Understanding Inappropriateness in Health Care. The Role of Supply Structure, Pricing Policies and Political Institutions in Caesarean Deliveries

The upward trend in the incidence of caesarean deliveries is a widespread stylised fact in many countries. Several studies have argued that it does not reflect, at least in part, patients' needs but that it is also influenced by other factors, such as providers/physicians incentives. Not surprisingly, the incidence of caesarean sections is often used as an indicator of the degree of (in)appropriateness in health care, which has also been found to be strongly correlated with excessive expenditure levels. In this paper, we exploit the significant regional variation in the share of caesarean sections recorded in Italy to explore the impact on inappropriateness of three groups of variables: 1) structural supply indicators (e.g., the incidence of private providers); 2) pricing policies (role of DRG tariffs); 3) political economy indicators (to capture different approaches to the governance of the health care sector). The analysis controls for demand side factors, such as the demographic structure of the population and education levels. The results suggest that DRG tariffs might be an effective policy tool to control inappropriateness, once the composition of the regional health care system - in terms of private vs. public providers - is taken into account. Also some characteristics of regional governments and the funding sources of regional health spending do matter.