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New prospects for the future Princess Grace Hospital

    I –The current situation

    The decision to build a new Princess Grace Hospital was made in 2006. This decision has since been confirmed.

    Following a bidding process, a procedure was initiated which resulted in the selection of the project put forward by the Architect Claude Vasconi, working in conjunction with the Iosis Group. The architectural proposal of this renowned professional, now deceased, was presented on 11th April 2008. The project of the new hospital itself was based on a medical programme decided upon in 2005.

    From a contractual point of view, the project is now at a decisive stage as the Government has to decide whether a pilot study should be launched, which would fully commit it to carrying out the operation.

    II –Re-assessing the project, confirming a goal

    Before activating this essential phase, the Government, perfectly aware that the increased cost presented a major obstacle for its implementation, wished to ensure that all the criteria necessary for the launch of the operation were still met.

    The following observations have been made:

    - The financial context in which the current project was devised has significantly changed. In addition to the consequences of the international crisis pushing each country to try and optimise their health expenditure, we must also take into account the accelerated time frame for the implementation of the T2A system (cf. appendix) (T2A = activity-based payment system) in France which, in the long term, will have a significant financial impact on the resources and running of the hospital. Shorter hospitalisation periods and the new reimbursement system are likely to generate a loss of revenue presently estimated at approximately 30 m€/year; it should be noted that 60% of all CHPG patients belong to the French healthcare system.

    - The medical programme set up in 2005 was in response to a public health strategy established at that time, which is no longer in line with our current vision of the size of our hospital. In cooperation with the major neighbouring French hospitals, we now need to focus on satisfying the public health needs of Monegasques and residents of the Principality, in addition to the population of our close environment, namely a hundred thousand inhabitants. This goal shall be accompanied by the development of a certain number of carefully chosen and selected centres of excellence.

    - In practical terms, a review of the medical project should enable certain initial options to be rationalised, to take into account any constraints resulting from the switchover to the T2A system, to limit construction and running costs, whilst at the same time continuing to deliver high-quality medical services to patients.

    As a result of which, all the players involved have come to the decision that the current project is over-ambitious, since it was based on a medical programme that is no longer applicable today and was established in a financial context that has changed significantly.

    III – A fundamental adjustment: redefining the medical programme.

    An overall re-evaluation of the medical programme is therefore called for. In conjunction with all the stakeholders involved and the hospital’s management, the Department of Social Affairs will carry out this urgent mission, in order to bring it to a successful conclusion within the next 9 months (by spring 2011).

    The Government has therefore come to the conclusion that it would be not be reasonable in the current economic climate and in view of the observations made, to embark upon a programme of over 705 M€ (inclusive of all taxes) which is no longer in line with the new operational rules for a hospital imposed by the switchover to the T2A system and which would lead to a structural deficit incompatible with the healthy management of public finances.

    The Government has therefore decided not to order the pilot study.

    IV – Consequences and prospects

    The aim of the redefined medical programme is to define the basis for building a new hospital of a smaller capacity and of greater functionality compared to the Vasconi/Iosis project.

    Based on this new medical programme, the most suitable location for the construction needs to be decided upon.

    -Reconstruction on the current site of the CHPG.

    This is one of the working hypotheses, although cohabitation between an operational hospital and one under construction poses great difficulty.

    Consequently we need to determine whether the new constraints set forth by the medical programme are compatible with a redefined Vasconi/Iosis project or whether a procedure for a new architectural project needs to be launched.

    At this stage, the option of rebuilding in situ should not be dismissed, but the difficulties in running our health facilities for several years under these conditions lead us to consider other solutions. Should the latter be feasible, this would be preferable as it would prevent both patients and staff having to undergo significant disturbance and pressure over several years.
    -Alternative solutions.

    After noting the impossibility of using the former SNCF land whose layout is not suitable, two alternative solutions can be considered:

    -The first would consist of using the Testimonio land,
    -The second that of the Annonciade 2 which will become available once the technical college and Charles III school have been moved to the former SNCF land.

    The initial findings of the technical services lead us to believe that the construction of the new CHPG on one or the other of these sites can be considered without any major changes to the delivery time. The lack of constraints associated with the necessity to consider a working hospital, would enable the new hospital to be built in a shorter time period. The target delivery date would be fixed, depending on the site, for 2018/2020, which is not very different from that of the initial project.
    * * *
    The Government’s decision is a responsible decision. The aim of the approach taken, which consists of a prior redefinition of the medical programme, is to build, in a reasonable time scale, a modern hospital combining high quality care and strict management, fully adapted to the needs of the local population. The building costs will be more in line with the current financial and budgetary situation The running costs for the years to come will be supportable by the public finance.

