Abstract
Institutional quality can influence the regulatory framework and the environment in which healthcare providers operate. This, in turn, affects the incentives towards quality and appropriateness of care, and thus patients’ health outcomes. This chapter investigates the relation between institutional quality and health outcomes. It reviews the previous literature, and then provides new theoretical insights and empirical evidence. The theoretical framework suggests that both formal policy levers and, more generally, a better institutional environment can affect the quality and appropriateness of care provided. The empirical evidence from Italy shows that higher institutional quality improves health outcomes in hospitals, as measured by reductions in heart attack, hip fracture, and stroke mortality rates.