Productivity and Technical Efficiency in the Italian Insurance Industry

The purpose of this paper is to partially fill the gap in the existing literature by conducting an analysis of technical efficiency and productivity growth in the Italian insurance industry. The analysis makes use of a detailed data base on Italian life and non-life insurance companies over the period 1985-1993, provided by the Associazione Nazaionale fra le Impress Assicurazioni, the association of insurance companies. The authors measure technical efficiency, changes in technical efficiency over time, and technical changes over time for a sample of Italian insurers, and use the results to test hypotheses regarding industrial organization and to analyze trends associated with structural developments in the market. Data development analysis (DEA) is used to estimate product frontiers for each year of the sample. A production frontier gives the minimum inputs required to produce any given output vector. An important reason for conducting the analysis presented is to provide benchmark statistics to facilitate comparisons of efficiency and productivity under the new European regulatory regime when data on more recent periods become available. In addition, the production frontier results are used to test hypotheses about two major issues in industrial organization - the coexistence of alternative product distribution systems, and organizational forms in an industry. The results indicated that technical efficiency in the Italian insurance industry ranged from 70 to 78 percent during the sample period. There was almost no efficiency change over the sample period. However, productivity declined significantly over the sample period, with a cumulative decline of about 25 percent. The decline was attributable almost exclusively to technological regress, implying that insurers needed more inputs to produce their outputs at the end of the sample period that they did at the beginning. Although improvement in both technical efficiency and technical change appear to be needed, the main problem at present appears to be the adverse shift in the production frontier. Although the sources of the technical regress characterizing the Italian industry are not entirely clear, this phenomenon has been observed in at least one other financial services industry that experienced deregulation and growth in new products and distribution systems - the Spanish savings banks. In a dynamically changing environment, many insurers may be adopting new approaches to producing their outputs. This provides more opportunities for firms to make mistakes in the choice of technology, perhaps leading to excessive consumption of inputs even by "best practice" firms. An increase in the complexity of insurance products and markets could have a similar effect. As firms become more experienced at operating in the new environment and the initial false-starts in the adoption of new technology have been corrected, the productivity of the Italian insurance industry can be expected to improve. The increase in competition resulting from deregulation should reinforce this process, as firms that fail to improve are likely to be penalized the by the market.

Telerehabilitation after total knee replacement in Italy: cost-effectiveness and cost-utility analysis of a mixed telerehabilitation-standard rehabilitation programme compared with usual care

OBJECTIVES: To assess cost-effectiveness and cost utility of telerehabilitation (TR) versus standard rehabilitation (SR) after total knee replacement (TKR). DESIGN: Markov decision modelling of cost-effectiveness and cost-utility analysis based on patient-level and secondary data sources employing Italian National Health Service (NHS; Ita-NHS) and Society perspectives. SETTING: Primary care units (PCUs) in Italy. PARTICIPANTS: Patients discharged after TKR. INTERVENTIONS: Mixed SR-TR service (10 face-to-face sessions and 10 telesessions) versus SR (20 face-to-face sessions) PRIMARY AND SECONDARY OUTCOME MEASURES: The incremental cost per additional knee flexion range of motion (ROM) and per QALY gained by SR-TR compared with SR. Second, we considered the probability of being cost-effective and the probability of being more effective and less expensive. RESULTS: TR appears to be the cost-effective in the base case and in all of the considered scenarios, but is no longer more effective and less expensive if transportation costs are excluded. Comparing SR-TR with SR, the incremental cost-effectiveness ratio (ICER) adopting the Ita-NHS perspective for the base case was −€117/ROM gained. The cost-effectiveness probability for SR-TR was 0.98 (ceiling ratio: €50/ROM), while the joint probability of being more effective and less expensive was 0.87. Assuming that TR would increase health-related quality of life (HRQOL) utilities by 2.5%, the ICER adopting Ita-NHS perspective is −€960/QALY (cost-effectiveness probability: 1; ceiling ratio: €30 000/QALY). All the performed sensitivity analyses did not change the conclusions, but if transportation costs were excluded, the probability for SR-TR of being more clinically effective and less expensive reduced to 0.56. CONCLUSIONS: The analysis suggested SR-TR to be cost-effective, even less expensive and more effective if the PCUs provide ambulance transportations. However, the uncertainty related to TR costs, HRQOL and long-term clinical outcomes raises important topics for future research, which should be addressed to confirm our estimates. TRIAL REGISTRATION NUMBER: ISRCTN45837371

