Competition and Costs: Evidence from Competitive Tendering in the Scottish National Health Service

This paper estimates the impact of competitive tendering on cleaning costs in Scottish National Health Service hospitals. Unlike previous studies, which have relied on cross‐sectional data, a five‐year balanced panel of 176 hospitals is used to estimate a series of fixed effects regression models. These panel estimates suggest that previous studies have likely over‐estimated the cost‐savings associated with competitive tendering. The findings also suggest that the lower costs associated with competitive tendering have more to do with auction theory than with any intrinsic efficiency of the private sector.     

Competitive Tendering and Optimal Size in the Regional Bus Transportation Industry: An Example from Italy

When defining how to implement tendering procedures for the regional bus transportation industry, one of the main problems local authorities have to face is setting the area size to be assigned as franchised monopoly.
This paper's aim is to analyse the topic by combining some empirical results and evidence from recent developments in the Italian regional bus industry. The empirical results show that the bus transportation sector is characterized by the presence of economies of density and scale. These results imply that the best strategy for introducing competition in the bus industry is a competitive tendering approach for an area of given dimension and not necessarily a route-by-route tendering. However, it seems that the criterion applied by local authorities in Italy is much more related to political issues—such as jurisdictional boundaries of a municipal or provincial area—than a desire to promote the exploitation of economies of scale and density.     

房地产开发中的成本控制分析——以H工程为例

房地产开发中,成本控制贯穿于房地产开发的全过程。房地产项目开发中的成本控制是以决策、设计、实施、竣工阶段的动态控制组成的。针对某项目房地产开发过程中决策、设计、招投标阶段的成本控制出现的问题,提出开发阶段全方位的控制成本的措施,以期提高经济效益。     

Competitive provision of public services: cost savings over successive rounds of tendering

We study the evolution of the cost of public service provision when subjected to a competitive tendering process. We add to the existing literature by analysing cost savings over successive rounds of tendering. Previous results in the literature show that initial cost savings tend to disappear over time with the age of the contract. Our findings suggest that each additional round of tendering will be followed by a renewal of cost savings. Thus, keeping competitive pressure via periodic tendering appears to address the problem.     

Cost structure and technological change of local public transport: the Kaohsiung City Bus case

This study has developed a translog cost function for the Kaohsiung City Bus (KCB) to analyse its cost structure and economic characteristics, based on monthly data over the time period from January 1996 to December 2000. The empirical results reveal that economies of density in the provision of bus services in Kaohsiung do prevail. The estimated marginal cost, which is less than the average cost but greater than the current bus fare, indicates that the subsidy is necessary. Due to the existence of returns to density (RTD), the KCB could obtain cost-saving benefits by extending its output scale. The KCB production technology is also not neutral. The effects of technological change on the KCB costs suggest that over the period 1996–2000 technological progress did lead to cost saving; the pure productivity growth rate increased from 0.45% in 1998 to 3% in 2000.     

Costing anaesthetic practice: reconciling perspectives and approaches

Summary

In a previously published article by Broadway and Jones, the anaesthesia-related cost of a hernia repair operation was estimated to be £74.40, of which 21% was accounted for by anaesthetic agents and adjunct drugs. This result contrasts with our estimate of the total procedure cost for an inpatient hernia repair operation of £1,037.39, of which anaesthetic agents and adjunct drugs comprised less than 1%. In order to explain this difference, in this paper we compare and contrast our methodology for and perspective on costing resource use in anaesthesia with those used by Broadway et al. We conclude that these two apparently divergent results, once reconciled in terms of cost coverage and perspectives taken, are broadly equivalent (a reconciled cost of £78.21 compared with the £74.40 of Broadway and Jones.), and that the cost of anaesthetic agents and adjunct drugs constitute a small proportion of total procedure costs.     

