Cross-border flows of Italian patients within
the European Union
An international trade approach
GEORGE FRANCE *
Italy is by far the major importer of health care services in the European Union. This paper uses concepts taken from
international trade theory to analyse flows of Italian patients to other European Union member countries. The paper
takes a typology in which international transactions in services are classified according to whether a transaction
requires the movement of the consumers, of the producer or of neither and applies it to the trade in health services.
The paper concentrates on the demand side of transactions and observes that a key feature in this trade is that the
most common transaction involves the movement of the consumer to the location of the provider. An attempt is
made to formalize a calculus which patients may be using in deciding whether or not to move for health care.
Hoped-for improvements in the quality of care are set against the pecuniary and non-pecuniary costs which must be
incurred to obtain these. The quite considerable volume of interregional transactions in health care services which
takes place in Italy is examined in a first application of the calculus. This provides a basis for applying it to Italian
transactions with other European health care systems. An important determinant of this trade seems to be differences
in the reputations, real or imagined, between Italian providers of certain types of care and those in a number of
other European Union countries. The paper concludes by examining some factors, including changes in the financing
mechanisms, which may in the future influence the volume and nature of the trade in health services between Italy
and the rest of the European Union.
Key words: international health care trade, cross-border patient flows, pre-authorized care, Italy, European Union
c
ross-border flows of patients within the European
Union are relatively small when judged in terms of the
aggregate volume of patients treated by the different
national health systems and of the aggregate volume of
resources these systems absorb. However, they may be
non-marginal for certain pathologies and/or geographical
areas in particular countries. This raises the possibility
that at least some national health systems have to take
explicit account of these flows in their planning and
funding decisions.
Cross-border flows for 'pre-authorized' care (henceforth
called 'El 12 care' after the designation of the standard
administrative form used in all Union countries for granting authorization) are interesting in the fact that they
represent an 'international trade' in health care services.
They are conceptually and administratively different
from El06 care (aimed at promoting labour mobility
within the Union) and El 11 care (intended to facilitate
tourism within the Union). Arrangements for El 12 care
can instead be seen as directly aimed at promoting intraUnion trade in a particular service, health care, even if
the ultimate goal is almost certainly more social than
commercial. If it was originally true that in the European
* Correspondence: George France, MA, Consiglio Nazionale delle Ricerche,
Istituto di Studi sulle Regioni, Lungotevere delle Armi 22, 00195 Rome, Italy,
tel. +39 6 3216061, fax +39 6 3216071
Union "(S)ocial policy has developed in the shadow of
economic policies" (p. 400 ),* this may no longer be the
case.
This paper examines the cross-border flows of patients in
terms of the international trade in health care services. It
begins by presenting a typology of the international transactions in the services in general. This is applied to the
service of health care. A calculus is then described which,
it is suggested, patients make in deciding when and where
to move for health care. Italy, being by far the principal
importer of health care services (exporter of patients), is
an interesting case to look at. Interregional transactions
in health care within Italy are examined in a first application of the calculus. This helps us to understand some of
the reasons why Italian patients seem to have a particular
propensity to travel abroad for health care. This serves
then as a bridge to the application of the calculus to
Italian transactions with other European Union health
care systems. The paper concludes with a brief examination of some factors which might influence the nature of
patient flows between Italy and other Union member
states in the future and of some future directions for
research on cross-border flows.
TRADE IN SERVICES
Economic theory uses the principle of comparative advantage to explain why international trade takes place.
Countries enjoy different endowments of land, labour and
Cross-border flow of Italian patients
capital in quantitative and
Provider does not move
Provider moves
qualitative terms and thereTemporary movement
Factor trade
fore differ in their relative
Commodity trade
(type 3)
capacity to produce specific User does not move
(type 1)
goods. All countries, accordPermanent movement
ing to this principle, can
Foreign direct investment/migration
(type 4)
benefit when each specializes in what it is best at doing
and engages in trade with
Temporary movement
other countries, exporting
Commodity trade
(type 2)
the goods for which it has the User moves
most comparative advantage
Permanent movement
and importing those for
migration
which it has the least comparative advantage. Inter- Matrix 1 Typology of international transactions in services
national trade theory also Source: Sapir and Winter (p. 275)
predicts that all countries
made unnecessary by the possibility of teleconferences.
