THE PROVISION FOR RISKS AND CHARGES OF PUBLIC HEALTHCARE COMPANIES: AN ANALYSIS OF A NATIONAL CONTEXT

The provision for risks and charges of public healthcare companies: An analysis of a national context. The increase in claims for compensation by patients to public healthcare companies highlights the key role of the provision for risks and charges. The resources set aside in the provision for risks determine the ability to cover losses or debts of determined nature, of certain or probable existence, of which, however, either the amount or the date of occurrence is undetermined. The research to identify the evolutionary trend of the provision of risk in national public healthcare companies. Moreover, it forecasts the future trend of provision for risks divided per the protection of civil liability towards third parties model. The research adopts a quantitative methodology to facilitate replicability and to investigate the trend of the provision for risks of a national public healthcare context, i.e., Italian public healthcare context. The research data set includes accounting information collected by websites of healthcare facilities in order to comprehend the evolutionary trend of the provision for risks. The results of the research describe a stable trend in the resources set aside in the provision for risks, a continuous decrease in the use of the provision for risks with a consequent increase in the fund itself, and a discontinuous trend in the percentage ratio between the annual provisions for the risk and the fund itself.


INTRODUCTION
Beginning in the ‗80s, with the introduction of international reforms in the public sector, public organizations have started different processes to improve the results and the use of resources (Brignall & Modell, 2000;Kroll & Moynihan, 2015;Modell, 2001). Initially, the focus of these reforms was to improve the efficiency and effectiveness of the public sector with the use of management tools, taken from the private sector, to manage the results obtained (Hood, 1989(Hood, , 1991. The aim of this use was to improve the quality of healthcare performance ( Trinchero et al., 2019). Since the ‗00, the focus of public reforms has become primarily the relationship between the mission and the various stakeholders (Inamdar & Kaplan, 2002;Kaplan, 1999;Osborne, 2010). The mission states the justification of the existence of an organization which, in the specific case of the public sector, is known as the ability to satisfy the needs of the stakeholder (Kaplan, 1999). For instance, if we consider public healthcare, its mission is to guarantee to all citizens, in conditions of equality, universal access to an equal dispensing of healthcare service (Borgonovi & Zangrandi, 2005;Sardi et al., 2020b). Even though public organizations have improved the management of resources and the results obtained, and still have to guarantee patient safety and care quality (Jankuj & Voracek, 2015;Sardi et al., 2020b), the health sector has continuously received a reduction in the government grant (Borgonovi & Compagni, 2013;Carletto et al., 2019;Francesconi & Guarini, 2018). In particular, the pandemic SARS-CoV-2 has put public health organizations in danger, as it has increased compensation claims from users of the national service. As so, in Italy, in 2020, 6.4% represented the compensation claims correlated to the requests for compensation due to the pandemic SARS-CoV-2 (D'Aurizio & D'Aria, 2021). For these reasons, more and more scholars and companies are starting studies to make the healthcare service of a nation more efficient and safe (Bonetti et al., 2016;Crema & Verbano, 2016Trinchero et al., 2019) with particular attention to the provision for risk; in fact, this set aside reduces the available resources to use for healthcare services. Consequently, it becomes essential to study the evolutionary path of provision for risk in order to improve healthcare organization management (Sardi et al., 2020a).
On this matter, the paper presents scrupulous research on the provision for risks of public healthcare companies, to determine the variation of the sums reserved in the last 5 years (2016-2020) and to comprehend the possible evolution of this provision fundamental to cover the losses with the characteristics of nature determination, certain existence, amount or date of occurrence undetermined at the end of the financial year. The overall research question (RQ) is: RQ: How could provision for risk evolve in national public health companies?
In order to answer the research question, the paper responds to other sub-questions: Sub-question 1: What is the trend of provision for risks of the public healthcare companies?
Sub-question 2: What is the trend of reserves of the public healthcare companies grouped for the regional healthcare system? Sub-question 3: What is the trend of the ratio between the annual reserves of the provision for risks and the provision for risk? Sub-question 4: What are the reserves of the provision for risks divided per the model of protection of civil liability towards third parties?
