31 March 2026 | This Focus examines the role of the market within the Italian healthcare system, characterised by the presence of a National Health Service (INHS), that is, a model financed out of general taxation (albeit with cost-sharing arrangements) and based on the principles of universal coverage, equity of access, comprehensiveness of services (including prevention, treatment and rehabilitation), territorial uniformity and service integration. The system is characterised by a mixed production structure: almost one third of public expenditure is allocated to services provided by private suppliers. On the financing side, the INHS covers less than three quarters of total healthcare expenditure (compared with just over 80 per cent in the EU as a whole), while households’ out-of-pocket spending is relatively high (almost 9 percentage points above the EU average) and is directed mainly towards treatment and rehabilitation services rather than long-term care, as occurs in countries with stronger public intervention.
This Focus provides evidence that is useful for assessing whether a process of healthcare privatisation is under way, and to what extent, both in terms of cost coverage and in terms of ownership of providers. This process is subject to divergent interpretations: on the one hand, it is regarded as a possible factor in weakening the INHS, in that it may undermine its founding principles; on the other hand, it is seen as an evolution that is difficult to avoid, if not desirable, in response to the increase in healthcare needs associated with population ageing and technological progress, which entails the introduction of new and often more costly treatments. Overall, the phenomenon is complex and multifaceted.
The hybrid nature of the Italian healthcare system can, in part, be traced back to choices made when the INHS was established. Unlike the British model, whose creation in 1948 led to the nationalisation of hospitals, Italy retained the system of agreements with private providers, later replaced by accreditation mechanisms and contractual arrangements. The role of private providers strengthened at certain stages, particularly in the early 1990s and during the second decade of the 2000s. In this latter period, the INHS underwent a downsizing process, accompanied by a significant reduction in its workforce, which reduced the contribution of the public sector to the production of healthcare services in favour of the private sector. Private healthcare provision now constitutes a dynamic and expanding segment, also characterised by significant concentration processes, especially in specific areas. On the financing side, the already high incidence of households’ direct spending by European standards has been accompanied by the recent and significant increase in expenditure intermediated by insurance schemes, mutual associations and health funds, which, although still limited, has further strengthened the role of the market in healthcare.
In recent years, and especially during the health emergency, the process of downsizing the INHS has shown signs of partial reversal. The abrupt and dramatic recognition of the staff shortages that had come to characterise the INHS led to a resumption of recruitment, although this was still insufficient and only partly structural. Nonetheless, significant problems remain in terms of the INHS’s attractiveness, linked both to wage levels and to working conditions, also in light of the fact that public funding for the system, as a share of GDP, has stabilised at levels similar to those recorded before the pandemic.
More recently, relations between the public and private sectors have intensified further. While accreditation, agreements and contracts allow the INHS to purchase from the market the services to be provided to citizens, health funds and mutual schemes may access public facilities through agreements relating to intramural professional practice (intramoenia, i.e. professional activities carried out outside normal working hours by physicians at a public hospital using the hospital’s outpatient and diagnostic facilities).
Some observers advocate stronger integration between the public and private sectors as a response to citizens’ demand for services not met by the INHS. The enabling bill for the reorganisation and strengthening of territorial and hospital care and for the revision of the organisational model of the National Health Service, approved by the Government on 12 January, appears to move in that direction. Among other provisions, the measure envisages the revision of the classification of hospitals and the introduction of “third-level hospitals”, centres of excellence at national level with an extra-regional role within the INHS, which may be privately owned and managed — including by foundations, associations and ecclesiastical bodies — and to which specific public resources, not yet quantified, would be allocated in order to cover the costs of care functions provided at national level. It should, however, be stressed that the nature and mission of private providers, even when operating within the INHS, are not fully comparable to those of public entities. The former pursue profit objectives — in the case of for-profit firms — or, in any event, revenue expansion, whereas the mission of the INHS is to guarantee the fundamental right to health, subject to limits on expenditure growth — albeit difficult to identify and apply in practice — arising from the requirements of effectiveness and appropriateness of the services delivered.
Looking more closely at the evidence emerging from this Focus, it should be noted that, over little more than a decade (between 2012 and 2024), public financing declined by 0.3 percentage points, reaching 6.3 per cent of GDP in 2024, while households’ direct expenditure — concentrated mainly on the purchase of medicines and medical devices and on outpatient care — remained around 2 per cent of GDP, and the role of voluntary financing schemes increased (by 0.1 percentage points of GDP). Financing through private insurance, which also manages a substantial share of the activities of health funds, increased by more than 100 per cent; here too, expenditure is directed mainly towards outpatient services, while a significant part is absorbed by governance and administrative costs.
The growth in health funds registered in the dedicated registry, which benefit from specific fiscal advantages, has been particularly strong: their number rose from 267 to 324 between 2010 and 2023, while the number of enrollees increased from 5.8 to 16.3 million between 2013 and 2023. In the latest available year, these funds disbursed more than €3 billion, nearly two thirds of which related to services of a substitutive, rather than supplementary, nature with respect to those guaranteed by the INHS.