can benefit from economies of scale deriving from larger
supernational markets and from the increase in economic
With types 1 and 2 transactions, the factors are 'emefficiency stemming from competition. It follows that,
bodied' in the production process, while type 3 implies
ceteris paribus, it is advantageous to reduce or eliminate that the factors can be disembodied from the production
process.
tariff and non-tariff barriers to trade. It may be opportune
to move to economic union since this could provide gains
Given the intangible character of services, there may be
from factor mobility, from the coordination of fiscal and
a problem of information asymmetry:3 providers possess
monetary policies and from unified policies for employmore information on the services being transacted than
ment, growth and income distribution.1
do users. Most goods are 'search' goods in that the quality
A conservative estimate of the share of services in intercan be ascertained before consumption. Many services are
national trade is around 20%; services are therefore
instead 'experience' goods where quality can be assessed
traded internationally, but considerably less than goods.
only after consumption has occurred. A few services are
While the principle of comparative advantage evidently
'credence' goods where the quality can never be fully and
also works for services, these possess 2 characteristics
confidently assessed, even after consumption. One way
which may limit international transactions: the inherent
for the user to get around the information asymmetry is
non-tradability of certain services and government
to rely on the reputation of providers. The latter will stress
barriers to trading in services.3 The non-tradability of
their reputation as a way of signalling quality. Users
services is related to their characteristic of non-storability
develop a relationship with providers based on trust; this
which derives from the fact that their production and
'relational' contracting tends to be associated with lower
consumption tend to occur at the same time and place.
transaction costs and less opportunistic behaviour. ReThe notion of non-storability can serve as the basis for a
putation can function as a barrier to entry into markets.
2 category classification of international transactions in
services: services requiring and services not requiring
physical proximity. Sapir and Winter3 have developed an TRADE IN HEALTH CARE SERVICES
extremely useful way of classifying international transApplication of the typology to health care
actions in services. Four types of international transMatrix 2 gives examples of the 4 types of transaction for
actions in services are identified in matrix I:
the health care sector. Type 1 is currently rare. However,
• type 1: neither users nor providers move, for example
financial or professional services transmitted by telecommunication,
• type 2: users move to providers, for example tourism,
• type 3: providers move to users, for example engineering
and
• type 4: providers establish branches in the country of the
users, for example, advertising or retail distribution.
Type 1 is the closest to classic international trade in goods,
but types 2 and 3 are also definable as international trade.
Type 4 represents a flow of capital, foreign direct investment. These different types of transactions are not necessarily mutually exclusive, for example type 4 may involve the mobility of professionals. Alternatively, there
may be substitution, for example user mobility may be
developments in remote controlled microsurgery could
increase its scale in the future; long distance diagnostics
is already technologically feasible. With type 3 transactions, health professionals, disembodied from their domestic health facility, carry their skills to other countries,
using local health facilities as a temporary base. It is not
known how much of this actually takes place, but the
liberalization of professional mobility within the European Union certainly permits it. Type 4 transactions
occur when foreign investors create medical facilities in
a country, perhaps with the aim of exploiting the reputation of a parent facility located in another country. A
recent example is Health Care International, a consortium of foreign and local investors which opened a
hospital in Scotland which was 'marketed' using an image
EUROPEAN JOURNAL OF PUBLIC HEALTH VOL. 7 1997 NO. 3 SUPPL
Service (Servizio Sanitario
Nazionale,
SSN) in the same
(type 3)
Example: highly specialized doctors
year. In 1992 the Italian SSN
commute to hospital in patient's country
User does not move
(type 1)
devoted 0.5% of its current
Example: telemedicine
budget to cross-border care.
(type 4)
Example: affiliate of foreign hospital
A recent study shows that
opens in patient's country
state border crossing for
health care is a very minor
phenomenon in the USA as
User moves
(type 2)
Example: El 12 care
well.^ Detailed data on intraUnion patient flows are not
Matrix 2 Typology of international transactions in health care services
yet available for later years,
but Italy - while it has recorded a major decline in El 12 authorizations - is still by
reputedly modelled on that of first-class facilities in the
far the Union's major importer of health care.
