• The increase in conflicts of interest due to the ‘dual practice’ system: physicians practicing both in public and private settings, channelling patients according to economic convenience;
  
• The inadequacy of management systems (information systems, accounting systems, planning, etc.);
  
• Increasing inequalities. Until the beginning of the 1990s, health expenditures were significantly different at regional levels, ranging on annual basis from a per capita spending of >700 in northern regions to <400 in some southern regions. These went along with an uneven distribution of facilities, since >70% of high-specialty services were concentrated in the north of Italy. Consequently, patients’ migration from south to north was common for inpatient and specialist outpatient care.
  

The aim of this paper is to assess how these reforms have changed the INHS, to what extent they concurred to improve the system, where they failed and which issues are still on the agenda. To do so, we run through the recent history of INHS and propose an interpretative framework to understand the grounds for its light and shade results.

Basis for the analysis is triple. The study draws from research, literature review and action-research and field investigations conducted over the last 10 years in the INHS. All research was aimed at understanding the gap between implemented and expected changes, given the framework set by principles and guidelines of reforms. The research is reported in Table 1.

Regarding action-research, these refer to process consultations delivered to health organizations, public and private, in different Italian regions: most of them concerned providing advices and support to top management involved in major organizational development processes.^f

	Promises and expectations of change

TOP Introduction and background Promises and expectations of... Data and facts State of the art... References

 
With 1992 and 1999 reforms, the INHS was adapted according to a set of principles commonly referred to as ‘the managerialization’ of the system.

The change was grounded around four major strongholds.

1. Revision of size and role of LHUs and introduction of three new top managerial roles – Chief Executive Officer (CEO), Medical Director (MD) and Administrative Director (AD) – in replacement of the previous governance structure based on a board politically appointed by the mayors. Regional Health Assessors appoint the CEOs (with a performance-based, fixed-termed renewable contract) who in turn appoint the MDs and ADs. The structure of the INHS, originally based on 660 LHUs, was revised with their merging in to 197 LHAs (LHAs – currently, after further mergers, they are 183) designed mostly around the provincial dimension.^g They are in charge of delivering or purchasing (from public independent hospitals and private providers) services for the residents of their geographical area. Though they substantially remained integrated delivery systems, as per the LHUs, the change in name was intended to highlight a new responsibility in providing sound management of resources.^h This increase in size, along with the introduction of the three top managers, should free the single LHA from the pervasive influence of local politicians, and improve its accountability for cost control and quality of services.
   Stakeholders were still to be represented by a Mayors Committee, which meets on average once a month, and must be kept informed by the CEO about LHA strategies, policies and major changes in service delivery.ⁱ Figure 1 illustrates the typical governance structure of LHAs and of independent public hospitals (independent hospitals, [IHs] – see point 3);
   
2. Regionalization that is greater autonomy and accountability of the regional level for the management of its health system (Figure 2). The local tier (municipalities') involvement in the INHS was eliminated and the funding scheme for the transfer of financial resources between State level and regions, and between these and the single health organization, was redesigned.
   The 21 regions were made responsible to guarantee ‘minimum levels of care’^j given financial resources transferred by the central tier or collected at regional level.^k The regionalization process is part of a larger and ongoing process of regional devolution, aimed at establishing a ‘federal state’: since health care on average accounts for >70% of regional expenditure, the devolved jurisdiction over most health-care issues to the regions was meant to:
   1. Improve the capacity to control total health spending in INHS;
      
   2. Provide conditions for a better ‘customization’ of health services given the profound differences among regions and the inequalities and inter-regional variations in health supply structure (still present, see Table 2).
      Therefore, given the greater accountability and responsibility devolved to regions, they were granted larger autonomy in decision-making, as reported in Table 3;
      