Budget impact analysis of the use of paricalcitol for the treatment of secondary hyperparathyroidism in chronic kidney disease

OBJECTIVE: Evaluation of the budget impact of the use of paricalcitol (compared to alternative treatment) for secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) when used at two different timing of therapy.METHODS: Two Markov models related to a different timing of treatment have been developed: the intermediate stage of chronic kidney disease (CKD3) and the dialysis stage. The analysis was conducted with the perspective of the Italian National Health System and over a 5-year time horizon. The clinical and economic data used in the model were derived from the literature and other assumptions were made based on the opinion of clinical experts. Univariate sensitivity analysis was conducted to test the robustness of the results.RESULTS: The base case shows that starting paricalcitol treatment from the dialysis stage (considering 13,311 possible candidates) is associated with a reduction in direct costs from € 1,782,921,351 to € 1,622,357,209 over 5 years. Furthermore, considering a collective of 1,000 subjects eligible and starting treatment with paricalcitol since the intermediate stages of the CKD, is associated with an overall cost saving of € 1,197,500.DISCUSSION AND CONCLUSIONS: Paricalcitol is expected to be cost-saving in patients with SHPT in Italy considering both the therapeutic indications of the drug. Moreover, despite the higher cost of using paricalcitol in pre-dialysis stage, an early treatment of SHPT determine an overall decrease in direct medical costs

Telerehabilitation after total knee replacement in Italy: cost-effectiveness and cost-utility analysis of a mixed telerehabilitation-standard rehabilitation programme compared with usual care.

OBJECTIVES: To assess cost-effectiveness and cost utility of telerehabilitation (TR) versus standard rehabilitation (SR) after total knee replacement (TKR). DESIGN: Markov decision modelling of cost-effectiveness and cost-utility analysis based on patient-level and secondary data sources employing Italian National Health Service (NHS; Ita-NHS) and Society perspectives. SETTING: Primary care units (PCUs) in Italy. PARTICIPANTS: Patients discharged after TKR. INTERVENTIONS: Mixed SR-TR service (10 face-to-face sessions and 10 telesessions) versus SR (20 face-to-face sessions) PRIMARY AND SECONDARY OUTCOME MEASURES: The incremental cost per additional knee flexion range of motion (ROM) and per QALY gained by SR-TR compared with SR. Second, we considered the probability of being cost-effective and the probability of being more effective and less expensive. RESULTS: TR appears to be the cost-effective in the base case and in all of the considered scenarios, but is no longer more effective and less expensive if transportation costs are excluded. Comparing SR-TR with SR, the incremental cost-effectiveness ratio (ICER) adopting the Ita-NHS perspective for the base case was -€117/ROM gained. The cost-effectiveness probability for SR-TR was 0.98 (ceiling ratio: €50/ROM), while the joint probability of being more effective and less expensive was 0.87. Assuming that TR would increase health-related quality of life (HRQOL) utilities by 2.5%, the ICER adopting Ita-NHS perspective is -€960/QALY (cost-effectiveness probability: 1; ceiling ratio: €30 000/QALY). All the performed sensitivity analyses did not change the conclusions, but if transportation costs were excluded, the probability for SR-TR of being more clinically effective and less expensive reduced to 0.56. CONCLUSIONS: The analysis suggested SR-TR to be cost-effective, even less expensive and more effective if the PCUs provide ambulance transportations. However, the uncertainty related to TR costs, HRQOL and long-term clinical outcomes raises important topics for future research, which should be addressed to confirm our estimates. TRIAL REGISTRATION NUMBER: ISRCTN45837371