USA and which was aimed at serving continental European and Arab patients.4 Finally, type 2 transactions are
best exemplified by El 12 care where patients choose a
The calculus underlying type 2 transactions
provider in another Union country in preference to a
In the event of feeling unwell, a patient (deciding against
domestic provider. Union citizens also move to nonself-diagnosis and self-therapy) has the choice of going to
Union countries such as Switzerland and the USA and
an accident and emergency division of a nearby hospital,
Canada while their national health systems treat patients
consulting a general practitioner or, where a general
from outside the Union.
medicine service does not exist, going directly to a specialist. Let us assume that ambulatory or hospital care is
Type 2 care is the most common international transaction
prescribed and that the cost of medical care is borne
in health care services, reflecting the fact that, like other
directly by the patient. The choice by the patient (and
services, health care is non-storable, is produced and
doctor/agent) between the providers in different geoconsumed simultaneously and generally requires direct
graphical locations will be based on the perceived quality
contact between the user and provider. That it is, in
(clinical effectiveness, the speed with which appropriate
general, the user who moves to the provider and not
care can be provided and the manner in which the care
viceversa probably reflects a number of factors:
is delivered) and total cost [the sum of direct costs for the
• the demand in any single foreign country for the services
purchase of medical services and transaction costs, that is
of a given provider may be too small to justify investthe non-medical costs of access to care (the travel costs,
ment in a branch facility and instead the provider may
accommodation costs, time costs, psychological costs of
be able to exploit economies of scale and the clinical
travel and being in an unfamiliar context)]. There seems
advantages of large case numbers by inducing patients
no a priori reason to think that, when the quality and
to move,
medical cost are broadly similar for providers in different
• the reputation of the provider may depend on a complex
locations, the patient will not prefer the nearest provider.
and perhaps unique mix of labour and capital difficult
That is, patients can be expected to be averse to distance
to replicate elsewhere and
for equal quality, since the transaction costs and distance
• formal barriers may impede factor flows.
are probably directly related. If we exclude the frontier
This general need for a patient to move to the point of
areas characterized by ethnic and and linguistic homosupply probably explains why the volume of type 2 intergeneity,
the psychological costs may reasonably be expected
national transactions in health care is also limited. Exto
rise
disproportionately
in the case of travel to foreign
penditure by Union countries on all cross-border care
countries.
Expressed
somewhat
differently, for equal med(El06, El 11 and El 12) has been a very small part of total
ical
costs
patients
will
tend
to
opt
for a more distant over
health care expenditure. In 1989 (the latest year for which
a
less
distant
provider
only
if
they
(and
their doctor/agent)
comparable data exist), the proportion for France, the
believe
that
they
can
thereby
obtain
higher
quality care.
UK, Spain and Ireland was less than 0.10%, just less than
Again
excluding
frontier
areas,
international
transactions
0.15% for Germany, around 0.17% for the Netherlands,
in
health
care
may
be
expected
to
involve
services
requiring
0.35% for Portugal, 0.38% for Belgium and 0.43% for
relatively
high
levels
of
medical
specialization.
Patients
Greece. Even Italy, which was by far the major importer
will differ in their propensity to travel for care and, hence,
of health care services, recorded a low 0.35%.5 There were
to engage in international transactions. This will depend
wide intercountry differences for El 12 care flows. In 1987,
on the household income and wealth, the capacity to
France recorded a mere 341 El 12 transactions, Belgium
obtain and process information on care options, the im1,200 and the UK an unspecified but reputedly very low
portance
given to the state of health and the willingness
number. In contrast, the figure for Italy was almost 26,000.
to
bear
the
costs associated with maintaining or improving
These data refer to authorizations granted and include
this
state.
