Does the Extent of per Case Payment System Affect Hospital Efficiency? Evidence from the Italian NHS

Recently increasing public pressure to contain costs in the health care sector has led many national governments to introduce some type of prospective payment system and reduce the scope of global budgeting. This study investigates the extent to which the reimbursement systems of the Italian hospital sector have an impact on hospitals' technical efficiency. Because of high variation in the financing and provision of health care services among regions and hospitals, Italy represents an interesting case study to test these effects. A two-stage data envelopment analysis was employed, in which the efficiency scores of all Italian hospitals were first calculated and then regressed on different environmental variables to capture the role of reimbursement systems. The results found a significant impact of the use of diagnostic-related group-based prospective payment systems on hospitals' efficiency.