The Interaction of Public and Private Systems in Health Care Provision: the Italian Two-faced Janus


The interaction between public and private systems in the provision of healthcare is complex because they refer to different logics and functioning mechanisms. This paper presents and discusses an extreme case of coexistence of public and private regimes in providing healthcare — the Italian intramoenia.
Although the intramoenia regime presents numerous advantages for the patient, the doctor, the hospital, the payer, and the whole healthcare system, it has not spread as much as might be expected. Many distortions could affect the relationships among the players involved in the intramoenia regime and, since at present the cost of the service rendered is generally carried by the patient through out-of-pocket spending, there are also undesirable inequity effects. We maintain that potentially opportunistic behaviours of the players could be reduced by the presence of a professional third party payer, who, thanks to the technical tools of insurance, is able to establish appropriate incentive schemes that could increase the efficiency, reduce inequities, and favour a successful co-existence of public and private forms of organisation and governance of the transactions.

1. Introduction: Public and Private Governance of Healthcare

Since its establishment, in 1978, the Italian National Healthcare System has been affected by complex and elaborate restructuring and reorganization processes. Academic and political discussions are continuously taking place with respect to the pursuit of efficiency in the management of healthcare services and the characteristics of demand, supply and the funding of healthcare.
The organisation and governance of healthcare can be of a private or public nature. The first relies on the ‘market rules’ whereas the second is determined by the ‘rules of planning’. Planning concerns the regulation of the number of authorised healthcare providers, the volume of activity ceiling, the definition of standard tariffs, and the introduction of restrictions with regard to the rates of medical services.
In general, the evaluation of the value of either the public or private approach to the provision of healthcare has to take into consideration:
a)    the correspondence of the services offered with the needs and preferences of the patients;
b)    the efficiency and quality at various stages of the provision of the services;
c)    the appropriateness of the incentive schemes settled on for the agents and of the degree of competitiveness inside the healthcare system.
The correcting interventions of the State in the healthcare system are usually related to the failure of the market and usually linked to the fact that healthcare is a semi-public good, that in this sector information is incomplete, and that the market is imperfect.
Internationally, examples can be found both of the introduction of instruments typical of the public system in order to correct the failures of the market, and of interventions directed at inserting market regulating mechanisms into a planned healthcare system.
More generally, the evolution of the management of healthcare systems tends to be characterised by the convergence towards regulation type solutions based on the presence of instruments which are part of both types of governance.
This evolutionary process is extremely complex and dynamic and forces players in the healthcare system to continuously adapt to new combinations of regulatory instruments and new equilibria, always departing from the principles of inclusion, equity, solidarity, and accessibility which are considered to be at the roots of a good welfare system.
Change is based on various objectives:
a)    the increasing of the level of efficiency of the organisation of demand for services supplied by the healthcare system, which relates in particular to the management of the relationship between citizens and the provider of the service;
b)    the raising of awareness and responsibility within the population with regard to the cost of the various services;
c)    the coordination of the division of tasks and areas of intervention between public and private providers of services, to avoid duplication and overlapping;
d)    the increasing of the quality and efficiency of the services through attaining adequate levels of competitiveness between the providers of healthcare services;
e)    the reinforcement and consolidation of the presence of private players in the healthcare system, in particular with respect to the financing of both healthcare services and long term structural investments, and of technological progress and scientific research.
The main objective of every country is to manage the combining of two goals: increasing the quality of the services supplied by the healthcare system and guaranteeing care to the weaker groups in society by an efficient and effective use of the resources available.
Within the process of renewal of the modes of governance of the healthcare system through corrective measures dealing both with market failure and with the failure of planning, two forms of intervention can be identified. one concern the planning system, the introduction of new schemes of incentives and of budgetary control and internal audit. the other relates to the design of institutional change, able to promote the co-presence and the synergic action of the principles of coordination and selection of the investment trajectories typical of the market with those distinguishing the planning system.
Starting from this premises, in this paper we will present and discuss a particular and extreme case of coexistence of public and private systems in Italy — the intramoenia regime — where public and private coexist with respect to the organisation, governance, delivery and financing of healthcare services. The interesting aspect of this case is that the ‘public/private dimension’ is not considered as a co-existence, within the healthcare system, of both public and private service providers, who have distinctive objectives and functioning mechanisms, but rather as a co-existence, in the same service provider (public hospital and/or medical doctor employed by the National Healthcare System), of both roles/regimes, the public and the private, which are organised and move according to completely different mechanisms. A Two-Faced Janus with a potential identity crisis.
In this paper the nature, development and diffusion of the intramoenia regime will be discussed (section two). Furthermore, the characteristics and the mechanisms of interaction developing between the various players within the intramoenia regime will be analysed in section three. In section four several proposals will be made with regard to the way in which a proper use of the ‘financing tool’ should by made. These proposals will relate particularly to the role played by payers (professional intermediaries). This could reduce the emerging of distortions in the functioning of this ‘double regime’ and promote a better interaction of public and private mechanisms, for the benefit of the patient and of the healthcare system in terms of both financial sustainability and equity.

