A new approach to optimal selection of services in health care organizations.

A new reimbursement policy adopted by Medicare in 1983 caused financial difficulties for many hospitals and health care organizations. Several organizations responded to these difficulties by developing systems to carefully measure their costs of providing services. The purpose of such systems was to provide relevant information about the profitability of hospital services. This paper presents a new method of making hospital service selection decisions: it is based on an optimization model that avoids arbitrary cost allocations as a basis for computing the costs of offering a given service. The new method provides more reliable information about which services are profitable or unprofitable, and it provides an accurate measure of the degree to which a service is profitable or unprofitable. The new method also provides useful information about the sensitivity of the optimal decision to changes in costs and revenues. Specialized algorithms for the optimization model lead to very efficient implementation of the method, even for the largest health care organizations.     

Costs, commitment, and rewards: factors influencing the design and implementation of internal labor markets.

Much research on internal labor markets has been hampered by the failure to differentiate the wide variety of ILMs, by accounts of their determinants that too heavily emphasize isolated causal factors, by the lack of detailed material describing the economic and organizational dimensions of their design and implementation, and by the neglect of managerial perceptions of and motivations for constructing ILMs. This paper presents detailed case studies of three organizations that have constructed very different ILMs. Based on this material, a model of the determinants of ILMs is developed that centers around the concepts of costs, commitment, and rewards and that attempts to assess the interactions of effects of markets and hierarchies on ILMs. The model is built on the premise that the underlying imperatives typically held to affect ILMs are inevitably filtered through managerial beliefs and the constraints on managerial decision making. The implications of these findings for theory and research on ILMs are discussed.     

On recalls, layoffs, variable hours, and labor adjustment costs

The paper analyzes the employment policy of a firm that can vary both hours and the level of employment. The analysis differs from previous work in the adjustment cost literature in that the firm is able to change its employment not only through hires, layoffs, and quits, but also by recalls of employees who were previously laid off. Thus, we introduce the possibility of the firm inventorying the labor input. It is shown that this labor inventory potential is necessary if the firm is to ever lay off workers. Further, it is demonstrated that linear rather than strictly convex adjustment costs are then required if the firm is to always recall employees who were previously laid off prior to hiring new workers.     

Structural instability of the core

Let σ be a q-rule, where any coalition of size q, from the society of size n, is decisive. Let w(n,q)= 2q-n+1 and let W be a smooth ‘policy space’ of dimension w. Let U(W)^N be the space of all smooth profiles on W, endowed with the Whitney topology. It is shown that there exists an ‘instability dimension’ w^*(σ) with 2w^*(σ)w(n,q) such that:

1. (i) if ww^*(σ), and W has no boundary, then the core of σ is empty for a dense set of profiles in U(W)^N (i.e., almost always),

2. (ii) if ww^*(σ)+1, and W has a boundary, then the core of σ is empty, almost always,

3. (iii) if ww^*(σ)+1 then the cycle set is dense in W, almost always,

4. (iv) if ww^*(σ)+2 then the cycle set is also path connected, almost always.

The method of proof is first of all to show that if a point belongs to the core, then certain generalized symmetry conditions in terms of ‘pivotal’ coalitions of size 2q−n must be satisfied. Secondly, it is shown that these symmetry conditions can almost never be satisfied when either W has empty boundary and is of dimension w(n,q) or when W has non-empty boundary and is of dimension w(n,q)+1.     

Deriving benefits from conflict resolution: A macrojustice assessment

Effective conflict resolution procedures serve to minimize dysfunctional effects of conflict and maximize functional effects. In the literature on conflict resolution procedures, the effectiveness of procedures has been evaluated primarily from the perspective of the individual. This article suggests that a system-level analysis of the pattern of outcomes resulting from different conflict resolution procedures is a necessary component in formulating a comprehensive framework for the design and evaluation of conflict resolution systems in organizations. The analytic questions addressed by this study concern associations between resolution procedures and outcome patterns in a system created specifically for conflict resolution within organizations: the grievance system. The pattern of outcomes was found to vary with the conflict resolution procedure. It is suggested that this has important implications for effective conflict resolution systems.     

A child health production function estimated from longitudinal data. Cebu Study Team

Collaborating researchers used a multi equation model to analyze 3080 mother-infant pairs living on the island of Cebu in the central Philippines and to estimate a child health production function. The econometric methods used eliminated obstacles such as heterogeneity and endogeneity of significant explanatory factors. They also maximized the longitudinal quality of the data. The results showed that morbidity in 1 period reduced infant weight in following periods. For example, diarrhea and febrile respiratory infection reduced growth in the time period following the illnesses. Further effects of some contributing factors were great near birth not diminished with age. For example, breast feeding promoted growth and protected against infection, especially diarrhea and febrile respiratory infection, more substantially near birth than it did later. Further, in urban areas, preventive health care positively affected growth independently of its indirect influence on reducing respiratory infection. Yet it had little effect on diarrhea. Diarrhea had a strong adverse effect on growth. Exposure of the infant to enteric pathogens had the greatest influence on production of diarrhea. In urban areas, exposure included water supply contamination, exposure to feces, a more pathogenic diet, and community crowding. In rural areas, however, exposure included community crowding and increased rainfall which presumably washed feces into the water supply. Household crowding in both urban and rural areas and irritation from smoke in urban areas only tended to bring about febrile respiratory infection.     

The First U.S. Food Stamp Program: An Example of Rent Seeking and Avoiding

Abstract . Rent seeking involves the wasteful expenses incurred to secure, acquire, or maintain a monopoly position. Rent avoiding involves the expenditures undertaken to avoid the imposition of rent-seeking costs. Each represents a social cost of Tullock rectangle loss in addition to the dead-weight or Harberger triangle loss that combined to form the Harberger-Tullock trapezoid social cost. The first Food Stamp Program in the United States came about through the rent-seeking and/or rent-avoiding efforts of farmers, grocers, bankers, and other economic agents and did not lead to the promotion of social welfare. The evidence of these self-interested efforts was gleaned from articles in the New York Times and government documents. The first Food Stamp Program also fits the economic theory of regulation developed by Stigler, Jordan, Peltzman and others, and it involved imposed costs on economic agents as the program evolved.