Does corruption and the institutional characteristics of the contracting authorities affect the execution of healthcare infrastructures?. An empirical investigation for Italy
| Date | 04 June 2018 |
| Pages | 148-164 |
| Published date | 04 June 2018 |
| DOI | https://doi.org/10.1108/JOPP-06-2018-010 |
| Author | Marina Cavalieri,Calogero Guccio,Ilde Rizzo |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue |
Does corruption and the
institutional characteristics
of the contracting authorities
affect the execution of healthcare
infrastructures?
An empirical investigation for Italy
Marina Cavalieri,Calogero Guccio and Ilde Rizzo
Department of Economics and Business, University of Catania, Catania, Italy
Abstract
Purpose –This paper aims at contributing to the researchon the role played by corruption in the health
procurement by use non-parametric techniques to examine whether the efficient execution of Italian public
contracts for healthcare infrastructures is affected by socio-economic variables (including the level of
“environmental”corruption)in the area where the work is localised and by the institutional features of the
contractingauthority.
Design/methodology/approach –A data envelopment analysis (DEA) is applied to a sample of 405
contracts during the period 2000-2005. Smoothed bootstrap techniques to calculate confidence intervals for the
estimated efficiency parameters along with different non-parametric tests and kerneldensity estimates are used.
Findings –Results show that “environmental”corruption negatively influences the performance of
healthcare infrastructures. Furthermore, healthcare contracting authorities appear to be less efficient than
other publicbodies acting as procurers.
Originality/value –The paper highlights the role of environmental corruption in the provision of
healthcareinfrastructures.
Keywords Corruption, Contracting authorities, Healthcare infrastructure
Paper type Research paper
Introduction
Corruption, broadly definedby Transparency International as the abuse of entrusted power
for private gain, is recognised to be a pervasive and perdurable worldwide problem
(TransparencyInternational, 2015).
A central academic debate is whether corruption “greases”or “sands”the wheels of
economic growth (Bardhan, 1997;Pande, 2008;Aidt, 2009). Overall, evidence on the “sand
the wheels”hypothesis has informed the position of key international organizations
(i.e. IMF, OECD, World Bank), which have launched,over the years, an increasing number of
national and international anti-corruption campaigns, aiming at promoting greater
transparency and accountability in public sector activities. Among the most remarkable
international initiatives are the United Nation Convention against Corruption, adopted in
2003, and the OECD Anti-Bribery Convention, which entered into force in April 1999 and
has resulted in the 2009 Anti-BriberyRecommendation (OECD, 2009).
Notwithstanding the importance of the issue, few papers have explicitly explored the
effects of “environmental”corruption on firms’efficiency, especially regarding public
JOPP
18,2
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Journalof Public Procurement
Vol.18 No. 2, 2018
pp. 148-164
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-06-2018-010
The current issue and full text archive of this journal is available on Emerald Insight at:
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utilities. However, most of them (Dal B
o and Rossi, 2007;Abrate et al.,2015) are confined
within a cross-country frameworkand rely on aggregate country-level indices of corruption
(e.g. Transparency International Index or the Corruption Perception Index), which, due to their
subjective nature, may be biased. Using “objective”measures of “environmental”corruption
(e.g. number of criminal charges against the public administration; number of government
officials convicted for corrupt practices), few other papers find a significant negative impact of
the corruptive phenomenon on efficiency of either municipal solid waste services in Italy
(Abrate et al., 2013) or major commercial airports in the USA (Yan and Oum, 2014).
A large number of research studies have dealt with the performance of procurement in
general and with the relevance of corruption for the procurement field (Piga, 2011). Indeed,
public procurement is considered to be particularly at risk of corruptive behaviours, mainly
because of the large amount of public resources involved, the asymmetric information
characterizing the decision-making process and the intrinsic incompleteness of contracts
(Thai, 2001;Moriand Doni, 2010).
Although an extended analysisof this literature is beyond the scope of the present paper
(for a detailed review, Finocchiaro Castro et al. (2014), it is here worth reminding that the
performance of public contracts is found to be significantly affected by the institutional
features of the procurement process (e.g. selection procedures, contract specification and
enforcement mechanisms. Bajari and Tadelis, 2001), as well as by corruption opportunities
(Estache and Trujillo, 2009;Benitez et al.,2010). The latter are likely to arise at any stage of
the procurement process, generating serious and different problems. Recently, Finocchiaro
Castro et al. (2014) highlighted how the performance of public works contracts, in terms of
cost overruns and time delays, is often negatively affected by “environmental”corruption,
thus resulting in relevant social losses. Guccio et al. (2012a) report that “environmental”
corruption, as measured by Golden and Picci (2005) index, is associated with higher
adaptation costs. Bandiera et al. (2009) distinguish between corruption (called “active waste”–
which provides utility for the public decision-maker) and inefficiency (called “passive waste –
which does not generate such an utility) in public purchases of goods and services. They find
that the majority of the total estimated waste in the procurement of standardized goods by
Italian public bodies is passive[1].
Public procurement in the healthsector is also highly inclined to corruption (Cohen, 2006;
Cohen et al.,2007;Rose-Ackerman and Tan, 2014). The only existing global estimates
concerning healthpublic procurement funds lost due to corruption can be tracedback to few
years ago and amount to 10-25 per cent of global spending on health (Transparency
International, 2006)[2]. The presence of corruption in public purchase of pharmaceuticals
and medical devices is well established owing to the highly sophisticated and lucrative
nature of these traded goods and to the existence of patent protections[3]. The problem is
particularly serious in Italy, as tenders represent the second expenditure voice in the
healthcare sector after that on employees, but highly more discretional than the latter. In
monetary terms, spending for the purchase of goods and services in the health sector
amounted to more than e30.4bnin the year 2016 (Corte dei Conti, 2017).
Notwithstanding, the role played by corruption in the health sector, in general, and in
health procurement, in particular, it has attracted very scant attention by scholars. To the
best of our knowledge, the only related paper is the one by Baldi and Vannoni (2015). This
investigates the relationship between the degree of centralization (or decentralization) in
public procurementand the tender prices of selected (highly standardized) drugs for hospital
usage in the period 2009-2012. The authors find that regional centralization and the
establishment of purchasing consortia among local health authorities (an hybrid system)
perform better with respectto completely decentralized systems (about 9 per cent and 20 per
Execution of
healthcare
infrastructures
149
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