The article is structured as follows. Section 2 describes the provision for the risks, focused on the function and its utility. It highlights the state of the art and it identifies in the literature a gap regarding the lack of scientific studies in the economics and management scope of the provision for risks and charges of public healthcare companies. Section 3 explains the methods and materials used to develop the research. Section 4 illustrates the various analyses carried out to answer the research question. Section 5 associates the research background with the results obtained by the study. Furthermore, it discusses the actual trend of provision for the risks and its future one, with an optical of business continuity, from the management of the health risk and users' safety. Lastly, Section 6 summarizes the future opportunities, implications, limitations, and contributions of the study.

RESEARCH BACKGROUND
Each company, during the accounting period, reserves resources in the provision for risks and charges to meet any liabilities that may arise in the future. The provision for risks and charges is an item present in the liabilities of the balance sheet. It includes -certain or probable liabilities of a specific nature, with an indeterminate date of occurrence or amount‖ (Organismo Italiano di Contabilità [OIC], 2016). -Provision for risks and charges is intended only to cover losses or debts of a determined nature, of certain or probable existence, of which, however, at the end of the financial year, either the amount or the date of occurrence is undetermined‖ (Article 2424 of the Civil Code, 1942).
The correct esteem of the provision for risks and charges is fundamental for all types of companies aimed to meet possible liabilities which could occur in future years. However, there is a particular sector where the correct determination of the provision for risks and charges is starting to assume a connotation more and more important: the public healthcare sector (Rizzi et al., 2021). Indeed, healthcare companies are facing a great challenge: the correct determination of provision for risks and charges. This provision has a key role in the activity of this sector as it should guarantee first, business continuity, and secondly, the patient's protection in the event of errors in the provision of healthcare services. The management of the SARS-CoV-2 pandemic has taken an increase in compensation requests from healthcare service users (D'Aurizio & D'Aria, 2021). This rise has concerned item B.II provision for risks which -represents liabilities of a specific nature and probable existence, the values of which are estimated. Therefore, these are potential liabilities related to situations already existing at the balance sheet date but characterized by a state of uncertainty whose outcome depends on whether or not one or more events occur in the future‖ (OIC, 2016). The item represents the sums used to compensate for potential damage (Rizzi et al., 2021).
One of the processes analyzed to diminish the errors and contain the litigation is the management of the clinic and sanitary risk. On one side, the aim is to contain the expenses to rationalize costs to pursue economic and financial goals. On the other side, the aim is to guarantee the quality and safety of care (Bizzarri et al., 2018). To manage the risks, it is necessary to analyze the different situations and afterwards put into practice monitoring and training activities (Buscemi, 2015). Even though the malpractice of medicine and defensive medicine have been common use for some time on, only in the last few years, the theme of the safety of the cure has taken some relevance (Bonetti et  . With the risk management activity, public healthcare companies can manage the risks of their activity, especially the ones related to clinical service. The management of clinical risk is one of the most important processes of public healthcare companies. Good management of this risk allows an improvement of the care's quality and users' safety. To guarantee these, it is necessary to know and analyze the risk and the healthcare as a whole (Bonetti et al., 2016;Canitano et al., 2011).
Despite various activities that aim to mitigate the risk, it is connatural to the existence of the firm itself (Ferrero, 1987). The risk that burdens each business is unavoidable and cannot be transferred. What can be transferred is the burden of risk that is the economic consequences, typically negative, that upon the occurrence of the harmful event they may be generated for the company and/or the operators. The transfer of the burden of the risk can occur -in the space‖ -namely to third economies, on a contractual basis -or -in time‖ -through self-insurance (Ferrero, 1987). Particularly for public healthcare companies, the transfer of the burden of risk -in the space‖, that is to third economies on a contractual basis, which occurs typically through the stipulation of insurance policies, while the -in time‖ transfer of the risks occurs through -self-insurance‖ (Perna, 2010;Sardi et al., 2020b). In a different case, the healthcare company reserves resources in the provision for risks and charges to cover losses or debts of a specific nature, of certain or probable existence, of which, however, at the end of the financial year, either the amount or the date of occurrence is undetermined. As so, it becomes essential to reserve the exact financial amount in the provision for risks and charges, which corresponds to the future event that could be fulfilled. The conditional time is a must as the future event, correlated to the degree of fulfilment and occurrence, could be a) probable, an occurrence deemed more likely that the opposite, b) possible, it depends on a circumstance that may or may not occur, and it is less likely than probable, or c) improbable, very low probabilities in the possibility of the realization (OIC, 2016). Furthermore, each healthcare company must comply with the accounting principles for the preparation of the financial statements determined by the relevant regulations. When the financial statement is drafted, the accounting principles that need to be followed need to ensure the uniformity of the indications provided by the civil and fiscal regulations and the ones issued by the legal economic authorities and professional associations. These accounting principles refer to both the base criteria for the accountability of the operations of management and of the specific problems related to the different balance sheet items (general principals or postulates), and, most at all, to the definition of the applicative principles and guidelines, for the filling of the financial statement.
