Potential efficiency gains and expenditure savings in the Italian Regional Healthcare Systems

The paper aims to analyse the extent to which the adoption of best practice policies could improve the efficiency of Italian Regional Healthcare Systems (RHSs) and reduce public healthcare expenditures. By means of a stochastic frontier model we estimate the RHSs’ technical inefficiency and its determinants using a panel data of 16 regions over the period 2010-2016. We use the Essential Levels of Care (LEA) scores computed by the Ministry of Health as a proxy for the RHSs’ output and public healthcare expenditure as the main input. The level of inefficiency is a function of a set of variables summarising the organisational arrangements implemented by RHS policymakers. The results allow us to identify the best-practice policy, defined as the set of observable organisational arrangements that maximises aggregate efficiency. Adoption of the best-practice policy by all RHSs leads to potential efficiency gains of 1.5 per cent on average (from 93.4 per cent to 94.9 per cent) and to potential healthcare expenditure savings of 1.8 billion euro in 2016 (1.77 per cent of current expenditures).