   3. Introduction of quasi-market. Through an accreditation system, operated by the region, public and private providers of specialist care compete in the same arena for funding. Funding is based on the prospective payments, diagnosis-related groups (DRGs) for inpatient care, or the ambulatory patients group (APG) system for outpatient care. Patients are free to choose the provider among those that have obtained the accredited status. Freedom of choice at national level for specialist care remains a stronghold of the INHS.^l Tariffs are set by the region, although there are national tariffs that can be used as benchmarks and as a basis to compensate inter-regional migration of patients. Further, public hospitals with highly specialized services (such as teaching hospitals or large general multispecialty hospitals) were made IHs from LHAs. They become ‘self-governing organizations,’ with their own top management. Therefore, since money follows patients, IHs, hospitals managed by LHAs and private accredited providers ‘compete’ for attracting patients^m (Figure 2);
      
   4. Changes to move beyond professional bureaucracies.^{n, 19,20} This line of change involved two sets of actions. First, the engagement of physicians in managerial responsibilities through a greater accountability of organizational units (clinical directorates, districts and clinical units) for performances (production, costs, innovation, etc.). The human resource management system was consequently reformed to introduce a tripartition of the salary of doctors (Table 4).
      Second, the introduction of managerial systems to support actions of top managers and ‘engaged’ doctors. This lead initially to the development of the planning, budgeting and controlling (PBC) system, linked with incentive schemes apt to stimulate professionals’ behaviour consistent with organizational goals. Then, all managerial functions were expected to be developed in LHAs and IHs, such as quality, marketing, information systems, strategic human resource management, communication, accounting, etc.
      
   
   

View larger version (29K): [in this window] [in a new window]   Figure 1 Governance and organization of Local Health Authorities and IHs

View larger version (45K): [in this window] [in a new window]   Figure 2 The new scheme of the Italian National Health System

• Increase the equity in the access to health services. With the revision of the funding system, previously based on historical expenditure^o and since 1992 modified to a capitation system, the expectation was a progressive re-equilibrium in facilities, services and skills diffused in all regions;
  
• Better control of health spending, due to regional accountability, change in governance of LHAs and IHs and physicians engagement in managerial responsibilities and cost-conscious practices;
  
• Improvements in efficiency, due to the competition created with the quasi-markets;
  
• De-politicization in the governance of health organizations.
  

	Data and facts

TOP Introduction and background Promises and expectations of... Data and facts State of the art... References

 
Regionalization and managerialization of the INHS have produced some light and shade results.

1. Out of the 21 regions, in 2006, after a long process of ‘learning by doing’ supported by recurrent financial aids by central government, six regions (Lazio, Abruzzo, Molise, Campania and Sicilia, Liguria) showed a huge spending deficit (the sole Lazio had about 8 billion of cumulated deficit over the last five years, and Lazio and Campania together count for 62% of total INHS deficit^p). These regions, along with others (at least four) that closed with smaller deficits, seemed incapable of steering their regional health systems towards an economically healthier future. Though regions and central government have experienced a continuous intergovernmental contention about the adequate level of funding and its fair distribution across the regions,^1,2 which might explain part of the regional deficit, it is certainly true that some regions have understood better than others the importance of building a competent regional techno structure to provide regulations and guidelines capable to direct their LHAs and IHs consistently to regional health and economic goals. In other words, some Regional Health Departments developed according to the expected role and were effective in controlling total expenditure, while several regions did not sufficiently ‘managerialize’ themselves, creating a paradoxical context in which controlled organizations (LHAs and IHs) were more skilled and competent than the controller.
   As a result, the six most critical regions have been ‘commissioned’ by the others and managers from ‘virtuous’ regions are now ‘coaching’ and tutoring their managers;^q
   
2. Quasi-markets never really developed. Though citizens are free to choose providers, and the DRGs/AVGs systems were implemented, monetary reimbursements to providers have been subject to extensive use of caps and global budget. Afraid of the consequences of market-type behaviour^r and opportunistic choices (adverse selection of case-mix, systematic and abnormal reporting of high complexity cases, etc.), regions did not limit themselves to the ‘rules of the game’, but played a more active role introducing the formal negotiation of global expenditure budgets, both with public and private providers, along with systems for curtailing tariffs to punish inappropriate hospital admissions and treatments. In this light, they tutored those LHAs that, with some exceptions, were not capable of playing the role of purchaser. Formal agreements between LHAs and providers are increasingly negotiated in northern regions, though they are still based primarily on setting volumes and cost caps, with limited focus to contents;
   