The scheme of the provision for risks and charges of the healthcare companies is as follows:  Total.
The items in the provision for risks and charges are explained in detail in Appendix, Table A.1. From these considerations arise the need to determine the performance of the provision for risks of the public healthcare company and the amount reserved.

METHODOLOGY
The research adopts a quantitative methodology and supports studies that are primarily on numerical information (Wacker, 1998). This methodology allows the replicability and generalization of the study, which drastically decreases the influence of external situations. The results of a quantitative study are predictive of a series of events, coming from the verification of the research hypothesis, and sometimes know exactly how it generates and develops a certain phenomenon (Balnaves & Caputi, 2001).
As the literature suggests, the research has been developed in 4 phases.
1. Definition of the study sample. The study deepens the case -Italy‖. The study sample includes all the Italian public healthcare companies, so 106 companies are divided into 21 regional healthcare systems (Appendix, Table A.2).
2. Data collection. Data have been collected from accounting documents of the healthcare company, financial statements, and other official documents published on regional and companies' websites related to the period from 2016 to 2020.
Not all the present items in the financial statements which make up the provision for risks and charges have the same relevance to answering the research question. In fact, by analyzing the figures attributed to each item in the integrated note of each healthcare company, we can state that the item of interest for the study is the B.II provision for risks as it includes all the sums used to compensate in case of potential damage.
The data collected are from about 106 companies, however, some accounting documents could not be found as they were not published under the section -transparency‖ on their company's internet website. The data are presented in alphabetic order first per region and then for a healthcare company.
The data collected related to the companies under study are: a) the value of the provision for risks from 2016 to 2020 and b) the set-asides of the provision for risks from 2016 to 2020.
The data have been categorized, sorted, and classified on numerical scales to form a database.
3. Data analysis. It includes two techniques:  Understanding the context: this analysis highlights the context of the Italian public healthcare companies, as the healthcare system varies in each nation.
 Cross case analysis: the statistical elaboration of the data, with the use of a series of extremely accurate parametric and inferential procedures, it has been possible for an objective comparison of the observed behavior, which, after it has been measured, it has become reproducible and reusable. This analysis investigates the provision for risks and their relative set aside in Italian public healthcare companies. It analysis: -The trend of provision for risks from 2016 to 2020 of the Italian public healthcare companies, this analysis highlights the complete data of provision risk for all companies (see Appendix, Table A. 3) and the variations of the annual provision and the 5 years analyzed (see Table 2).
-The trend of reserves of the Italian public healthcare companies grouped for the regional healthcare system from 2016 to 2020; in particular, this analysis highlights the variations of the annual reserves and of the 5 years analyzed (see Table 3).
-The trend of the ratio between the annual reserves of the provision for risks and the provision for risk (see Table 4).
-The reserves of the regional healthcare systems are based on the civil liability model towards third parties chosen between a) insurance, b) mixed e c) self-insurance (see Figure 1).
4. Result representation. The research has allowed to development of statistical models useful to explain the provision for risks' trends and their relative set aside (Wacker, 1998).

RESULTS
The following analysis has highlighted a great variability between the regions of the public healthcare system (Cicchetti & Gasbarrini, 2016). This analysis describes the main evolution of regulations and the characteristics of a complex healthcare system.
Law 833/78 established the National Health Service. A few years later, this system highlighted some problems, including the excessive use of public resources, which led to a reorganization of the national healthcare system. Legislative Decree 502/1992 named -Reorganization of the health regulations‖ introduced the process of companies. This reorganization led to an improvement in the management of public healthcare companies. The current structure of the Italian healthcare system has three different levels: the first concerns the central government, the second -the twentyone regional governments, and lastly, the thirdthe local companies (ASL) together with the independent hospitals (IHS). Healthcare spending in the National Health Service grew in nominal terms, from 2010 to 2016, by an average of 0.7% per annum against an average annual inflation growth of 1.1% (Longo & Ricci, 2017). In 2020, however, the growth of Italian public spending on health, as a result of the SARS-CoV-2 pandemic, was 5.31% (AGENAS, 2022). In this context, Italian public healthcare companies have the objective of providing an increasingly qualitative service in the face of decreasing resources (Garlatti & Lombrano, 2017).