Other
factors will be the age and general state
multiple authorizations for the same patient. This, howof
health
of
the
patients
(a measure of capacity to travel)
ever, has to be set against the approximately 9 million
and
the
availability
of
accompanying
persons.
hospital admissions registered by the National Health
Provider does not move
Provider moves
Cross-border flow of Italian patients
a 'credence' good.3 The freedom with which patients can
So far we have assumed that decisions on the choice of
actually apply this calculus will depend crucially on how
providers lie entirely with the patient and doctor/agent.
This follows directly from the assumption that the total
health care is financed and on what kind of health plancost of the health care is borne by the patient. What if the
ning, if any, exists.
medical costs are borne in large measure, if not entirely,
by third parties: private insurers, non-profit health insurance funds or national health services? The fact that it INTERNATIONAL TRANSACTIONS IN HEALTH CARE
has a zero price for the patient at the moment of consumpBY ITALY
tion (excluding, of course, transaction costs) makes
Interregional movement of patients
health care a fundamentally different service from most
In 1992, for the SSN as a whole, approximately 600,000
other services traded internationally. Third party payers
type 2 transactions for hospital care which involved
may wish to have a say in the choice of provider. The form
movement across regional borders were registered. This
this takes probably varies according to the type of payer.
represented over 6% of all hospital admissions in Italy in
Insurance-type payers may be indifferent to the location
that year. Examining these flows provides us with some
of the provider if they are not liable for the access costs
useful elements for our analysis of cross-country flows of
and as long as the patient provides adequate docuItalian patients. Regions vary considerably in their
mentation on the care delivered. Even in the event that
balance of trade with other regions. With the notable
insurers wish to establish 'preferred' relationships with
exceptions of Piemonte, Valle d'Aosta and Trentinoproviders to contain costs and guarantee quality standAlto Adige, all the northern and central regions are net
ards, there is no reason why they should a priori discrimexporters of hospital care services and all the southern
inate against foreign providers unless the transaction costs
regions are net importers. In 1991, 268,000 southern
which they have to bear (for example, translation costs,
patients (8.0% of the total admissions for the area)
problems of having to deal with different legal systems
travelled out of the area for care;7 23,000 or 10% of the
and, in general, having to guard from a distance against
southern children hospitalized (35% for Calabria) were
opportunistic behaviour by providers) are found to be
treated in extra-regional hospitals.8 In 1992, over 56% of
higher than those incurred in dealing with domestic
the patients treated by the Rizzoli Orthopaedic Institute
providers.
in Bologna were out of region and almost three-fifths of
these came from the southern regions. Well over 50% of
National health service payers may be more inclined to
the patients treated in the National Cancer Institute in
impose constraints on patient choice and, hence, on
Milan come from the south.
mobility in order to guarantee the efficient utilization of
capacity (for example, to match services with health
It was suggested earlier that health care is a 'credence'
needs within defined geographical areas). In such a case,
good. Information on the motives for interregional mothe distance travelled will not be completely at the disbility in Italy seems to confirm this amply. The principal
cretion of the patient (and doctor/agent) but will depend
reason given by the southern patients for the decision to
- perhaps decisively — on decisions by the health aumove considerable distances is dissatisfaction with the
thorities based on budgeting and planning criteria. A
quality of care obtainable in their home or nearby regions.
national health service payer may discourage the use of
In the case of paediatrics, for example, parents were
foreign providers when these are more costly than domesunhappy about the local health services, complained of a
tic providers (perhaps even if the quality is higher) or if,
lack of well-equipped or specialized facilities, expressed
for reasons of health planning and rationing, it is not
dissatisfaction with therapy already received and reported
intended to make the service in question available to
that they had been advised to go outside the area.**
national health service patients. We can, however, imaBroadly the same reasons are given for patients moving
gine situations where a national health service permits or
for oncological care. In the case of paediatrics, the children
even encourages international transactions in certain
travelling north for care are frequently healthy or with
health services. It deliberately chooses to rely on foreign
banal health problems not requiring complex facilities
providers to meet part or the whole of certain health needs
and easily treatable in the home region on an out-patient
(for example Luxembourg), perhaps particularly in fronbasis. This mobility for non-acute diseases is a measure
tier areas. In such a context we would expect the travelof just how poor the reputation of the home hospitals is.