3. LHAs and IHs pursued their process of managerialization with actions on structures and processes. Regarding the first, major efforts were put in consolidating redundant services. This lead to a large reduction in beds (from 1995 to 2004 inpatient beds in public and private providers dropped from 357,000 to 240,000,^s while day-hospital beds raised from 15,000 to 28,500), though not proportionally following a reduction in staff (from 1997 to 2004 INHS personnel remained stable, around 650,000 units). Complex negotiation with unions and the significant role that INHS and single organizations play as national and local driver for employment^t are primary explanations. Further, the shift of services from hospital settings to community structures might be another cause, as in the period 1997–2005 most LHAs were able to turn up-side-down the expenses for hospital and community care, with the latter becoming greater (goal is to spend at least 55% on community services – included 5% of prevention – on average is nowadays around 52%⁴). Unfortunately, LHAs had to invest in recruiting new personnel for community services as it was not easy to relocate employees from hospitals given their current fragmented organizational structures and the fact that they're overstaffed of physicians (specialists) and understaffed of nurses.^u In this light, both LHAs and IHs have looked with increasing interest to introduce Clinical Directorates (CDs) – in the form of Departments for hospital services or Districts for community services – as an answer to the organizational needs of improving governance and efficiency (Table 5).^v Unfortunately, the path to the development of CDs has been more troublesome than expected as >50% of CDs still lack the necessary organizational arrangements (appointment of CD executive committee, adaptation of existing human resource and PBC systems, etc.) to perform effectively.^22–25
   Regarding actions on organizational processes, the greatest efforts have interested the areas of:
   • PBC systems. Most public health organizations have developed some kind of budgeting system (Table 6);
     
   • Human resource management. Most LHAs and IHs have put a lot of effort in implementing the changes required by the new tripartite salary for doctors and clinical staff. Most organizations have introduced the performance-related pay, though the effectiveness of it relies much on the quality of the budgeting system. More difficult has been the introduction of the within-grade position-related pay, implementation of which was delayed in most cases and done with disregard to its spirit;^w
     
   • Relationships with general practitioners (GPs).^x All regions and all LHAs should sign an agreement with GP's unions, including performance targets (prescriptions, drug budgets, hospital admissions, etc. – set to engage GPs as gate-keepers or providers), actions to create associated practice with other GPs and the sharing of clinical records with other providers to build an effective ‘continuum of care’. Data show that nine regions have not yet contracted the regional agreement, which represents the framework for the local one. All in all, at present, only about one-third of LHAs has experimented with such agreements;
     
   • Process re-engineering. Several health organizations have launched projects to study and benchmark clinical pathways, with the aim of improving their cost-effectiveness and to facilitate the integration among different components of the care process;
     
   • Information and communication technology (ICT). Large investments on ICT have been the premise to build management control systems, to link different actors (for instance GPs and LHAs) and to make the DRGs/AVGs systems work.
     More recently, the focus of IHs and LHAs shifted towards new areas, such as operations management, marketing, risk management, fund raising and health technology assessment, which seem to be the frontier of future managerial development.
     
   
   
4. Engagement of clinicians. Involving and engaging physicians and other health professionals in the management of LHAs and IHs has been the key word of the last 10 years. Though physicians with managerial responsibility are formally involved in the management of IHs and LHAs, they are rarely truly engaged as they are not interested or because the CEOs adopt top–down style of management (for reasons that range from ideological decisions to the fear of being caught in the crossfire of turf wars). There are some exceptions, with some LHAs and IHs, where the management board (members are the chairs of CDs) is increasingly used by CEOs and medical directors as decision-maker on strategic issues. Some CEOs reported that in this way they're able to increase peer-control over decisions for which usually they are subject to several internal pressures. This framework is supported by the national association of LHAs and IHs, according to a recent document focused on proposals for improving the governance of the INHS elaborated for the discussion with the health minister.
   

