Relate hospital charges to use of services.

Despite their constantly rising charges that provoke government regulators and insurance companies to impose "caps," hospitals and other health care institutions continue to use antiquated cost control systems. This author describes a new accounting system, based on the amount of care each patient needs, that has been in use at Massachusetts Eye and Ear Infirmary for six years. In this system, basic "clinical care units" (determined by a peer review process and in collaboration with third-party payers) establish the acceptable standard for a given diagnosis. With charges and reimbursement based more directly on the labor and services involved, hospitals can plan more efficient use of nursing staff and other personnel and services. Use of established norms for each diagnosis also helps staff and third-party insurers determine when hospital resources are being used most productively.     

Cutting costs in your own backyard: opportunities in financial services

Hospitals looking to reduce cost and improve performance in financial services should focus on these areas: Treasury banking services costs and fees. The possibility of a revenue-generating vendor payment solution. The accounts payable process.     

Key points to consider in the design and delivery of group long-term care insurance services

Long-term care insurance is a rapidly growing form of risk protection that many employers are beginning to make available to employees and their family members. Benefits managers need to use care in navigating the not yet fully charted waters of this new field of group insurance.     

Zero defections: quality comes to services

Companies that want to improve their service quality should take a cue from manufacturing and focus on their own kind of scrap heap: customers who won't come back. Because that scrap heap can be every bit as costly as broken parts and misfit components, service company managers should strive to reduce it. They should aim for "zero defections"--keeping every customer they can profitably serve. As companies reduce customer defection rates, amazing things happen to their financials. Although the magnitude of the change varies by company and industry, the pattern holds: profits rise sharply. Reducing the defection rate just 5% generates 85% more profits in one bank's branch system, 50% more in an insurance brokerage, and 30% more in an auto-service chain. And when MBNA America, a Delaware-based credit card company, cut its 10% defection rate in half, profits rose a whopping 125%. But defection rates are not just a measure of service quality; they are also a guide for achieving it. By listening to the reasons why customers defect, managers learn exactly where the company is falling short and where to direct their resources. Staples, the stationery supplies retailer, uses feedback from customers to pinpoint products that are priced too high. That way, the company avoids expensive broad-brush promotions that pitch everything to everyone. Like any important change, managing for zero defections requires training and reinforcement. Great-West Life Assurance Company pays a 50% premium to group health-insurance brokers that hit customer-retention targets, and MBNA America gives bonuses to departments that hit theirs.     

An analysis of efficiency in the delivery of financial services: The case of life insurance agencies

Scale and scope economies are examined for life insurance agencies that distribute multiple financial products. The results of this study suggest that there are significant administrative returns to scale for firms that sell a mix of financial products. The findings for scope estimates are inconsistent, suggesting that there are positive and negative cost complementaries for pairs of products. Subadditivity can be rejected, suggesting that joint distribution of financial products is not necessarily more efficient than specialization and that different-sized agencies are not necessarily at a cost disadvantage.     

Colliding Worlds: Issues Relating to Language Translation in Accounting and Some Lessons from Other Disciplines

This paper explores the implications of language translation in accounting. It draws on research on translation in other disciplines, and on insights from applied linguistics. It examines practical problems and solutions explored in other disciplines that we deem relevant to accounting. The paper also examines the ideological, cultural, legal, and political consequences of translation. We find that the ambiguity inherent in translation is, on the one hand, relevant for the translation of accounting principles and can contribute to accounting convergence. We show, on the other hand, that it has the potential to be exploited in ideologically or pragmatically motivated distortions in the implementation of accounting regulation. We further argue that the importance of translation in accounting is underestimated or disregarded, inter alia because it has limited effect on the culturally and economically most dominant stakeholders. We finally examine the implications of translation problems for less powerful stakeholders and smaller language communities.     

Housing and the labor market: Time to move and aggregate unemployment

Conventional macro-search models (Mortensen and Pissarides) with unemployment benefits and taxes have been able to account for the variation in unemployment rates across countries but do not account for the role geographic mobility or commuting time might play. We build a model in which both unemployment and mobility rates are endogenous. Our findings indicate that an increase in unemployment benefits and in taxes does not generate a strong decline in mobility but does increase unemployment as in the standard model. We find that with higher commuting costs the effect of housing frictions plays a large role and can generate a substantial decline in mobility.     