    V – State housing: meeting commitments

    The implementation of this strategy and the solution mentioned regarding the use of the Testimonio land will result in the abandonment of the previously planned Agaves 2 operation. In order to compensate for the 100 state-owned apartments which would have been delivered within the framework of this operation, the Government will immediately launch two public construction programmes which will lead to the delivery in a similar time schedule, i.e. by 2013, of 120 state housing units, namely 20 more than originally planned.

    In order to do this:

    - the building of the educational media centre planned on the former SNCF land in the continuity of the Rainier III block, already devoted to state housing, will be shifted and moved so that 80 state apartments can be delivered.

    - the construction of forty or so additional state housing units on the two Pasteur HBM (council housing) blocks, i.e. the Tamaris and Jasmin buildings, which have been vacated by their occupants, will also be launched straight away.

    Consequently the state housing programme will be delivered in its entirety within the set deadlines.
    VI – Traffic and parking: immediate action

    Although the future of the Princess Grace Hospital is important, its current running remains a priority for the Government.

    Access and parking problems have been pointed out by both the staff and visitors.

    Aware of the need to make significant improvements in this area, the Government has decided:

    -in the very short term, namely in July this year, to facilitate access to parking for the CHPG. As such, a special lane will be specifically created.

    -as part of the moving plan which will be implemented within the CHPG, to reserve a large number of parking spaces, by the end of 2012, for staff members that will be delivered in the Saint Antoine designated development area, which will enable the same number of spaces to be made available on site for visitors.
    Activity-based payment system, known as T2A


    Ä This is one of the three systems to finance a hospital. The two others are: per diem fee (currently applicable to the CHPG and no longer used in France since 1984) and overall budget (fixed yearly allocation, no longer used in France since 2004).
    Ä The T2A system was applied to French hospitals for the first time in 2004, as the French Social Security did not wish to reimburse days of hospitalisation or pay an overall budget blindly, but instead pay the hospital according to: the type, number and complexity of the pathologies treated
    Ä The T2A system is a tariff-based payment system as well as an activity-based payment system. It encourages reduced “production costs” for hospital activities by remunerating the latter with rates established by France, so as not to exceed an overall level of pre-determined health insurance expenditure each year.


    Ä The T2A system concerns hospitalisation activities in Medicine, Surgery and Obstetrics (not Geriatrics or Psychiatry, at least not for the moment).
    Ä Illnesses are classified according to type in close to 2,300 homogenous groups of patients (GHM), i.e. pathologies which have similar characteristics from a medical and economic point of view (cost of treatment).
    Ä For a stay for a patient classified in a given homogenous group of patients, a hospital is reimbursed according to a rate fixed by the French authorities in the same way as for all the hospitals in the neighbouring country. If in a given year, the volume of hospital stays increases to such an extent as to compromise the annual hospital expenditure budget that the Social Security can finance, then the reimbursement rates may be decreased.
    Ä Certain hospital costs are financed separately in the T2A system; firstly, the most expensive drugs and surgical prostheses and secondly, missions of general interest that a hospital fulfils without this being able to be quantified or priced during a patient’s stay: this may concern for example, public service missions, the impact of the social difficulties for some patients or teaching, research and medical innovation.

    What are the consequences?

    Ä Reduced revenue: The T2A system is significantly less remunerative than the per diem system.
    Ä An impact on the hospital’s resources and expenditure: The T2A system reimburses hospitals according to the standard costs defined for each pathology group (GHM rates) and not the real cost incurred for each hospital. Consequently, this financing system forces hospitals that are used to a high level of resources to spend less.
    Ä An impact on the hospital’s organisation: the T2A system encourages reduced hospitalisation periods. If a stay is longer than that which is strictly necessary from a medical point of view, the hospital will only be paid the standard reimbursement rate corresponding to the pathology treated, and will have to incur any extra costs relating to the extended hospitalisation stay.

    In short, the T2A system is a financing system that gives fewer resources to hospitals than the per diem pricing system. France, which applies the system to its own hospitals, would like stays concerning French patients hospitalised at the CHPG to be reimbursed to the latter by the French Social Security at the same rates as French hospitals (all the more since they represent approximately 62% of the CHPG’s hospitalisation revenue). French hospitals experienced a significant increase in their deficit upon the switchover to the T2A system: the same will apply to the CHPG.
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