	State of the art and perspectives

TOP Introduction and background Promises and expectations of... Data and facts State of the art... References

Regarding structural challenges, specific issues are:

1. Size of the regions and size of LHAs. Italy has very different regions in terms of population and this reflects on the average size of LHAs.^y In the search for higher scale economies, smaller regions have started to re-organize their LHAs in ‘Aree Vaste’ (sub-regional zones, corresponding to inter-provincial areas), which are intermediate levels between the region and the single LHAs.³ These zones can work as governance mechanisms, requiring LHAs to appoint an inter-organizational committee (members are LHAs/IHs CEOs, and/or MDs and ADs) to guarantee peer-control and shared priorities in specific decision-making processes (such as, new investments in technologies, reconfigurations of services, hiring policies, etc.) or as coordination mechanisms, such as in the case of support units.^z Therefore, on one side zones should avoid the risk of autarchy in LHAs choices and, on the other side, provide opportunities to consolidate administrative staff and services (accounting, purchasing, logistic, human resource management, etc.). Obviously, the establishment of zones is controversial as both staff and local politicians – the former worried of the consequences on their jobs and the latter of their capacity to influence health services policies – are providing resistance to change;
   
2. The north–south divide. Northern regions are much more developed in terms of health structures (70% of high-specialty services are still delivered in north regions) and south inhabitants are forced to migrate to find answers to their health needs. Federalism – due also to the ‘poverty trap’ – risks to further increase this gap, feeding a vicious circle. Moreover, it might ‘kill’ the principle of freedom of choice that still exsists for hospital care, already extensively challenged by contracts and global budget practices limiting productive capacity of IHs,^aa and hospitals managed by LHAs.
   

1. The over-politicization and the underdevelopment of competences and skills in the regional health departments or regional health agencies, in several cases unable to steer LHAs and IHs;^bb
   
2. The lack of continuity in LHAs and IHs management. On average CEOs last 3.5 years before they are moved to another health organization. The spoil system has produced a class of CEOs that have changed three or more LHAs or IHs, in some cases in different regions (though mainly in the north of Italy and usually where similar political parties are governing the regions). The average span of time of CEOs mandate is by far too short to provide the necessary context for consolidating organizational development. Therefore, health organizations are living in a permanent state of change, as any new CEO is tempted to restart or rearrange previous changes to mark his/her presence.
   Further, in some regions where political coalitions are more unstable, CEOs might be shuffled around in extremely short times (months) and posts are still used with logics of political patronage or as ‘golden parachutes’ for politicians not re-elected – with a total disregard for competences, skills and expertise. So, the de-politicization pursued with the regionalization has produced a different type of over-politicization and, in some cases, an even more developed patronage system as majors are often able to influence regional choices;
   
3. The engagement of physicians in management has been much more difficult than expected. This for typical cultural resistances, but also for the inability of health organizations to develop adequate operating mechanisms to support new roles and responsibilities. On top, planning and control and human resources management systems were not adequately developed.
   

Differences among regions, not motivated by specific contextual factors (demography, geomorphology, epidemiology), have to be monitored and possibly reduced, and the managerialization process needs to be revised based on the initial drawbacks already known.

Strategic premises of 1992 reform have demonstrated to be valid, as changes occurred and health organizations modernized or reconfigured part of their service networks, became more keen to involve patients and citizens in decision-making, stimulating a more cost-conscious approach in clinical practices (sometimes even too much^cc).

Some parts of the promises were met. Increase in the equity in the access to health services have occurred as southern regions, although as of late, have developed and are developing high-specialty structures. Improvements in the control of health spending occurred and total expenditure of the system in the 1990s increased at lower pace than previous years. Some improvements in efficiency also occurred, due to the competition created with quasi-markets (though they never really worked as expected). Over-politicization in the governance of health organizations slightly reduced, at least in northern regions, thanks to the authoritativeness that some CEOs exert over local and regional politicians.

Nevertheless, the cost issue is still critical:

• In 2006 only one region had a positive last five years cumulated financial result;
  
• The annual INHS funding is forecasted to grow from 95 to almost 99 billion in the next years, and currently it counts for 6.4% of gross domestic product (GDP) (including private out-of-pocket expenditure it grows to 8.4%).³ This data, if compared with similar European leading countries such as the UK (7.1 and 8.3%), France (8.3 and 10.5%) and Spain (5.7 and 8.1%), shows some differences, but not such as to justify the poor financial performance of the majority of regions as due solely to a continuous under-funding (as they claim).
  

