NCPA - National Center for Policy Analysis


April 14, 2010

For the past 10 years, public and private hospitals in Lombardy, Italy, have competed directly for patients, and in doing so have created what is considered by many to be one of Europe's most efficient health care systems, says the Wall Street Journal. 

Like other European countries, Italy offers universal health care coverage backed by the state: 

  • Italians can go to a public hospital, for example, without involving an insurance company; the patients are charged a small co-pay, but most of the bill is paid by the government.
  • As a result, the great majority of Italians don't bother to buy private health insurance unless they want to seek treatment from private doctors or hospitals, which are relatively few. 

Offering guaranteed reimbursements to public hospitals, though, took away the hospitals' incentive to improve service or rein in costs.  Inefficiencies were rampant as a result, and the quality of Italy's public health care suffered for years.  Months-long waiting lists became the norm for nonemergency procedures -- even heart surgery -- in most of the country.  Big changes came in 1997, when Italy's national government decentralized the country's health care system, giving the regions control over the public money that goes to hospitals within their own borders, says the Journal: 

  • Lombardy has increased its quality standards, set its own reimbursement rates and, most importantly, put public and private hospitals on an equal footing by making each equally eligible for public funds.
  • If a hospital meets the quality standards and charges the accepted reimbursement rate, it qualifies.
  • Patients are free to choose between state run and publicly funded private hospitals at no extra cost; their co-pay is the same in either case.
  • As a result, public and many private hospitals in Lombardy compete directly for patients and funds. 

Around 30 percent of hospital care in Lombardy is private now -- more than anywhere else in Italy.  And service in both the private and public sector has improved.  Patients in Lombardy receive among the widest array of treatments in Italy, and are covered for a longer list of prescription drugs than almost anywhere else in Europe.  Waiting times were slashed, too, says the Journal. 

Source: Margherita Stancati, "Competitive Care," The Wall Street Journal, April 13, 2010. 

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