Questions About the Initiative of the European Commission Concerning the Awarding and Compulsory Competitive Tendering of Public Service Concessions

The ruling of the European Commission is that the award of contracts by regional or local authorities for the provision of services of general economic interest must be done by way of competitive tendering. Such contracts must not be awarded to the authority's own public enterprises or to any other enterprise, including by means of unilateral State act, without a call for tenders, a practice that had previously been common in many Member States. Public service concessions are also subject to the competition rules of the EC Treaty. Should the European Commission enact a directive concerning compulsory competitive tendering, this would result, for several Member States, in a serious change of paradigm as regards the awarding of public service concessions. Against this background, this article will attempt to find answers to the following questions: —How is the present relationship of the regional or local authority with its own public enterprise to be considered? —Are there any limits to applying the rules on competition of the EC Treaty to public service concessions? —What kind of positive and negative effects concerning economic efficiency and supply of specific public services result from the awarding of public service concessions and from compulsory competitive tendering? —What kind of, and what amount of, transaction costs result from compulsory competitive tendering and from the awarding of concessions? —Does competitive tendering work properly, and are public tenderers given equal opportunities? —Are there any alternatives to compulsory competitive tendering that would achieve an efficient market performance and provide sufficient supply?     

The law of small numbers: investigating the benefits of restricted auctions for public procurement

A commonly accepted view in the academic literature is that dispensing with competition may only be beneficial when tendering complex contracts. However, restricted auctions are frequently used among EU member states to procure small contracts. In this article, we investigate this paradox. Using an original data set of 180 contracts used by a local public buyer of social housing between 2006 and 2009, we show that limiting competition may enable economies to be made on transaction costs while the most efficient bidders still come forward, and that abuses such as corruption or favouritism do not result. To our knowledge, this article is the first to shed light on the advantages of using restricted auctions when tendering small simple contracts.     

The Equity of Alternative Policies for the Australian Homeowner*

The income-tax treatment of homeowners and renters is an important instrument of national housing policy. Major changes in the treatment of homeowners occurred in 1975 and 1976; the second change focused especially on the problems of first-buyers and was coincident with an expanded home-savings grant scheme. As a further reform several writers have advocated the taxation of the rent imputed to homeowners. This paper develops a user cost of capital approach to estimate the distribution of housing costs along the income scale and between policy alternatives. The model indicates the vital importance of accounting for inflation whenever physical housing costs are inflating but mortgage costs are fixed in nominal terms. Although inflation is increasing housing costs at all income levels, high-income homeowners appear to be suffering the greatest cost increases as the result of inflation. Furthermore, unless mortgages are indexed, the customary imputed-rent formula is regressive.     

Concepts of learning and experience in developing solar thermal technologies

This study presents a plausible picture of development of solar thermal technology, using the learning and experience curve concepts. The cost estimates for solar thermal energy technologies are typically made assuming a fixed production process, characterized by standard capacity factors, overhead, and labor costs. The learning curve is suggested as a generalization of the costs of potential solar energy system. The concept of experience is too ambiguous to be useful for cost estimation. There is no logical reason to believe that cost will decline purely as a function of cumulative production, and experience curves do not allow the identification of logical sources of cost reduction directly. The procedures for using learning and aggregated cost curves to estimate the costs of solar technologies are outlined. Because adequate production data often do not exist, production histories of analogous products/processes are analyzed, and learning and aggregated cost curves for these surrogates estimated. If the surrogate learning curves apply, they can be used to estimate solar thermal technology costs. The steps involved in generating these cost estimates are given. Second-generation glass-steel heliostat design concept developed by MDAC is described; a costing scenario for 25,000 units/year is detailed; surrogates for cost analysis are chosen; learning and aggregated cost curves are estimated; and the aggregate cost curve for the MDAC designs is estimated. The surrogate concept of cost estimation combines qualitative steps, which are highly subjective, with quantitative techniques, which require thorough knowledge and understanding to justify their use. As such, the results, interpretations, and inferences must be qualified by an understanding of the process by which they were developed. The method of surrogate learning curves had limitations in both the data acquisition and data analysis phases of activity. Improvements in the validity of cost data and in the task used for this type of study are necessary to enhance the reliability of unit cost predictions resulting from this technique.     