	Footnotes

 
a Italy is a parliamentary republic with 21 regions, 102 provinces, about 8100 municipalities and with a highly populated territory (about 58 million in 300,000 km²)

b Exploiting the well-known phenomenon of supply induced demand and quite often ‘bending’ the organization development to their career goals and group interests

c As France and Taroni¹ clearly describe ‘all the political parties had quickly become locked into the 1978 reform, especially the arrangements for democratic participation, which gave them patronage power at the local level and, on occasion, party funding from kickbacks from, for example, building and maintenance firms and pharmaceutical companies.¹⁷ The costs of changing the arrangements were therefore high and the likely benefits slender, particularly given the limited time horizons of politicians living in a world of unstable, short-lived coalition governments. Municipalities resisted reform, fearing erosion of their recently acquired power

d In 1992, Italy was struggling to keep its public finance under control due to the goals set by the European Monetary System. Also, as France and Taroni¹ recall, ‘from late 1991 through 1992 the Italian political party system lost its legitimacy, as leading politicians of the parties that had usually comprised the coalition governments were charged with using illicit means to raise party funds.¹⁸ The health sector was directly involved and the then Minister of Health, the head of the ministry's Pharmaceutical Directorate, members of the body responsible for setting the SSN pharmaceutical formulary, and leading industrialists were all arrested’

e For a complete description of the contents of reforms that took place in INHS from its inception to present, see France and Taroni^1,2

f Among the health organizations involved in major development and innovation processes that provided the basis for this work are: Bologna, Cagliari, Piacenza, Lucca, Palermo and Foligno LHAs; Istituto Clinico Humanitas; The Research Institute for Cancer Care (IRCC Candiolo); and Palermo, Naples, Milan, Ancona, Rizzoli (Bologna), Florence, Siena, Pisa Teaching Hospitals. All projects were conducted as action-researches by researchers of CERGAS (Research Centre on HealthCare Management) of Bocconi University with the supervision of the author of this work. All researches are documented at the CERGAS

g On an average LHAs now serve a population of about 300,000 citizens

h First of all, exploiting economies of scale that should result form the increase in size due the mergers

i However, formally it is a relatively weak function of social control over the practices of the LHA, although informally some significant pressure can be still exerted by single mayors through their relationships with the health assessor and the regional government

j So-called LEA (Livelli Essenziali di Assistenza), which services that are included in the benefit package granted to all Italian citizens and residents

k As France et al.² brilliantly describe ‘the SSN provides comprehensive coverage to all Italian citizens and, since 2002, to all foreign citizens with legal residence. Until recently, there was no formal specification of the benefit package to which SSN patients were entitled. As was for long typical in health-care systems based on the National Health Service model, de facto patients received what was medically feasible, what the SSN was able to provide with available resources and what doctors prescribed. In 2001, a catalogue of SSN benefits, the LEAs, was defined in terms of a positive list and a negative list based on the criteria of effectiveness, appropriateness and efficiency in delivery, as well as on the ‘rule of rescue’. The positive list contains the services which the SSN is required to provide uniformly in all regions. This obligation is spelt out in varying degrees of detail, ranging from specific procedures to broad categories of services. Regions are free to provide non-LEA services to their residents, but must finance these with own source revenues, which some actually do. The negative list includes three categories of ambulatory and hospital services. First, a small number of services are excluded outright from SSN coverage because of their proven clinical ineffectiveness or because they are considered not to fall within the remit of the SSN. These include cosmetic surgery (except in cases of malformation and injury), ritual circumcision, non-conventional medicine, vaccinations for employment and vacation purposes, and over 20 types of physiotherapy. Second, certain diagnostic and therapeutic ambulatory services, for example bone density testing, excimer laser surgery and orthodontic services, are included in the entitlement on a case-by-case basis (that is if judged appropriate for a patient's particular clinical condition). Third, there is an indicative list of potentially inappropriate hospital admissions, classified in terms of DRGs, for which the regions are supposed to provide substitute treatment such as day cases and ambulatory care. Examples of these are carpal tunnel release, cataract surgery and hypertension. In addition, the SSN has always had a positive and negative drug list in the National Pharmaceutical Formulary (NPF). The current version classifies drugs according to their clinical efficacy and, to an extent, cost-effectiveness in two categories: one for drugs prescribable under the SSN; the other containing drugs paid for in full by patients, whose prices are set freely by the manufacturers. In 2005, the SSN spent 13.5 billion for the first category of drugs, while patients spent 30 billion for the second

