competition mechanism, the regulator decided to reduce unit payments if volumes exceeded an overall budget cap fixed for all hospitals at the national level. This has facilitated significant cuts in hospital expenditures, along with creating deleterious incentives to provide more hospital care and more intensive procedures.
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