2. An Original Way of Public and Private Coexistence: The Intramoenia Regime

Over the years, there has been a progressive introduction of market elements in public healthcare systems. An important test case of an attempt to join public and private is the Italian case of intramoenia care — private provision of health services within the public healthcare system —, which is one of the possible ways of creating public-private interaction and coexistence in the organisation, delivery and funding of healthcare services.
In the case of intramoenia care, public medical and healthcare staffs, individually or in teams, perform, outside the contracted hours of service, in ambulatory, day hospital or day surgery regimes, diagnostic services (with technologies and/or as specialistic visits) and therapy (medical and/or surgical), as requested by and based on the free choice of the patient. The choice of intramoenia care implies that either the patient, his/her insurance company, or his/her integrative healthcare fund pays for the service.
Therefore, intramoenia care forms a context where the relationships between players in the health sector (health professionals, hospitals, third payers and patients) are extremely complex. Within public institutions, regulated and characterised by public mechanisms, in fact services governed by contracts of a private nature are carried out by the health care professionals employed by the public hospital.
Intramoenia care was introduced by Law nr. 662 of 23 December 1996, after which it was subject to various changes and has developed and been unevenly disseminated throughout Italy. Prior to its introduction, two steps were particularly relevant and have allowed for the development of the intramoenia regime: 1) in 1978 (Law nr. 833) doctors (and veterinarians), who are public employees of Local Health Units, Universities, Polyclinics and Scientific Institutes for Hospitalisation and Care, were given the right to exercise private professional activity; 2) in 1991 (Law nr. 412) the principle of exclusiveness of employment of physicians within the National Healthcare System was introduced.1 The consecutive Legislative Decree nr. 229/1999, recognises health workers’ rights to exclusivity of employment, allowing them to exercise their private activity in the intramoenia regime, within the public healthcare hospitals where they are already employed. Law nr. 120/2007, stems from the need, almost ten years after its introduction, to correct delays and distortions originating from the implementation of the intramoenia regime (described in various studies which will be discussed below). It also introduces various organisational-managerial and structural correction mechanisms. From an organisational-managerial point of view the law favours the establishment of a pricelist which covers the costs of the intramoenia regime; the monitoring of the waiting lists for people not using intramoenia care and the adoption of mechanisms to reduce the average length of waiting lists; assuring limited differences in waiting time between the regular public waiting list and the intramoenia regime; the clarification by the hospitals of their intentions concerning how to distribute the two modes of healthcare delivery. From a structural point of view, according to the law the healthcare supplier can use for the intramoenia regime the spaces available for institutional activities. However it has to guarantee the separate management of the two types of healthcare delivery in particular with regard to the timetable, booking, and payment. This last has to be entrusted to the personnel but in a different location and at different times from those of the institutional activity. Therefore, as intramoenia care needs to take place within and under particular conditions, it is necessary to carry out restructuring works.
Over the last few years the National Agency for Regional Health Services, the Social Affairs Committee of the Chamber of Deputies (2002-2003), the 12th Hygiene and Health Committee of the Senate (2007) and Istat (National Statistics Institute) (2007) have carried out surveys and have gathered statistical data regarding the diffusion and characteristics of the intramoenia regime.
The main objective of the Parliamentarly Survey2 carried out by the 12th Hygiene and Health Committee of the Senate was to analyse the state of the intramoenia regime almost ten years after its introduction. Particular attention was paid to the implications for waiting lists and the possible other inequalities generated for those accessing public health services. The outcome of the analysis shows a very heterogeneous picture. There are regions of Italy where intramoenia care is fairly widespread and the results are satisfactory and others areas where it is not widespread and the results are particularly poor. With regard to the doctors of the National Health Service and the Institutes of Public Care (survey of 353,200 doctors), the outcome of the survey showed that 95% opted to work exclusively for the National Health Service (5% work also in private clinics). Of this 95% only 59.2% effectively use the opportunity to perform private activity in the intramoenia regime within the National Health Service. The analysis shows that the space occupied by the intramoenia regime as part of the public health facilities, is very little: only 2% of the outpatient’s clinics and 2.3% of the beds.
There is a high demand for differentiation of services emanating from the population. A recent study carried out by ISTAT (2007) with respect to the demand for services by fee-paying patients (intramoenia care and private healthcare) shows that there were aproximately 15,298,000 diagnostic tests carried out in Italy in 2005 of which 69.7% were laboratory tests and 30.3% diagnostics by specialists. Of these diagnostics by specialists 20.9% was paid in full by families (out-of-pocket). The percentage of specialist visits paid in full is highest among people aged between 25 and 44 years, particularly women (39.2% in the age group 25-34 years and 32.7% in the group 35-44 years) and residents in central Italy (24.9%). The health services which were most frequently paid for in full are specialist visits (56.8%).
With regard to the level of education, the survey shows that in 2005 46.8% of people with a primary school diploma had paid in full for a specialist visit, compared to 68.2% of people with a high school diploma or a university degree. With respect to the economic condition of the interviewees it turned out that 47.9% of those who indicated they have scarce or insufficient economic means had paid for specialist visits. With regard to diagnostic tests, 35.8% of those who have a higher level of education pay in full against 15.4% of those with a primary school diploma.
Unfortunately, available data with respect to ambulatory care are limited. Data available on intramoenia care originate from the Schede di Dimissione Ospedaliera SDO (Hospital Discharge Data Sheets). In 2004 the most numerous healthcare services carried out in the intramoenia regime related to obstetrics/gynaecology (26.4% of the discharged patients using intramoenia care), general surgery (16.9% of the discharged patients using intramoenia care) and orthopaedics/traumatology (11.1% of the discharged using intramoenia care, see Table 1).