l GPs are expected to play a gate-keeping role for elective services, since their prescription is compulsory for outpatient services and is often required by hospitals for inpatient admissions. Private providers especially require the prescription as it represents a formal document that in case of controversy makes it more difficult for the region to challenge the appropriateness of the service delivered. Unfortunately, GPs do not really play a gate-keeping role, in most cases they simply provide the prescription. The reason is mainly two-fold. On one side, there is opportunism, pushed by the intent-to-limit their workload. On the other side, there is a threat of ‘loosing’ the enrolled patient if unsatisfied by a negative advice about the prescription. INHS patients can change their GP at any time, without needing to give an explanation

m Given the fact that funding caps for hospital services delivered to residents are set in most regions, LHAs and IHs might find it more convenient to attract patients from other regions – since they are a source of additional financial resources – rather than from close LHAs. Services delivered to patients coming from other regions are compensated among regions with the national DRGs tariffs

n We refer to the definition given by Mintzberg.²¹ Professional bureaucracies are characterized by the search for the standardization of procedures and products through the so-called pigeon-holing process: the organization seeks to match predetermined contingency to a standardized programme, and so organize itself around the skills and knowledge of its professionals who are in charge of categorizing or diagnosing the client's (patient) needs and applying, or execute, the matching programme or procedure. Therefore, hospitals developed hyper-functional structures, with clinical leaders as the ‘owners’ of hospital resources. Quite often, the chief of specialty would use the declination of possessive adjective when referring to hospital resources: my beds, my nurses, etc. Fragmentation, lack of managerial culture and self-referentiality are common problems that hospitals are trying to, and should, address more¹⁹

o The historical expenditure-based funding produced a vicious circle favouring those regions with higher structural costs. Those with more facilities and capable of finalizing better investments, received more funding and were able to invest more. Northern regions were able to exploit this context better given that political representatives seating in LHUs boards or Regional Councils were more keen to find successful compromises to speed up investments, compared with southern regions

p Total funding for the INHS, set by national budget law, was about 121 billion in 2005. Deficit in 2005 was around 4.6 billion³

q Since accepting to be tutored and producing a long-term plan for recovering from the deficit, the national government, in April 2007, funded the critical regions with an additional 3 billion as a contribution to support them in the financial re-equilibrium

r As data regarding increases in hospital care volumes made shortly evident^3,4

s Though the reduction, optimal size is still to be reached. Current numbers lead to an average of 4.1 beds – for acute care – per 1000 inhabitants. The benchmark set by the law is 3.5. Also, by regulation, there should be one bed per 1000 inhabitants for postacute care. Currently, the ratio is 0.6. Further, using the benchmarks as reference, six regions have acute beds in excess, whereas 12 regions lack postacute beds. Quite interesting is the fact that private accredited inpatient beds remained substantially stable, although their utilization changed significantly as the majority of industrial groups providing hospital care developed high-specialty units – such as, cardiac care, neurosurgery, orthopaedics, etc. – ‘cannibalizing’ over time public beds (also with the ‘shopping’ of some of the leading public surgeons). All in all, private beds increased, as day-hospital beds raised from almost zero to about 2500. With the exception of the large groups, the majority of private providers are still small clinics, founded by physicians and mostly owned by single entrepreneurs or families (87% of total accredited private providers has <150 beds, 67% <100)^3,4,10

t The NHS represents a major direct employer in the Italian labour market. Total staff amounts to about 650,000 people, that is, >11% of total population. In 80% of Italian Provinces INHS organizations are – by far – the largest employer

