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

4. Benefits Arising from a Professional Private Financing of Intramoenia Care

At the end of the analysis proposed in the above paragraphs, we conclude our paper suggesting the introduction of coverage instruments such as healthcare insurance policies and integrative funds which serve to finance the cost of healthcare services provided in the  intramoenia regime.
The presence of the insurer and/or of the healthcare fund, in fact, could promote:
a)    a better organization/channelling of demand for healthcare services as a consequence of the definition of sets of healthcare services rather than single services, linked to the concept of therapeutic pathway suggested by medical science and clinical practice for each pathology. In consequence, departing from these ex ante established sets of treatments related to a certain pathology, non useful and/or redundant exams and/or treatment — non-appropriate demand for health services — can be eliminated, thereby also reducing the length of the waiting lists;
b)    a more effective and efficient organization of the supply of healthcare services. The adoption of the logic of benchmarking and comparison between different hospitals will facilitate a virtuous mechanism promoting an increase in levels of efficiency of healthcare providers, and effectiveness and quality of the services rendered;
c)    a significant reduction of the burden of healthcare expenditure on public finances, as a result of the progressive contribution of third party payers;
d)    a greater equity in the composition of private health expenditure. Part of this expenditure will no longer be out-of-pocket but will become expenditures intermediated by professional third party payers, able to operate a fairer pooling of risk. Moreover, if a tax relief linked to the level of income would be introduced, we could also observe a lower level of regressivity connected to the private payment.
In the process of the progressive hybridization of ‘pure’ (public or private) healthcare systems — due to the presence of both market and planning failures — leading them to intermediate positions, the fact that the interaction between public and private mechanisms is often difficult and complex to achieve has to be taken into consideration. The main reason for these difficulties is to be found in the fact that planning and market are two different systems of organizing and governing transactions and relationships following totally diverse types of logics and functioning rules. The Italian case of intramoenia regime is an extreme case of coexistence of public and private. in it all the possible distortions typical of the relationship between different operators (doctor-patient-hospital-payer) are enhanced and strengthened by the fact that they are located in a context characterized by the co-presence of different regulating instruments and operating mechanisms, those of the market and those of the planning.
The introduction of market and competition mechanisms cannot be fully realized by integrating instruments typical of the market in a system based on planning without changing the incentive schemes and the monitoring instruments of that system. On the contrary, market mechanisms should affect the structure of relationships and roles existing among the different operators involved.
in general this concept requires, the differentiation of financing sources and, more specifically, the use of private capital.
The entry of private payers, if properly defined, re-designs the modes of measurement/evaluation and the objectives of the production units of healthcare services. It does so by substituting the concept of cost-effectiveness of healthcare services for that of adherence to the reference values of planning. The adoption of the concept of cost-effectiveness implies the presence of several autonomous units of production, competing with each other. It also finds its implementation in the rewarding of the ability to interpret and satisfy the value of use requested by citizens, and in the efficient managing of resources.
The evaluation of the areas of intervention of private financing in healthcare, integrating public funding, means, in our opinion, analysing the contribution that this funding could offer, in a dynamic perspective, to increasing the general performance of the system. In other words, it is a matter of modifying the traditional view of the involvement of the private financing sector in the National Healthcare System still linked to a mere financial logic of mitigating pressure on public finance.
Instead, in this paper, we propose an evaluation of the contribution of the private sector in the financing of healthcare as a tool for re-defining the structure of property rights within the system so as to obtain a better organisation of the production and provision of healthcare services.
The public Regulator has to indicate the contexts and under which conditions it could be convenient to set alongside the elements of guarantee and organicity of planning, the abilities to extract information, to define effective incentive schemes, and to coordinate in a manner typical of the market. The area of the services provided in the intramoenia regime seems to be, as we hope to have effectively discussed in the present paper, one of the more suitable.
In the intramoenia scenario, in fact, we maintain that the role of third party payers, professional intermediaries can mitigate potential opportunistic behaviours on the part of various players. It an also promote a more effective and positive interaction, coexistence, and integration between public and private, benefiting from the advantages of both systems of governance of transactions.


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