The implications for the UK Exchequer of an ethical arms export policy

For the UK, defence exports provide many jobs but critics point to the morality and human rights aspects of the arms trade. Recent speeches by the foreign secretary suggest that Mr Cook is acutely aware of the trade-off between a more ethical arms export policy and jobs in the defence industry. Recent research suggests that government subsidies for arms exports cost the UK taxpayer between £228 million and £708 million per annum. However, these figures ignore the Exchequer costs of the jobs lost as a result of the reduction in arms exports. This study uses information on the expected number of job losses, and the Exchequer cost per job destroyed, to estimate the employment costs to the Exchequer associated with a one-third reduction in UK defence exports. These costs are then subtracted from the subsidy savings to derive the overall net financial saving to the taxpayer for a one-third reduction in UK arms exports.     

On the potential economic costs of cutting carbon dioxide emissions in Portugal

The objective of this paper is to estimate the impact of reducing carbon dioxide emissions from fossil fuel combustion activities on economic activity in Portugal. We find that energy consumption has a significant impact on macroeconomic activity. In fact, a 1 ton of oil equivalent permanent reduction in aggregate energy consumption reduces output in the long term by €6,340. More importantly, and since carbon dioxide emissions are linearly related to the amounts of fuel consumed, our results allow us to estimate the costs of reductions in carbon dioxide emissions. We estimate that a uniform standard for reducing carbon dioxide emissions from fossil fuel combustion activities would lead to a marginal abatement cost of €95.74 per ton of carbon dioxide. This is a first rough estimate of the potential economic costs of policies designed to reduce carbon dioxide emissions. At this level one may conclude that uniform, across the board reductions in carbon emissions would have a clear negative effect on economic activity. Hence, at the aggregate level there is clear evidence for a trade-off between economic performance and a reduction in carbon emissions. This opens the door to the investigation of the scope for policy to minimize the costs of environmental policy and regulation.     

Costs of administration,travelling, and productivity losses associated with hospital administration of multiple myeloma drugs in Finland

Aim: To estimate the drug administration, travelling, and productivity costs associated with infusion or subcutaneous proteasome inhibitor (PI) treatments (specifically carfilzomib and bortezomib) for multiple myeloma (MM) patients in Finland.

Materials and methods: Price tariffs of Finnish hospital districts are used as the basis of invoicing sent to healthcare service payers. A review of these price tariff lists was conducted and obtained data analysed to estimate the mean unit cost of PI administration visit. Travelling costs stratified by areas with different population densities were assessed, based on the national travelling reimbursement register data maintained by the Social Insurance Institution of Finland. Productivity costs due to time spent on administration visits and travelling were estimated based on an expert interview and a spatial healthcare accessibility analysis.

Results: Nineteen (95%) of the Finnish hospital districts were included in the review. Relevant unit cost information was found for 15 (75%) of the districts. The mean PI administration cost alone was 270€ (95% CI?=?189€–351€) per administration and increased to 371€ when travelling costs were included. Productivity costs added, the mean PI administration costs totalled 405€ for bortezomib and 437€ for carfilzomib.

Limitations: The costing rationale of price tariffs may vary between hospital districts. Productivity costs were estimated conservatively, due to lack of data.

Conclusions: The administration of intravenous or subcutaneous PIs to treat MM in healthcare facilities causes significant and potentially avoidable healthcare, travelling, and indirect costs, and they should be included in all health economic evaluations (HEEs). As the cost estimates utilized in this study represent most of central hospitals in the country, they provide useful information for future HEEs. A broader conclusion is that novel oral medications, such as the first oral PI, have a significant potential for reducing administration-related costs of subcutaneous or intravenous PIs.     

Cost estimate of platelet transfusion in the United States for patients with chronic liver disease and associated thrombocytopenia undergoing elective procedures

Aims: This study aimed to estimate the cost of platelet transfusion in patients with chronic liver disease (CLD)-associated thrombocytopenia undergoing an elective procedure in the United States.