This context has led healthcare companies to seek better efficiency of processes. One of the processes that have been analyzed in recent years is the management of litigation and civil liability to third parties.
The  Table 1), the models of civil liability towards third parties, which the regions can choose, are the insurance model, the self-insurance model, or the mixed model. Understanding which is the best model to apply is very difficult because public health organizations are very complex realities and have discontinuous trends due to the various decisions of policymakers (Rizzi et al., 2021). The analysis of the context shows that claims for compensation and the average cost of compensation to patients are, also, constantly increasing, with the consequence of the abandonment of many insurance companies in ensuring the protection of civil liability towards third parties of public healthcare companies (D'Aurizio & Dati, 2019).
The risk fund of an Italian public healthcare company, therefore, takes a fundamental position in this area. The amounts of the reserves in the provision for risk, although they protect liabilities of a type, certain or probable nature, with an undetermined date of occurrence or amount, reduce the resources available to a company. The amounts reserves will be affected in subsequent accounting years. The Italian legislation has led public healthcare companies to verify the adequacy of certain procedures, including administrative accounting procedures.
One of the procedures was the -Reconnaissance of the litigation for the management of the deep risks and burdens‖ (Legislative Decree 118/2011) in application also of the implementations previewed from the various international reforms. The application of this requirement has led to the recognition of the key information to verify the adequacy of the value of the provision for risks and charges entered in the Balance Sheet concerning contingent liabilities arising from disputes.
The results of the analyses described above for the 106 Italian public healthcare companies divided into the 21 regional healthcare systems describe the development of the provision for risk and the provisions (expressed in euro) also based on the civil liability model chosen by the regional healthcare systems.
The first analysis shows that in the last 5 years (2016-2020) the total provision for risk items in the liability section of the Risk and Expense Fund of the Balance Sheet has increased constantly, but with very different amounts. The percentage increases were 19%, 15%, 12%, and 3%, respectively, but if we consider the last 5 years, the increase in the provision for risk is 59% (see Table 2). Several reasons push for this increase. For instance, healthcare companies generally pay serious claims after many years because the process is very long, which increases the medium claim cost (ANIA, 2022).
The second analysis shows that the total amounts reserves at the regional level are uneven, but the average of the amounts set aside at the National Health Service level over the last 5 years has been constant (see Table 3). The analysis describes, following the trends just described, how quotas reserves at the national level tend to be fairly linear year by year, while the use by the provision for risk is constantly decreasing.
The third analysis describes a discontinuous trend in the percentage ratio between the annual provision in the provision for risk and the provision for risk (see Table 4).  The fourth analysis describes an increase in provisions related to the models of civil liability towards third parties. The analysis illustrates an increase in advance payments for the insurance and mixed model, while a decrease for the self-insurance model (see Figure 1).

DISCUSSION
Since the ‗80s, public healthcare companies have started processes to improve the efficiency and effectiveness of the use of public resources. As pointed out by Hood (1991), this transition also took place thanks to the use of management tools used by the private sector (Hood, 1989(Hood, , 1991 To meet the public needs identified in the public sector management reforms, public healthcare companies have initiated various procedures, including administrative accounting procedures. In the case study related to Italy, one of the processes started was that of -Reconnaissance of litigation for the management of the funds risks and burdens‖ in application also of the fulfillments previewed from the various international reforms. The application of Legislative Decree 118/2011 led to the discovery of the key information to verify the adequacy of the value of the provision for risks and charges entered in the Balance Sheet about contingent liabilities arising from litigation. OIC (2016) states that -risk funds represent liabilities of a determined nature and a probable existence, the values of which are estimated. They are, therefore, contingent liabilities linked to situations that already exist at the balance sheet date but are characterized by a state of uncertainty, the outcome of which depends on whether one or more events […] Potential means a situation, condition, or case existing at the balance sheet date, which is characterized by a state of uncertainty, which may result in a loss (contingent liability) at the occurrence of one or more future events in a profit (potential activity)‖ (p. 4). The principle still goes to affirm that the -potentiality‖ is present at the date of drawing up the balance sheet, but its manifestation will happen in a future period (Marcello & Lucido, 2019). As for the remaining items that make up the provision for risks and charges, this case is characterized by a component of randomness that public healthcare companies must assess for the accounting of the values in the budget. So, we could say that the higher the number of potential liabilities over time, the greater the need for public resources.
