Behavioral differences between public and private not‐for‐profit hospitals in the Italian national health service

Abstract

In this paper we attempt to identify behavioral differences between public and private not-for-profit hospitals, by exploiting the introduction of the DRG-based payment system in the Italian NHS during the second half of the Nineties. We estimate the technical efficiency of a sample of hospitals for the period 1995-2000 considering an output distance function, and adopting both parametric (COLS and SF) and non-parametric (DEA) approaches. Our results show a convergence of mean efficiency scores between not-for-profit and public hospitals, and seem to suggest that differences in economic performances between competing ownership forms are more the result of the institutional settings in which they operate than the effect of the incentive structures embedded in the different proprietary forms. We also observe a decline in technical efficiency, probably due to policies aimed at reducing hospitalization rates.

The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: A population-based investigation

“…2 Vitaliano and Toren (1996), Puig-Junoy (1998), Sloan (2000), Barbetta et al (2007)), not-for-profit hospitals exhibit the same level of technical efficiency than public ones, while private hospitals are less efficient (even if we observe that they tend to converge to the efficiency of the other two types at the end of the observed period). Third, private hospitals are involved in cream skimming at a much higher rate than public and not-for-profit ones.…”

“…15 Once we have estimated the hospitals' efficiency score (which is time invariant in the RE model and time variant in the TRE one), we take into account, as pointed out by previous contributions in literature (e.g. Barbetta et al (2007), Dafny (2005) and Silverman and Skinner (2004)), the impact of ownership on efficiency. Following Singh and Coelli (2001) we consider the estimated efficiency scores for public, private and private not-for-profit hospitals and we apply the Kruskal-Wallis test to check for significant differences.…”

“…In the dataset, about 54% of the 134 hospitals active in Lombardy are 17 We follow the classification adopted by Barbetta et al (2007), and consider as public both Aziende Ospedaliere (hospital enterprises) and Istituti di Ricovero e Cura a Carattere Scientifico Pubblici (public research hospitals); we classify as not-for-profit hospitals both Istituti di Ricovero e Cura a Carattere Scientifico Privati (private research hospitals) and Ospedali Classificati (hospitals run by religious bodies); private hospitals are the private accredited ones. As stated by Sloan (2000), the main distinction between private and not-for-profit organization lies in the distribution of accounting profits.…”

“…The PPS has been adopted, in place of incurred cost reimbursement, to improve the sector's efficiency by introducing financial incentives aimed at encouraging a more cost-efficient management of medical care. 1 However, under this reimbursement scheme, the hospitals' managers have also the incentives to adopt some opportunistic practices (Barbetta et al (2007), p. 82), which, in turn, may affect hospitals' technical efficiency.…”

“…The upcoding practice consists in classifying a pa-1 As stated by Barbetta et al (2007), many contributions, especially those investigating the US market, point out that a reimbursement system based on incurred costs does not provide incentives to both cost containment and price competition among hospitals.…”