Local Public-Services Provision under Public-Private Partnerships : Contractual Design and Contracting Parties Incentives

When deciding to resort to a PPP contract for the provision of a local public service, local governments have to consider the demand risk allocation between the contracting parties. In this article, I investigate the effects of demand risk allocation on the accountability of procuring authorities regarding consumers changing demand, as well as on the cost-reducing effort incentives of the private public-service provider. I show that contracts in which the private provider bears demand risk motivate more the public authority from responding to customer needs. This is due to the fact that consumers are empowered when the private provider bears demand risk, that is, they have the possibility to oust the private provider in case of non-satisfaction with the service provision, which provides procuring authorities with more credibility in side-trading and then more incentives to be responsive. As a consequence, I show that there is a lower matching with consumers' preferences over time when demand risk is on the public authority rather than on the private provider, and this is corroborated in the light of two famous case studies. However, contracts in which the private provider does not bear demand risk motivate more the private provider from investing in cost-reducing efforts. I highlight then a tradeoff in the allocation of demand risk between productive and allocative efficiency. The striking policy implication of this article for local governments would be that the current trend towards a greater resort to contracts where private providers bear little or no demand risk may not be optimal. Local governments should impose demand risk on private providers within PPP contracts when they expect that consumers' preferences over the service provision will change over time.

Essays in equilibrium asset pricing

Introduction This dissertation consists of three essays in equilibrium asset pricing. The first chapter studies the asset pricing implications of a general equilibrium model in which real investment is reversible at a cost. Firms face higher costs in contracting than in expanding their capital stock and decide to invest when their productive capital is scarce relative to the overall capital of the economy. Positive shocks to the capital of the firm increase the size of the firm and reduce the value of growth options. As a result, the firm is burdened with more unproductive capital and its value lowers with respect to the accumulated capital. The optimal consumption policy alters the optimal allocation of resources and affects firm's value, generating mean-reverting dynamics for the M/B ratios. The model (1) captures convergence of price-to-book ratios -negative for growth stocks and positive for value stocks - (firm migration), (2) generates deviations from the classic CAPM in line with the cross-sectional variation in expected stock returns and (3) generates a non-monotone relationship between Tobin's q and conditional volatility consistent with the empirical evidence. The second chapter proposes a standard portfolio-choice problem with transaction costs and mean reversion in expected returns. In the presence of transactions costs, no matter how small, arbitrage activity does not necessarily render equal all riskless rates of return. When two such rates follow stochastic processes, it is not optimal immediately to arbitrage out any discrepancy that arises between them. The reason is that immediate arbitrage would induce a definite expenditure of transactions costs whereas, without arbitrage intervention, there exists some, perhaps sufficient, probability that these two interest rates will come back together without any costs having been incurred. Hence, one can surmise that at equilibrium the financial market will permit the coexistence of two riskless rates that are not equal to each other. For analogous reasons, randomly fluctuating expected rates of return on risky assets will be allowed to differ even after correction for risk, leading to important violations of the Capital Asset Pricing Model. The combination of randomness in expected rates of return and proportional transactions costs is a serious blow to existing frictionless pricing models. Finally, in the last chapter I propose a two-countries two-goods general equilibrium economy with uncertainty about the fundamentals' growth rates to study the joint behavior of equity volatilities and correlation at the business cycle frequency. I assume that dividend growth rates jump from one state to other, while countries' switches are possibly correlated. The model is solved in closed-form and the analytical expressions for stock prices are reported. When calibrated to the empirical data of United States and United Kingdom, the results show that, given the existing degree of synchronization across these business cycles, the model captures quite well the historical patterns of stock return volatilities. Moreover, I can explain the time behavior of the correlation, but exclusively under the assumption of a global business cycle.

Cost-effectiveness of surgery in low- and middle-income countries: a systematic review.

BACKGROUND: There is increasing interest in provision of essential surgical care as part of public health policy in low- and middle-income countries (LMIC). Relatively simple interventions have been shown to prevent death and disability. We reviewed the published literature to examine the cost-effectiveness of simple surgical interventions which could be made available at any district hospital, and compared these to standard public health interventions. METHODS: PubMed and EMBASE were searched using single and combinations of the search terms "disability adjusted life year" (DALY), "quality adjusted life year," "cost-effectiveness," and "surgery." Articles were included if they detailed the cost-effectiveness of a surgical intervention of relevance to a LMIC, which could be made available at any district hospital. Suitable articles with both cost and effectiveness data were identified and, where possible, data were extrapolated to enable comparison across studies. RESULTS: Twenty-seven articles met our inclusion criteria, representing 64 LMIC over 16 years of study. Interventions that were found to be cost-effective included cataract surgery (cost/DALY averted range US$5.06-$106.00), elective inguinal hernia repair (cost/DALY averted range US$12.88-$78.18), male circumcision (cost/DALY averted range US$7.38-$319.29), emergency cesarean section (cost/DALY averted range US$18-$3,462.00), and cleft lip and palate repair (cost/DALY averted range US$15.44-$96.04). A small district hospital with basic surgical services was also found to be highly cost-effective (cost/DALY averted 1 US$0.93), as were larger hospitals offering emergency and trauma surgery (cost/DALY averted US$32.78-$223.00). This compares favorably with other standard public health interventions, such as oral rehydration therapy (US$1,062.00), vitamin A supplementation (US$6.00-$12.00), breast feeding promotion (US$930.00), and highly active anti-retroviral therapy for HIV (US$922.00). CONCLUSIONS: Simple surgical interventions that are life-saving and disability-preventing should be considered as part of public health policy in LMIC. We recommend an investment in surgical care and its integration with other public health measures at the district hospital level, rather than investment in single disease strategies.