Table 1: Discharged intramoenia patients in 2004: organised by ward (20 most important)


Source: National Agency for Regional Health Services, 2007

Reports published by the Tribunale del Malato-Cittadinanzattiva (Tribunal for the Rights of the Patient, 2007) showed that the reasons for choosing intramoenia care are linked to the possibility of choosing the doctor one prefers, and the guarantee of therapeutic continuity.
The latest data available with regard to the expenses incurred by families for healthcare (2006) show that 7.6% of the total expenses incurred for healthcare concerns intramoenia care, whereas 7.5% of the total expenses relate to the ticket3 (National Agency for Regional Health Services, 2007; see Tables 2 and 3).

Table 2: Health expenditure of Italian families, 2004-2006
Values at current price, millions of Euros


Source: Our elaboration of data from National Accounts of Ragioneria Generale dello Stato (several years)

Table 3: Health expenditure of Italian families for intramoenia and tickets, 2004-2006
Values at current price, millions of Euros


Source: Our elaboration of data from National Accounts of Ragioneria Generale dello Stato (several years)

We can assume that the expenses incurred by families for intramoenia care are higher than the 1.100 milion Euro’s (see Table 3) which are registered for 2006, as checks made by the Revenue Guard Corps (and transmitted to the Senate) show that about 30-40% of all services had not been officially registered.
The data evidence that, even if intramoenia care is still not very well developed all over Italy, the demand for differentiation of the services emanating from the population is high and growing. In the following sections strengths and weaknesses of the intramoenia regime will be discussed.

Giuseppe Turchetti, PhD, Scuola Superiore Sant’Anna, University of Pisa.
1 The possibility of working as a private professional for doctors working in the public healthcare system is compatible with the exclusiveness of the work relationship, as long as it is carried out at different times and not in private healthcare institutes with no relationship with the national health care system.
2 The study is based on the questioning of various actors involved in the healthcare system (from the Ministry of Health, the Associations of Physicians and Patients and the managing directors of local health institutions) and on the information gathered through questionnaires sent to all the regions and selected healthcare providers.
3 The ticket is an obligatory contribution per service rendered in the public healthcare system; weak groups -age, income, state of health- are exempt from paying this contribution.

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