REIMBURSEMENT SYSTEMS AND QUALITY OF HOSPITAL CARE: AN EMPIRICAL ANALYSIS FOR ITALY

There is an ongoing debate about the effect of different reimbursement systems on hospital performance and quality of care provided. Given that quality cannot be observed directly and defined through only one indicator, in the literature several aspects and outcome measures are proposed, such as Acute Myocardial Infarction (AMI) mortality, Congestive Heart Failure (CHF) mortality, 30 days readmissions for some diagnosis. Despite the many empirical studies investigating the issue of quality measurement, many are the questions that still remain open, mainly concerning the most appropriate indicator. The widespread adoption of different hospital prospective payment systems (PPSs) has also provoked an intense theoretical debate on their effects, since the level of competition in the system and, above all, the quality of care provided could be influenced. The trade-offs between incentives for efficiency and risks of opportunistic behavior by providers, that erode quality of care, have been especially analyzed. In this paper, we aim at contributing to the literature on the effect of different hospital payment schemes on patient outcomes. The paper focuses on the Italian National Health Service (Servizio Sanitario Nazionale, SSN), which seems to be a particularly interesting case, when hospital reimbursement mechanisms are considered. The Italian SSN has been subject to a considerable decentralization process, characterized by the devolution of responsibility to regional governments: therefore, Regions have introduced different organizational and financing models. Great variability exists in the way tariffs are used at a regional level, as Regions have chosen their tariff schemes in accordance with the specificities of health care providers. The paper investigates the variability of quality outcome data across Italian hospitals and the role played by the prevailing payment systems. An empirical analysis of the Italian hospital system is carried out using administrative regional data on mortality rates and hospitalization (and readmissions) for AMI, CHF, stroke, and Chronic Obstructive Pulmonary Diseases (COPD) in the years 2009-2010. The results confirm a significant impact of the methods of financing hospitals (national vs. regional DRG) on the selected health outcomes and highlight the opportunity to proceed to more detailed analyses (for example, considering quality variability at either the provincial or local health unit level).