ling and associated costs to be reimbursed. Less than full
Quite a number of transactions involving movement are
coverage of travel and certain other access costs in a
'spontaneous', with children arriving without any docusituation of authorized care is tantamount to the imposimentation, that is having had no contact with the health
tion of a patient co-payment.
service of the region of residence, an even harsher
comment on the reputation of that service. Southern
To sum up, it is suggested that patients apply a calculus
patients
(and their doctor/agent and relatives) seem to use
according to which hoped-for improvements in the quala
measure
of quality of care which goes beyond a narrow
ity of care are set against the pecuniary and non-pecuniary
medical
definition
and regards the overall way in which
costs which must be incurred to obtain these. Because of
their
case
is
dealt
with
by the health service [information
information asymmetry and in order to reduce the inon
care
options
and
on
the treatment being received,
formation costs, patients will tend to use the reputation
doctor-patient
(and
doctor-relative)
relations, quality of
of providers as a proxy for quality. Health care, that is, is
EUROPEAN JOURNAL OF PUBLIC HEALTH VOL. 7 1997 NO. 3 SUPPL
nursing support, the overall respect for patients' rights,
etc.]. Recent research suggests that patients' 'rights' are
less respected in southern regions than elsewhere. 13 That
southern parents may prefer to travel long distances for
care for children with mental problems has been interpreted as demonstrating dissatisfaction with how the local
health services handle such cases when medical competence may be less important than the capacity to treat
patients and parents humanely and with understanding. 12
The poor reputation, as judged by the patients, of the local
health services must certainly in part be attributable to
the low opinion of the southern services demonstrated
both by local doctors and by doctors in the northern and
central regions treating southern patients (the former by
encouraging their patients to move and the the latter by
their failure after treatment to refer such patients back to
their local services). 12
'Reputation' is however not always a good proxy for
quality and the poor reputation of southern health services seems in part at least unmerited. The capacity of
providers in home regions to make accurate diagnoses is
evidenced by the fact that the second diagnosis made by
the out of region hospital in most cases confirms the
original one. 1 Moreover, the capacity of the facilities in
the southern regions seems adequate for the demand
expressed for many services. 9 ' 12 The south-north movement for oncological care may instead have more justification given the fewer radiotherapy facilities in the
south and the fact that those available are less well
equipped and organized and with longer waiting lists. ^
On the whole, the health services in the southern regions
tend to be less well endowed and organized than those in
other parts of Italy. It is not clear what effect, if any, this
has upon measurable health states.
The volume of interregional flows reflects, however, not
only the importance attached to reputation by Italian
patients but also the fact that they are relatively unconstrained in their search for reputation. First, the medical
costs for out of region care are borne by the home region
while patients can obtain assistance in paying pecuniary
transaction costs, though the type of costs allowed and
the proportion of these covered varies from region to
region. Patients may thus have to meet some pecuniary
transaction costs while they tend to bear in full nonpecuniary transaction costs and they have shown themselves to be willing to actually pay these. Second, the SSN
allows considerable freedom of choice to patients, leaving
them to follow their preferences for treatment and move
for care. The Italian Constitution (article 32) guarantees
the 'right to health' and this right over the years has
increasingly been interpreted by the courts and policy
makers to mean a right to health care. The use of providers
outside the local health authority or region of residence
has had to be authorized, but this has tended to be done
automatically and frequently retroactively. Virtually the
full power of prescription has lain with the the patient's
doctor. The non-availability of a particular service in a
particular geographical area has been viewed as a valid
motive for an SSN patient to be authorized to go to
another area, if necessary even to a private uncontracted
provider. In this regard, the regions had no financial
incentive to limit out of region care. Regions exporting
patients did not pay for this directly; instead the Ministry
of Health adjusted central grants to take account of the
interregional mobility. This adjustment was moreover
only notional and done well after the transactions had
taken place, so the regions importing care had no clear
idea of the real costs involved.
In summary,
• Italian patients seem to attach considerable importance
to reputation,
• much of the cost associated with the use of providers
with a reputation is paid with public funds, but patients
are prepared to bear transaction costs,
• patients have been relatively unconstrained territorially
in their choice of provider and
• the regions have had little financial incentive to limit
patient mobility.