Materials and methods: The study was conducted in two parts: development of a conceptual framework identifying direct, indirect and intangible costs of platelet transfusion, followed by the estimation of the total cost of platelet transfusion in patients with CLD-associated thrombocytopenia before an elective procedure in the United States using the conceptual framework and cost data obtained from a literature search. The cost of the entire care required to raise a patient’s platelet count before the procedure was considered.

Results: The final conceptual framework included the costs of generating the supply of platelets, the platelet transfusion itself, adverse events associated with platelet transfusion and refractoriness to platelet transfusion. When costs were accounted for in all the framework cost categories, the total direct cost of a platelet transfusion in a patient with CLD and associated thrombocytopenia was estimated to be in the range of $5258 to $13,117 (2017?US dollars) in the United States. The largest portion of costs was incurred by the transfusion event itself ($3723 to $4436) and the cost of refractoriness ($874 to $7578), which included the opportunity cost of a delayed procedure and subsequent platelet transfusions with human leukocyte antigen-matched platelets.

Limitations and conclusions: Although we were unable to include all cost components identified in the conceptual framework in our total cost estimate, thus likely underestimating the true total cost, and despite the data gaps and challenges limiting our estimate of the full cost of a platelet transfusion in patients with CLD-associated thrombocytopenia undergoing an elective procedure in the United States, this study outlines a comprehensive conceptual framework for estimating the cost elements of a platelet transfusion in these patients.     

Endogenously chosen travel costs and the travel cost model: an application to mountain biking at Moab,Utah

The travel cost model is frequently used to estimate net willingness to pay for recreation at remote sites by using the visitor's travel costs as a proxy for the price of recreation. However, some concern has been raised over the validity of using the visitor's stated travel costs as a proxy for price. This paper addresses some of these concerns, by examining the possible over-estimation of consumer surplus due to endogenously chosen travel costs. This paper extends past theoretical work for the linear model by developing a correction for endogenously chosen travel costs in more commonly used nonlinear models such as the Poisson or count data model. Also provided is the first empirical test of the presence of endogeneity and an estimate of the magnitude of the error from ignoring endogeneity in travel costs. After applying this test and the correction to data that was gathered for mountain biking at Moab, Utah the estimate of consumer surplus falls from US $153 to US $135, which is a 12% reduction.     

On measuring the benefits of lower transport costs

Despite large amounts invested in rural roads in developing countries, little is known about their benefits. This paper derives an expression for the willingness-to-pay for a reduction in transport costs from the canonical agricultural household model and uses it to estimate the benefits of a hypothetical road project. Estimation is based on novel cross-sectional data collected in a small region of Madagascar with enormous, yet plausibly exogenous, variation in transport cost. A road that essentially eliminated transport costs in the study area would boost the incomes of the remotest households – those facing transport costs of about $75/ton – by nearly half, mostly by raising non-farm earnings. This benefit estimate is contrasted to one based on a hedonic approach.     

Entry costs and stock market participation over the life cycle

Several explanations for the observed limited stock market participation have been offered in the literature. One of the most promising is the presence of market frictions mostly in the form of fixed entry and/or transaction costs. Empirical studies point to a significant structural (state) dependence in the stock market entry decision, which is consistent with costs of this type. However, the magnitude of these costs is not yet known. This paper focuses on fixed stock market entry costs. I set up a structural estimation procedure which involves solving and simulating a life cycle intertemporal portfolio choice model augmented with a fixed stock market entry cost. Important features of household portfolio data (from the PSID) are matched to their simulated counterparts. Utilizing a Simulated Minimum Distance estimator, I estimate the coefficient of relative risk aversion, the discount factor and the stock market entry cost. Given the equity premium and the calibrated income process, I estimate a one-time entry cost of approximately two percent of the permanent component of the annual labor income. My estimated model matches the zero median holding as well as the hump-shaped age–participation profile observed in the data.     