Auctions vs. Bargaining: An Empirical Analysis of Medical Device Procurement

We test recent theory on the benefits of auctions and bargaining as alternative procurement mechanisms using data on the procurement of medical devices by Italian hospitals. Theory suggests that auctions perform well when cost control is the key concern, but are less effective at producing the optimal mix of quality and price for complex products where quality is difficult to verify. Consistent with the theory, we find that auctions are used more often when the influence of financial staff relative to medical staff is high, when the marginal cost of increasing product quality is high, and when the marginal value of increasing quality is low.-

Columbus' egg and the engineer's effect in forecasting solutions adoption

Why is it that both complex and simple solutions that have proved to be effective have low rates of adoption? The literature on innovation (i.e., a specific category of solutions) management has provided some clues, identifying barriers of several types: organizational, technological, economic, human behavior and the nature of the innovation. We suggest that one reason is the misalignment between the degrees of complexity i.e., the degree of knowledge embedded, of the problem and its solution. A solution perceived to be too simple for a complex problem falls into the category of what might be called “Columbus' egg”. At the basis of this effect there is the tendency to minimize expected frustration as the difference between the effort made in looking for a solution and the obtained reward. When the solution is too complex for a simple problem, this is the case of the “Engineer's effect”. This effect has its cognitive underpinnings in the tendency to minimize decision-making costs. We discuss and illustrate these phenomena and propose some guidelines for technology developers and product innovation managers, as well as for forecasting solutions adoption

Assessment of the Economic Impact of Belimumab for the Treatment of Systemic Lupus Erythematosus in the Italian Setting: A Cost-Effectiveness Analysis

OBJECTIVE: The purpose of this analysis is to evaluate the cost-effectiveness of belimumab, a new biological treatment specifically developed for the treatment of Systemic Lupus Erythematosus (SLE), in the Italian setting. SLE is a chronic non-organ specific autoimmune disease characterized by a disregulation of the immune system that involves many organs and systems. METHODS: A cost-effectiveness micro-simulation model with a lifetime horizon originally developed for the UK was adapted to the Italian setting. The analysis compared Standard of Care (SoC) alone vs belimumab plus SoC from a National Healthcare Service (NHS) and societal perspective. Health-economic consequences of treatments and organ damage progression were calculated. When available, Italian data were used, otherwise UK costs were converted using Purchasing Power Parities (PPPs). Utility values were based on the EQ-5D™ assessments in the belimumab clinical trials (BLISS 52 and 76). Results were discounted with 3% for costs and effects. A maximum belimumab treatment duration of 6 years was assumed and wastage costs were considered. RESULTS: Cost per life year gained (Incremental Cost-Effectiveness Ratio, ICER) and cost per Quality Adjusted Life Year (QALY) (Incremental Cost-Utility Ratio, ICUR) were €22,990 and €32,859, respectively. These values reduced to €20,119 and €28,754, respectively, when indirect costs were included. CONCLUSIONS: It may be concluded that in the Italian setting and according to the guidelines of the Italian Association of Health Economics (IAHE), belimumab was shown to be cost-effective, in terms of both ICER and ICUR, (€25-40,000/QALY)

Systemic lupus erythematosus and the economic perspective: a systematic literature review and points to consider

Systemic lupus erythematosus (SLE) is a chronic, disabling, progressive disease, with many associated comorbidities, affecting patients during prime working years resulting in a high economic burden on society, producing high direct, indirect and intangible costs. In this article, our goals are two-fold. First, we review and discuss studies published in the period 2002–2012 concerning costs of SLE and point out gaps in the published literature. Second, we propose further research studies to advance our understanding of the economic perspective in SLE in the current area of new and emerging therapies. The literature evaluating disease costs in SLE remains limited and to date has only included a small number of countries. Despite these limitations, available studies indicate that SLE has significant socio-economic ramifications. Future studies are needed, especially to assess novel biologic therapies which have been made available or currently under investigation for SLE. An interesting approach in these new economic evaluations in SLE may be represented by the selection of the targets of the treatment to include in the cost-effectiveness and cost-utility analyses. Future treat-to-target strategies will likely include evaluation of their pharmacoeconomic implications