Public financing of healthcare also operates through the tax system, in particular through deductions for healthcare expenditure and the various preferential regimes applying to contributions paid to insurance intermediaries. In the first case, the cost to the public budget amounted to about €4.6 billion in 2023, with benefits tending to increase as income rises. In the second case, the shortfall in tax revenue is estimated at €1.1 billion, only partly offset by lower deductions for reimbursed healthcare expenses; this is accompanied by lower social contribution revenues of about €600 million (which in turn translate into an increase in direct taxes of just under €200 million). Benefits accrue mainly to employees in the middle- and upper-income brackets and to residents of the northern regions, followed by those in central Italy. The expansion of supplementary healthcare instruments — driven above all by the increasing fiscal incentives in this area and by the advantages that also arise in collective bargaining in terms of lower labour costs for firms and easier industrial relations — may raise critical issues both in terms of equity and efficiency, also in view of the high administrative costs associated with these instruments.
On the production side, the balance has progressively shifted in favour of the private sector in the creation of value added. The public share declined by almost 5 percentage points, following a particularly marked reduction between 1995 and 2017 (equal to 7.6 points), only partly offset by a subsequent recovery, especially during the pandemic years. This dynamic mirrors that of staffing, which within the INHS was significantly affected by the expenditure-containment policies introduced, in particular, following the sovereign debt crisis. The effects emerged both in pay and in employment terms, with a reduction of about 46,500 employees between 2009 and 2017, against an expansion of employment in the private sector. Only in response to the health emergency was there a significant resumption of recruitment within the INHS, with an overall increase of 64,800 units between 2018 and 2024.
Over time, public healthcare expenditure has increasingly shifted towards intermediate consumption and the purchase of services from private providers. The share of the former in total expenditure increased significantly (by 13 percentage points between 1995 and 2024), also as a result of higher expenditure on medicines purchased directly from healthcare facilities (partly replacing expenditure on medicines dispensed by pharmacies), greater recourse to outsourcing and the use of flexible labour (including the so-called “gettonisti”, i.e. professionals recruited at hourly costs higher than those of employees, often through temporary work agencies), as well as the health emergency and the increase in prices due to the energy crisis. The gradual shift in expenditure from pharmaceuticals dispensed by pharmacies to pharmaceuticals purchased directly by healthcare facilities did not substantially alter the overall weight of pharmaceutical expenditure in final healthcare consumption, at least over the last fifteen years. At the same time, the reduction in the employee compensation component was partly offset by higher intermediate consumption, also as a result of outsourcing processes.
Within public provision, the share of hospital services declined significantly (by about 10 percentage points), in line with de-hospitalisation processes and policies aimed at containing the number of beds and facilities. Despite the parallel strengthening of territorial services, also supported by the National Recovery and Resilience Plan (NRRP), the results still appear inadequate and uneven across regions.
As regards the purchase of services from market producers, in addition to the downsizing of pharmaceutical expenditure dispensed by pharmacies and, to a lesser extent, of expenditure for general practice, there has been a strengthening of the overall role of services delivered by private facilities. After declining in the 1990s, their share in final consumption increased, with an overall rise of about 4 percentage points between 1995 and 2019, before falling by 2 points during the years of the health emergency and up to 2024. In 2020, lockdown measures and fear of contagion reduced access to healthcare facilities; subsequently, despite the recovery of previously postponed services and the adoption of measures intended to encourage a greater contribution from the private sector to the reduction of waiting lists, the INHS primarily strengthened public facilities through staff expansion. Among the services purchased on the market, rehabilitation, supplementary and prosthetic care declined sharply over the period considered, whereas other care — which includes long-term care services — increased substantially.
Finally, the Focus offers a reconstruction of the overall health market in Italy, showing that the firms involved generate almost €70 billion of value added (equal to about 6.4 per cent of total value added generated by firms) and employ just under 1.2 million workers.
The pharmaceutical supply chain is a complex and highly internationalised system, characterised by high levels of exports and imports and by the presence of multinational firms, with affiliates also included in wholesale trade. These features make it difficult to assess the sector’s profitability. In the medical devices segment, consolidation processes and rising profitability can be observed (particularly among corporations); similar dynamics are found in the pharmacy sector.
In the service delivery segment, there is high labour intensity and a significant ratio of value added to turnover; however, productivity per worker is lower than in high-technology manufacturing sectors. Restricting the analysis to corporations, specialist and diagnostic care show marked expansion, whereas hospital and residential services have faced greater difficulty in recovering their pre-pandemic activity levels. Higher costs — also attributable to the energy crisis and to rising interest rates — have adversely affected profitability, particularly in the diagnostic segment, which has recorded larger losses in recent years after a phase of high profitability. By contrast, specialist care has remained more resilient, while hospital and residential services continue to show weaknesses. In the latter area, as in specialist care and clinical analysis laboratories, the presence of corporations continues to increase.