International transactions by Italy
According to unpublished Ministry of Health data, in
1991, almost 30,000 import transactions classified as
type 2 in matrix 2 were recorded in the trade of health care
services between Italy and the rest of the European Union.
The trade was not entirely one-way, with patients from
other Union countries using Italian centres of excellence,
such as the Ophthalmology Institute of the University of
Parma and the Rizzoli Orthopaedic Institute in Bologna;
however the overall balance of trade in this sector was
heavily in deficit for Italy .
The other 3 types of international transaction are currently of marginal importance for Italy. Type 1 probably
takes the form of telephone consultations between Italian
and foreign specialists for specific patients, but it is improbable that this involves a direct fee for a service. Type
3 transactions - where specialists move geographically to
their patients — occur within Italy, for example in the field
of neuromicrosurgery with specialists dividing their time
between private hospitals in Milan and Rome. French
oncologists visit Italy to consult with patients. Foreign
fixed direct investment (type 4) has occurred in the
private health sector, for example the American Hospital
in Rome, but its overall dimensions are unknown.
In 1987,8 of the 20 Italian regions explained almost 80%
of all the type 2 transactions. 16 A small northern region
bordering on France - Valle d'Aosta - stood out with 32.6
transactions per 10,000 inhabitants while Piedmont and
Liguria (2 other regions with borders with France) and
Sicily in the south also recorded considerable populationadjusted flows.
Extra-Italy movement, predictably, tends to be for relatively serious pathologies. In 1987, the more important of
these were oncology (38% of all transactions), nephrology (15%), orthopaedics (10%), cardioangiology and
cardiosurgery (10%); and ophthalmology (8%). These
were costly: in 1988, the El 12 forms accounted for only
14% of all the transactions in health care within the
Union but explained almost 60% of the expenditure. 5
Cross-border flow of Italian patients
Studies of Italian oncology patients using the Gustave
Roussy Institute and the Paul Brousse Hospital in
France 1' have found that their choice had been influenced negatively by the reputed low quality of the
Italian service, long waiting times, inadequate nursing
support, difficult relations with doctors and problems in
obtaining information on domestic care options and on
the care being received (diagnosis and therapy). They are
influenced positively both by the clinical reputation of
the French centres and of their medical staff and by the
overall way in which the patients are treated. A study of
patients resident in Piedmont who travelled to France for
care found that similar factors operated.18 French hospitals apparently try to reduce the psychological problems
associated with foreign movement by having Italianspeaking staff, providing explanatory brochures and administrative forms in Italian and offering accommodation
for patients and accompanying persons at special rates. In
this regard they compare very favourably with north
Italian oncology centres which, with few exceptions, offer
little or no help to patients in resolving the non-medical
problems associated with undergoing therapy.
Italy overall had a poorer stock of radiotherapy megavolt
equipment than other large European countries, particularly France, with the northern and central regions
being relatively less worse off than the southern ones.
Waiting lists can be long in Italy and treatment time
available for individual patients quite limited. In addition, as already noted, southern centres tend to offer less
than fully satisfactory care due to the problems of old
equipment, insufficient staff and organizational problems.14
For a series of reasons, including the scarcity of organs and
the problems of organization and coordination, the number of transplants conducted in Italian hospitals is lower
than most other European countries.20 The number of
patients waiting for a transplant is therefore high (6,000
for kidney transplants in 1991,21 although the situation
appears to have improved considerably since then ) and
the interest in seeking care abroad is, in consequence,
intense.
It is difficult to say whether the patients could have
obtained care in Italy comparable to that provided abroad,
because of the scant information contained in the documentation transmitted to the regions by foreign providers
concerning the care delivered and clinical outcomes.18
Patients travel abroad from regions which are relatively
well equipped medically and technologically, for example
Lombardy, Piedmont and Liguria, even when they live in
or close to large urban centres with well-known hospitals.
However, patients from the northern and central regions
tend to use foreign providers more for medical visits after
therapy in Italy, whereas the southern patients instead
tend to move abroad for therapy immediately after diagnosis.23 This may be an indirect measure of the differences in the reputations of the northern and southern
hospitals as perceived by local patients.