Medication,equipment, and supply costs for common interventions providing extended post-surgical analgesia following total knee arthroplasty in US hospitals

Aims: To estimate the cost to hospitals of materials (i.e. medications, equipment, and supplies) required to administer common interventions for post-surgical analgesia after total knee arthroplasty (TKA), including single-injection peripheral nerve block (sPNB), continuous peripheral nerve block (cPNB), periarticular infiltration of multi-drug cocktails, continuous epidural analgesia, intravenous patient-controlled analgesia (IV PCA), and local infiltration of bupivacaine liposome injectable suspension (BLIS).

Materials and methods: This analysis was conducted using a mixed methods approach combining published literature, publicly available data sources, and administrative data, to first identify the materials required to administer these interventions, and then estimate the cost to the hospital of those materials. Medication costs were estimated primarily using the Wholesale Acquisition Costs (WAC), the cost of reusable equipment was obtained from published sources, and costs for disposable supplies were obtained from the US Government Services Administration (GSA) database. Where uncertainty existed about the technique used when administering these interventions, costs were calculated for multiple scenarios reflecting different assumptions.

Results: The total cost of materials (i.e. medications, equipment, and supplies) required to provide post-surgical analgesia was $41.88 for sPNB with bupivacaine; $756.57 for cFNB with ropivacaine; $16.38 for periarticular infiltration with bupivacaine, morphine, methylprednisolone, and cefuroxime; $453.84 for continuous epidural analgesia with fentanyl and ropivacaine; $178.94 for IV PCA with morphine; and $319.00 for BLIS.

Limitations: This analysis did not consider the cost of healthcare providers required to administer these interventions. In addition, this analysis focused on the cost of materials and, therefore, did not consider aspects of relative efficacy or safety, or how the choice of intervention for post-surgical analgesia might impact outcomes such as length of stay, re-admissions, discharge status, adverse events, or total hospitalization costs.

Conclusions: This study provided an estimate of the costs to hospitals for materials required to administer commonly used interventions for post-surgical analgesia after TKA.     

Cost estimation of patients admitted to the intensive care unit: a case study of the Teaching University Hospital of Thessaly

Objective: This study aimed to estimate the cost of patients admitted to the Intensive Care Unit (ICU) of the Teaching University Hospital of Thessaly (TUHT) in 2006 and to demonstrate discrepancies between actual hospitalisation cost and social funds’ reimbursement.

Methods: Cost analysis was performed using a macro-costing approach, which focused on the estimation of nominal and actual cost per ICU patient. Data were derived from the annual records of resources consumed in each hospital unit and from hospital balance sheets. Sensitivity analysis was also performed by inflating nominal costs to present values.

Results: There were 312 patients admitted to the ICU. Mean actual cost per ICU patient was estimated at €16,516, whereas actual reimbursement from social funds was only €1,671. This means that reimbursement accounted for just 10% of the actual hospitalisation cost. Once nominal costs were inflated to present values, the reimbursement accounted for 25% of the actual hospitalisation cost. The major cost drivers of ICU hospitalisation were personnel costs followed by infrastructure, hotel services and pharmaceutical expenditure. These results may be limited by a lack of consideration for clinical outcomes along with a high level of aggregation in cost data.

Conclusion: Reimbursement should be re-adjusted in order to balance public hospital deficits and make public-private mix viable. This way, intensive care capacity would increase and allow a more equitable distribution of healthcare resources.     

On the performance of endogenous access pricing

Endogenous access pricing (ENAP) is an alternative to the traditional procedure of setting a fixed access price that reflects the regulator’s estimate of the supplier’s average cost of providing access. Under ENAP, the access price reflects the supplier’s actual average cost of providing access, which varies with realized industry output. We show that in addition to eliminating the need to estimate industry output accurately and avoiding a divergence between upstream revenues and costs, ENAP can enhance the incentive of a vertically integrated producer to minimize its upstream operating cost. However, ENAP can sometimes discourage surplus-enhancing investment.