Hospital Care Reimbursement Mechanisms and the Adoption of Medical Technology in the Italian Nhs

Current reimbursement schemes imply different incentives for health care providers, among which there are the ones related to the adoption of technology. Several empirical studies have investigated the links between the pattern of medical technology adoption, particularly medical equipment, and a few determinant factors, among which reimbursement mechanisms. Most of these studies, however, focus on single and specific medical equipment and, therefore, their analysis is inherently limited to represent the characteristics of the reimbursement mechanism for the specific services connected with the use of a given technology, with respect to other services. In this paper, we aim at enlarging the scope of analysis so as to consider the impact of the general features of reimbursement mechanisms on the adoption of medical technology. Our analysis is focused on hospital care in Italy. The DRG mechanism was introduced in the early nineties, while, at the same time, regional governments were recognized extended autonomy in the implementation of the payment mechanism (determination of rates, differentiation of the reimbursement system for different providers, etc.). Moreover, these reforms were implemented in a situation characterized by relevant differences across regions, in terms of technological endowments. Our analysis will focus on the change in the medical equipment of Italian hospitals in the period 1997-2007. The data are available for the overall hospital sector, at a regional level (there are 20 regions in Italy). We build up and indicator for measuring the regional endowment of medical equipment, based on a weighted sum of the number of equipment, where the weights are represented by a vector of normalized prices. The main objective of the analysis is to check how the differences across the regional reimbursement mechanisms, above all in terms of how extended is the use of the DRG system in the coverage of the overall financing of hospital care, impact on the change in the equipment endowment, as measured by our indicator.