Cross-country studies of the levels of satisfaction of citizens with their health systems find Italians among the
least satisfied.24'25 Doctors/agents seem to play an active
part in the decision to choose a foreign provider. One
study found that for 18% of the patients interviewed, their
doctor had specified both the foreign facility and the
name of the foreign specialist to contact. ' Another
study10 found that doctors were a principal source of
information for patients on foreign care options. Yet
another study18 found that 62% of GPs believed that the
condition of the SSN justified the use of foreign care.
Just as in the case of interregional mobility, reputation
may not always be an accurate measure of quality. There
seems to be an inflated notion on the part of Italian
patients of what can be expected from foreign providers
and excessive pessimism about the therapeutic capacity
of Italian providers. One study found that 53% of Italian
oncology patients interviewed saw French therapy as
unique and exceptional. Travel by terminal cancer
patients has been described as 'journeys of hope'. Undertaking a foreign trip may tend to be seen as 'doing something', actively combating the illness.26 The act of travel
in this case is not seen negatively but positively. To the
extent that this is true, the aversion to distance hypothesis
is placed in doubt, at least for certain categories of patients.
Of a sample of Italian patients at the Paul Brousse Hospital in Paris 77% were financed under El 12 regulations,
11% were financed in part on the basis of an El 12
authorization and in part under El 11 regulations (which
apply to medical care for European Union tourists), 5%
used private insurance and 7% were self-financing.1^ In a
sample of Italian patients using the Gustave Roussy Institute, which is also in Paris, around 46% were completely
reimbursed by the SSN for medical expenditure, 30%
were partially reimbursed and 16.2% received no assistance whatsoever.10 Patient co-payments and non-medical expenses for patients and accompanying persons
mean that patients probably incur considerable out of
pocket expenditure. The regions have the power to help
patients here but the extent to which they do so varies
considerably.
Until recently, the relatively unconstrained freedom enjoyed by patients (and their doctors) to choose their
provider extended beyond the national territory. In the
event that a patient was unable to obtain suitable care in
a national facility, he or she was almost automatically
deemed entitled to use a foreign provider. Real or perceived deficiencies in the national service were considered to justify foreign transactions. This 'institutionalization' of the poor reputation of the SSN was reflected
in the relative ease with which El 12 authorization was
granted. Indeed, it was frequently sufficient for a doctor
to declare the use of a foreign provider to be 'necessary'
and 'urgent'. Essentially decisions on transacting internationally were left to the discretion of patients and
doctors. Regions had little incentive to be strict in granting El 12 authorization since the medical costs generated
were paid by the Ministry of Health, out of its own budget,
directly to the other national authorities.
EUROPEAN JOURNAL OF PUBLIC HEALTH VOL. 7 1997 NO. 3 SUPPL
Possible future tendencies for Italian international
transactions in health care
the Union but there seems to be no intention to seek
autarky. This would not in any case be feasible for legal
and political reasons and, at least in the medium term,
would not always be practicable on the clinical plane,
most strikingly in the case of organ transplants. International transactions may become even more concentrated in areas where foreign providers enjoy a clear-cut
comparative advantage, most evidently for oncology
(France) and transplants (France and Belgium).
A number of recent policy measures taken subsequent to
the period studied so far in this paper will probably have
important implications for out of Italy patient flows. In
particular, since 1989 the central authorities in Italy have
been seeking to curtail patient (and doctor/agent) freedom to generate international transactions. Authorization to go abroad now depends on the results of a search
within the domestic system for the care required. A list of
pathologies has been drawn up for which authorization CONCLUSIONS
can be granted. This list specifies the maximum waiting
The calculus described in this paper, albeit quite elementimes beyond which patients are entitled to go abroad.