u According to OECD data,²⁶ in 2003 nurses per 1000 inhabitants were 5.4 in Italy, 9.7 in the UK and Germany, 7.3 in France, 7.9 in the USA, while doctors were, respectively, 4.1 in Italy, 2.2 in the UK, 3.4 in Germany and France, 2.3 in the USA

v A similar line of argument is presented in the literature review discussed by Braithwaite et al.²⁷ which recalls as CDs should improve efficiency,²⁸ decentralize decision-making,²⁹ combine clinical and managerial expertise in useful ways,³⁰ provide a clearer focus on patients³¹ and enhance resource allocation and management³²

w The idea was to overcome the traditional context in which clinicians with managerial responsibilities were paid more than simple clinicians: this lead to (a) irrational proliferation and duplication of clinical departments and units (it is common for large hospitals to have several similar surgical and medical units, such as Medicine I, II and III, etc., with consequent diseconomies of scale and scope), instrumentally created for paying some clinicians more; and (b) to the need of appointing as manager the best clinicians, with disregard for their managerial skills and true interest for such a role (other than the one due to benefits of external recognition and money). The reasons are that the within-grade position-related pay, instead of representing an additional source of remuneration, was substantially created making variable part of the previous fixed salary of doctors. Therefore, most LHAs and IHs had to developed, at least initially, a system to classify and weight different positions that guarantee historical equilibrium – that is a system in which the lowest managerial position values more than the highest professional position. As a result, the race for managerial position is still strong as clinicians see it as the only opportunity to increase their income, and LHAs and IHs struggle to consolidate and re-engineer their organizational structure. To understand the relevance of this phenomenon, we should also consider the fact that INHS doctors seem to be the least paid in western countries. According to a study conducted by the Treasury and published in the British Medical Journal, physicians employed in Italy earn on an average £40,000, while their counterparts earn around £50,000 and £90,000 in France and the UK, respectively³³

x A special feature of the INHS are family physicians (around 48,000 in Italy) and community paediatricians (7000). Those professionals are contracted by the INHS. They are paid on a per capita basis (GPs are allowed to have a maximum of 1500 enrolled patients and citizens are free to choose their GP from a list provided by the LHA), but can access to additional financial incentives negotiated at regional and local level. Further, it is estimated that up to 10% of GP income comes from extra payments for participation in special programmes or reaching organizational or expenditure targets. Financial rewards exist for providing additional services like home care, care for the aged in residential homes and vaccination of special groups, such as flu shots for the elderly

y For instance, Lombardy LHAS have roughly 700,000 inhabitants compared with the 200,000 in Friuli Venezia Giulia LHAs

z In some zones, LHAs and IHs are managing jointly purchasing processes, development of new technologies, logistic, maintenance, etc.

aa One critical issue concerns the fact that towards the end of the fiscal year some IHs are under high pressure by regions (or freely decide) to reduce or postpone interventions and admissions for budgeting reasons. Worse, they might keep open admissions for extra-region patients since the reimbursement of their services is provided out of the cap set by the regional or LHA global budget or contract. On top of this, in order to limit such opportunistic behaviours, some regions have started to introduce limits to the freedom of choice through a more strict regulatory framework on LEAs (see previous note k). Starting from specialties with the prevalence of elective surgery/admission, – such as plastic surgery, ophthalmology, dentistry etc. – they have reduced the coverage provided by the RHS neglecting the reimbursement for services delivered by other regions – where the service is included in the regional LEAs – for their residents

bb We already noted that the Conference of the Regions and the National Health Department have agreed to identify a list of six regions as the one requiring specific support and have decided to send their managers from top regions as ‘franchising’ management

cc As we already said, in the initial stage of introduction of the DRG system, INHS hospitals were not free from opportunistic behaviour based on the pure economic convenience, such as adverse selection of patients, inappropriate treatments or misreporting of case-mix

dd Concentrated mostly, but not only, in some type of organizations, such as teaching hospitals and in some geographical areas (central and southern regions)⁷

	References

TOP Introduction and background Promises and expectations of... Data and facts State of the art... References

 

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