The results of the analyses of the provisions show a linear trend. These results underline a constant decrease in the use of the provision for risks and a consequent increase in the Fund itself. At the same time, they describe a discontinuous trend in the percentage ratio between the annual provision for risks and the Fund itself. The results also show that over the years under review, there has also been an increase in the provision concerning the insurance model adopted. Where there is the insurance model and the mixed model for the civil liability towards third parties there is an increase, while where there is the self-insurance model there is a decrease. The forecast of provision for risks by the models of civil liability towards third parties describes a decrease in the resources earmarked for the direct model, while an increase in resources for the insurance and mixed model (see Figure 2). This context could be subject to further changes in the future as about 35% of companies operating in the field of civil health liability, following a survey of 40 companies, stated that from 2020 they have introduced or will introduce specific exclusion clauses for risks arising from particular events such as pandemics (IVASS, 2021b). Such clauses could increase the provision relating to the mixed and self-insurance model and decrease the insurance model, thus reducing the resources available precisely to cope with the increased potential risks.
Future research will have to consider and integrate many aspects, including certainly the effects of the SARS-CoV-2 pandemic on claims. In addition, the results of the healthcare policies of the various countries will have to be analyzed. One of the challenges certainly will be to invest in staff and organizational structures-management able to evaluate and quantify in an increasingly timely degree the degree of risk, to avoid incorrect or excessively prudential estimates of possible future adverse events. At the same time, consistency in the application of accounting principles will be increasingly important to arrive at objectively comparable budgetary data. So, the transparency of the use of public resources, which should provide for the publication of data on all claims made in recent years for all healthcare establishments, verified as part of the exercise of the function of monitoring, prevention, and management of health risk: the risk management activities (Sardi et al., 2020a). Not least to understand how the prevention and management of healthcare risks can affect the safety of care and the provision of benefits and consequently the budgets of healthcare companies.
Understanding the degree of risk posed by health systems, therefore, lays the foundations for more qualitative management of public resources. The assessment of the adequacy of the funds, in addition to being part of the normal operations to be carried out at the end of each financial year, will become a strategic asset to ensure both the continuity of service and the actions to be taken to improve the delivery of health care. This consideration leads to a close synergy between health management and administrative management from a perspective of an -economic-managerial‖ connection.

CONCLUSION
The research fills a knowledge gap related to the performance of the provision for risks of a health system in a period of continuous reduction of public funding, as well as inflation growth. The results describe in the last 5 years (2016-2020) a national health system in which the provision for risks item has increased constantly, but with very different amounts. At the same time, it highlights that the total amount reserved at the national level tends to be fairly linear, while the use by the provision for risks is constantly decreasing. The results also show a discontinuous trend in the percentage ratio between the annual provision in the provision for risks and the provision for risks, indicating a constantly changing system. Finally, the results describe an increase in provision in regions adopting the insurance model and the mixed model for thirdparty liability, while a decrease in regions adopting a self-insurance model.
The provision of the resources set aside in the provision for risks by civil liability to third parties model observes a decrease for the direct model, while an increase for the insurance and mixed model.
The main limitation of the study is the use of an exclusively quantitative methodology; it does not involve the use of observations and interviews with users and healthcare service operators. Another limitation includes the lack of accounting documents on healthcare facilities' websites. However, the use of this methodology has allowed for analyzing a large sample. The research analyzed all the Italian public healthcare companies included in the National Health Service favoring a greater understanding of the provisions for risks. This research could thus encourage new studies on provision criteria and models of third-party liability, as well as support comparisons with other countries with similar healthcare systems.
The contribution of the research is the deepening of a subject that is little studied, but of great importance for users of healthcare services and for companies themselves, especially in a historical period in which public resources are limited. The research highlights a constantly changing system. The implications of the study concern the possibility of a better determination of the level of risk of public healthcare companies and healthcare services based on the provisions of the provision for risks.