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Scale Effects and Expected Savings from Consolidation Policies of Italian Local Healthcare Authorities



Consolidation is often considered by policymakers as a means to reduce service delivery costs and enhance accountability.


The aim of this study was to estimate the potential cost savings that may be derived from consolidation of local health authorities (LHAs) with specific reference to the Italian setting.


For our empirical analysis, we use data relating to the costs of the LHAs as reported in the 2012 LHAs’ Income Statements published within the New Health Information System (NSIS) by the Ministry of Health. With respect to the previous literature on the consolidation of local health departments (LHDs), which is based on ex-post-assessments on what has been the impact of the consolidation of LHDs on health spending, we use an ex-ante-evaluation design and simulate the potential cost savings that may arise from the consolidation of LHAs.


Our results show the existence of economies of scale with reference to a particular subset of the production costs of LHAs, i.e. administrative costs together with the purchasing costs of goods (such as drugs and medical devices) as well as non-healthcare-related services.


The research findings of our paper provide practical insight into the concerns and challenges of LHA consolidations and may have important implications for NHS organisation and for the containment of public healthcare expenditure.

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  1. 1.

    According to ISTAT [2], the healthcare expenditure in 2016 was equal to 149,500 million euros, 75% of which was financed by the public sector and the rest by the private sector, mainly in the form of out-of-pocket (OOP) payments. In Italy, healthcare is delivered mainly by public providers. The total amount of the public health expenditure is annually defined according to the national budget constraints: the central level—represented by both the Ministry of Health and the Ministry of Finance—ensures that the regions keep their healthcare expenditure within their budgets and guarantees the essential levels of care. There is not an official target for the ratio of total public health expenditure over GDP.

  2. 2.

    The term ‘accreditation’ was introduced in Italian health legislation in the early 1990s: private hospitals and ambulatory care organisations meeting specific quality requirements may apply for accreditation and may act as providers for the NHS if they obtain ‘accredited’ status.

  3. 3.

    Lombardy was one of the first regions to implement the merging process by redefining the geographical boundaries of 40 local health authorities in 3 years: from 84 LHAs in 1992 to 44 LHAs in 1995. In 2005, Lombardy accounted for 15 LHAs (see Mattei [3] for more details).

  4. 4.

    The values of all explanatory variables of the consolidated LHAs are derived directly from those of the original LHAs. With regard to the number of inhabitants, the lump-sum funding and the number of doctors, for instance, are computed by summing the original values based on the assumption of no variation of services. With regard to density, dependency ratio and foreigner rate are constructed by computing the average of the original data, weighted by population.


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An earlier draft of this paper was presented at the annual meeting of the Italian Health Economics Association, Alghero, Italy. The authors thank the conference participants for their detailed and helpful comments. The authors also thank Vincenzo Rebba, Francesca Zantomio and two anonymous referees for helpful comments on earlier drafts of the manuscript. The authors also gratefully acknowledge the staff of the Regione Veneto for research assistance.

Author information




DR and MZ conceived the presented idea. CD, DR and MZ developed the theory and performed the computations. All authors discussed the results and contributed to the final manuscript.

Corresponding author

Correspondence to Cinzia Di Novi.

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Data availability statement

All data used for this project are publicly available and accessible online. We have annotated the entire data-building process and empirical techniques presented in the paper.


This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Conflict of interest

C.D., D.R and M.Z. declare no conflicts of interest.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (DTA 73 kb)

Supplementary material 2 (DO 6 kb)



See Tables 5, 6 and 7.

Table 5 Dimensions of local healthcare authorities (LHAs) (number of LHAs per region and descriptive statistics about their population and area, 2012)
Table 6 Descriptive statistics (with regard to the local healthcare authorities (LHAs) of Ordinary Statute Regions)
Table 7 Average per capita costs by organizational model

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Di Novi, C., Rizzi, D. & Zanette, M. Scale Effects and Expected Savings from Consolidation Policies of Italian Local Healthcare Authorities. Appl Health Econ Health Policy 16, 107–122 (2018).

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