tary, appears useful in formalizing the analysis of crossNational legislation requires regions to filter requests for
border care. What emerges in the Italian case is the key
El 12 authorizations using 'referral committees', made up
role of reputation in overcoming patients' aversion to
of doctors, for each of the listed pathologies. These comdistance and the importance of distinguishing between
mittees are supposed to establish whether the patient can
reputation and quality in this regard. Both reputation and
obtain the necessary care within a 'reasonable' time from
quality seem to be important in determining differences
a domestic provider. If this is not possible, the committee
according to the geographical area of residence in the
determines where the patient can best obtain the care in
propensity of patients to move abroad for care. Travel in
question abroad. With this mechanism, the reputation of
search of reputation or quality is not an independent
a provider continues to be used as a measure of quality,
variable in the calculus. Italian patients have been relatbut the evaluation of reputation by a a group of doctors is
ively free to move for medical care while being financed
presumably clinically better founded than if it is left to
by the national health service. Nevertheless, such is the
patients and their doctors. The information asymmetry
pull of reputation/quality that patients seem prepared to
can therefore be reasonably expected to diminish. The
bear what may be substantial transaction costs.
regions were slow in implementing these arrangements,
The data currently available for the period after 1989 are
but all have now set up referral committees for the listed
insufficient for any detailed appraisal of the effects of the
pathologies. Unpublished Ministry of Health data show
regulations introduced in that year on the volume and
El 12 authorizations for hospital care rising until 1991 (to
nature of Italian use of foreign care. Preliminary unpub30,000) suggesting that the new regulations had not then
lished Ministry of Health data record, however, a substanbegun to take effect. The authorizations then dropped
tial decline in volume. This reflects the fact that the new
dramatically by approximately 50%. A study of the oncology
regulations have in effect increased the cost for the pareferral committee in the northeastern region of Piedmont
tient when using reputation as a criterion for choosing a
found that in 1992 two-fifths of patients requesting El 12
provider: without an El 12 authorization both the medical
authorizations were referred to Italian facilities or were
costs and all the transaction costs are borne by patients
considered not to require the care requested.18
and authorization is now more difficult to obtain. Data for
Changes have also been made in how El 12 transactions
a large sample of patients who requested El 12 authorizaare financed. As from January 1997, the Ministry of
tion in 1993-1994 and for all applicants in 1995 became
Health will continue to settle with the other national
available in 1996. For the first time there is information
authorities directly for the debts of the single regions for
on the requests for authorization which have been reforeign care, but it will then deduct these expenditures
jected. These data will allow a detailed study of the
from the regions' central grants. This should presumably
evolution of the use of foreign care over time and of
make them more wary of lax authorization.
authorization patterns in the different regions.
For these reasons, we would expect a further decline in
Another interesting line of research to follow is a comthe demand for foreign care by Italian patients. On the
parison of different countries' cross-border flows. Even
other hand, the El 12 referral committees are required, in
after the full impact of the 1989 regulations and changes
the event that authorization is granted, to provide pain the arrangements for funding domestic and foreign care
tients with information on the non-medical aspects of
makes itself felt, Italy will continue to be the major
foreign care. In addition, arrangements have been made
importer of health care services in the Union. An interby the Ministry of Health, in association with Italian
esting question is why some countries register extremely
consular facilities in destination countries, to help palow volumes of import transactions compared with Italy.
tients once they arrive. These measures will have the
The analysis in this paper suggests a number of factors
effect of reducing some kinds of transaction costs such as
worth considering here. These would include
information costs and pyschological costs and, hence, can
be expected, ceteris paribus, to increase the demand for • the quality and reputation (as seen by patients and
doctors) of domestic health services vis-a-vis services in
foreign care.
other countries,
The official orientation is to rationalize the international
• the information possessed by patients and their doctors
trade in health care services with other health systems in
about foreign care options,
Cross-border flow of Italian patients
m the patients' aversion to travel,
• the stringency of El 12 authorization procedures and
• the degree to which the medical costs and transaction
costs are covered by third-party payers.
The author acknowledges support by the EU Concerted Action
'Health Care Financing and the Single European Market' (SEMproject), contract BMH1-CT92-O74O, which is funded under the
BIOMED1 Programme of General Directorate XII.
He also wishes to thank the Ufficio Attuazione SSN of the Italian
Ministry of Health for the data provided.
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Received 7 May 1996, accepted 19 September 1996