New development: Mutual solutions to shaping public service delivery

There have been a number of developments in approaches to public service delivery in the UK, partly as a response to austerity measures, as well as a shift to new models of public sector, private and third sector provision. This article considers the development of public service mutuals—those organizations that have spun out of the public sector, and where employees of the new providers play a key role in shaping and delivering public services at local and national levels. The authors identify areas where further work is needed to better understand these new models and to consider whether the perceived benefits associated with traditional mutual models are applicable when applied to public service provision.     

Modeling fund and portfolio risk: A bi-modal approach to analyzing risk in turbulent markets

Following the financial crisis of 2008, it has been argued that Value at Risk (VaR), and risk analysis in general, failed to alert risk managers of the turbulence on the horizon. This is a misguided view that should not have come as a surprise because many widely circulated academic papers and discussions suggested, well before the crisis, that simple VaR results could easily be misinterpreted if the circumstances for its proper use are not fully understood. This paper addresses some ways in which VaR concepts may be applied more effectively. Non-standard Monte Carlo simulations are utilized. Whereas standard mean–variance defined methodologies using Monte Carlo analysis may not capture how “fat” a lower tail may actually be, a bi-modal switching structure between assumed normal periods and possible turbulent economic periods may help resolve the problem. Lower boundaries (worst case paths) of the different (normal versus bi-modal) processes are mapped to illustrate implied riskiness of portfolios if turbulence occurs. The analysis implies that no mechanical risk analysis is sufficiently divorced from a judgment call about possible market disruptions; however, a bi-modal approach allows quantification of the said judgment in conjunction with empirical observations from history.     

Information shares of two parallel currency options markets: Trading costs versus transparency/tradability

This paper studies whether trading costs or transparency/tradability are more important to price discovery using a unique dataset of currency options that trade simultaneously in two parallel markets. The Over-The-Counter (OTC) market is characterized by sophisticated investors, low trading costs, and low transparency/tradability compared to the Tel-Aviv Stock Exchange (TASE). Pricing errors are much larger on the TASE and the information share of the OTC market is significantly larger than that of the TASE by various information share measures, showing that trading costs and trader type have a first-order effect on price discovery while transparency/tradability have a second-order effect.     

Relating Context Variables to Participative Budgeting and Evaluative Use of Performance Measures: A Meta‐analysis

Extant findings regarding how context variables relate to participative budgeting and the evaluative use of accounting performance measures (APM) are contradictory. Unlike previous reviews of such findings, this empirical article uses a meta‐analysis to examine the relations of context variables with participative budgeting or evaluative use of APM to determine (i) how the variables relate and (ii) which factors might cause between‐correlation variance, such as statistical artefacts or moderating influences of variable measures, sample selection, or industry differences. All meta‐analyses are based on rather small samples. Three groups of context variables emerge. First, some relate significantly and homogeneously to participative budgeting or evaluative use of APM; these direct relations should be considered explicitly in further studies. Second, for some variables, the relations are homogeneous but not significant, such that they are neither simple nor direct. Third, substantial variance exists in the correlations for some context variables; these relations are contingent on other influences. Industry differences and sample selection explain some inconsistencies in exploratory moderator analyses and should receive additional research attention.     

From phase transitions to Modern Monetary Theory: A framework for analyzing the pandemic of 2020

Analyzing the economic impact of the COVID‐19 pandemic of 2020 requires an appreciation that price signals were no longer primary determinants of supply and demand. Economic agents were acting out of health fears, government‐mandated shutdown rules, and dealing with financial distress. The economy had entered a state that was far from equilibrium. Orthodox tools, such as comparative equilibrium analysis, can tell one about state “A” and state “B,” but provide no guidance as to how to analyze the phase transition. We turn to the physics of phase transitions to help us understand what essentially was a network collapse. The analysis is extended to examine whether the initial policy responses were more likely to cushion the blow or to accelerate the eventual economic recovery, which is extended into an examination of Modern Monetary Theory. Finally, we study the behavioral changes induced by the pandemic that are likely to be long‐lasting and impact the pace of the recovery. And we note a variety of data anomalies that are sure to vex empirical researchers as they study the pandemic of 2020.