Using the increase in the number of pharmacies mandated by the "Cresci Italia" law approved in 2012, this study measures the impact of liberalizing the opening of new pharmacies on hospitalizations and the related expenditure. The hypothesis is that a more timely access to services and pharmaceutical products can prevent or shorten hospitalizations for less severe cases, which are treated in hospital essentially with drugs. We use monthly microdata on hospitalizations recorded at all Italian hospitals and we exploit the variation generated by the new regulation.
On average, every new pharmacy prevents 17 medical hospitalizations every year. We find that an increase of 8% in the number of pharmacies lowered medical hospitalizations by 1.1% and the related expenditure by 1.3%. The drop is concentrated on short hospitalizations of children and elderly patients. We do not find any impact on a control group of surgical hospitalizations. Pharmacies appear to reduce hospitalizations by giving information to people who would otherwise go to a hospital.