Containing costs in the Italian local healthcare market

We aim to investigate the cost containment effects of the creation in 2005 of agencies specifically responsible for all technical and administrative services within the regional healthcare system of the Tuscany region of Italy. We seek to contribute to the existing literature on the centralization and decentralization of purchases and technical services by assessing the amount of savings produced by these agencies at the intermediate level between local authorities and hospitals and the regional administration. We use the balances of all Italian local health authorities and hospital trusts combined with the synthetic control procedure to create from a donor pool of untreated units a weighted average of observations resembling the exposed units before and after the policy change in 2005. The magnitude of the effect is significant as the creation of these agencies is estimated to have reduced expenditures on auxiliary goods and contracted services by 6% in the period from 2006-2014. Moreover, we find that the cost reduction is not associated with a decrease in the provision of healthcare services and procedures to the general population or in the quality or efficiency of the regional healthcare system itself.