Spatial effects in hospital expenditures: A district level analysis

We use spatial econometric methods to analyse spillovers in hospital expenditures across Health Districts of the Emilia-Romagna Region (Italy). We estimate spatial models that allow for global spillovers and distinguish between the expenditures associated with potentially inappropriate hospitalizations and those associated with complex medical procedures. We also investigate the relative contribution of geographical and institutional proximity in explaining spatial dependence, by explicitly modelling different connectivity structures and exploiting them to build alternative spatial weight matrices. We find that interactions largely differ between types of expenditures, with positive spatial effects for potentially inappropriate admissions, the effect being generally not significant for high-complexity expenditure. Relying on the estimated direct and indirect effects, we also test for the presence of spatial spillovers across districts. Finally, the paper draws policy implications for the public health planner.