Twofold cost of reproduction: an increase in parental effort leads to higher malarial parasitaemia and to a decrease in resistance to oxidative stress.

Parental effort is usually associated with high metabolism that could lead to an increase in the production of reactive oxidative species giving rise to oxidative stress. Since many antioxidants involved in the resistance to oxidative stress can also enhance immune function, an increase in parental effort may diminish the level of antioxidants otherwise involved in parasite resistance. In the present study, we performed brood size manipulation in a population of great tits (Parus major) to create different levels of parental effort. We measured resistance to oxidative stress and used a newly developed quantitative PCR assay to quantify malarial parasitaemia. We found that males with an enlarged brood had significantly higher level of malarial parasites and lower red blood cell resistance to free radicals than males rearing control and reduced broods. Brood size manipulation did not affect female parasitaemia, although females with an enlarged brood had lower red blood cell resistance than females with control and reduced broods. However, for both sexes, there was no relationship between the level of parasitaemia and resistance to oxidative stress, suggesting a twofold cost of reproduction. Our results thus suggest the presence of two proximate and independent mechanisms for the well-documented trade-off between current reproductive effort and parental survival.

Dynamic models of energy allocation and investment

In dynamic models of energy allocation, assimilated energy is allocated to reproduction, somatic growth, maintenance or storage, and the allocation pattern can change with age. The expected evolutionary outcome is an optimal allocation pattern, but this depends on the environment experienced during the evolutionary process and on the fitness costs and benefits incurred by allocating resources in different ways. Here we review existing treatments which encompass some of the possibilities as regards constant or variable environments and their predictability or unpredictability, and the ways in which production rates and mortality rates depend on body size and composition and age and on the pattern of energy allocation. The optimal policy is to allocate resources where selection pressures are highest, and simultaneous allocation to several body subsystems and reproduction can be optimal if these pressures are equal. This may explain balanced growth commonly observed during ontogeny. Growth ceases at maturity in many models; factors favouring growth after maturity include non-linear trade-offs, variable season length, and production and mortality rates both increasing (or decreasing) functions of body size. We cannot yet say whether these are sufficient to account for the many known cases of growth after maturity and not all reasonable models have yet been explored. Factors favouring storage are also reviewed.

The nine-year sustained cost-containment impact of swiss pilot physicians-pharmacists quality circles.

BACKGROUND: Six pioneer physicians-pharmacists quality circles (PPQCs) located in the Swiss canton of Fribourg (administratively corresponding to a state in the US) were under the responsibility of 6 trained community pharmacists moderating the prescribing process of 24 general practitioners (GPs). PPQCs are based on a multifaceted collaborative process mediated by community pharmacists for improving compliance with clinical guidelines within GPs' prescribing practices. OBJECTIVE: To assess, over a 9-year period (1999-2007), the cost-containment impact of the PPQCs. METHODS: The key elements of PPQCs are a structured continuous quality improvement and education process; local networking; feedback of comparative and detailed data regarding costs, drug choice, and frequency of prescribed drugs; and structured independent literature review for interdisciplinary continuing education. The data are issued from the community pharmacy invoices to the health insurance companies. The study analyzed the cost-containment impact of the PPQCs in comparison with GPs working in similar conditions of care without particular collaboration with pharmacists, the percentage of generic prescriptions for specific cardiovascular drug classes, and the percentage of drug costs or units prescribed for specific cardiovascular drugs. RESULTS: For the 9-year period, there was a 42% decrease in the drug costs in the PPQC group as compared to the control group, representing a $225,000 (USD) savings per GP only in 2007. These results are explained by better compliance with clinical and pharmacovigilance guidelines, larger distribution of generic drugs, a more balanced attitude toward marketing strategies, and interdisciplinary continuing education on the rational use of drugs. CONCLUSIONS: The PPQC work process has yielded sustainable results, such as significant cost savings, higher penetration of generics and reflection on patient safety, and the place of "new" drugs in therapy. The PPQCs may also constitute a solid basis for implementing more comprehensive collaborative programs, such as medication reviews, adherence-enhancing interventions, or disease management approaches.

Cost evaluation and comparison of three decision strategies to revascularize : results of the suspected CAD protocol of the european CMR registry

Background: Cardiac magnetic resonance (CMR) is accepted as a method to assess suspected coronary artery disease (CAD). Nonetheless, invasive coronary angiography (CXA) combined or not with fractional flow reserve (FFR) remains the main diagnostic test to evaluate CAD. Little data exist on the economic impact of the use of these procedures in a population with a low to intermediate pre-test probability. Objective: To compare the costs of 3 decision strategies to revascularize a patient with suspected CAD: 1) strategy guided by CMR 2) hypothetical strategy guided by CXA-FFR, 3) hypothetical strategy guided by CXA alone.

Sex allocation conflict in ants: when the queen rules.

Insect societies are paramount examples of cooperation, yet they also harbor internal conflicts whose resolution depends on the power of the opponents. The male-haploid, female-diploid sex-determining system of ants causes workers to be more related to sisters than to brothers, whereas queens are equally related to daughters and sons. Workers should thus allocate more resources to females than to males, while queens should favor an equal investment in each sex. Female-biased sex allocation and manipulation of the sex ratio during brood development suggest that workers prevail in many ant species. Here, we show that queens of Formica selysi strongly influenced colony sex allocation by biasing the sex ratio of their eggs. Most colonies specialized in the production of a single sex. Queens in female-specialist colonies laid a high proportion of diploid eggs, whereas queens in male-specialist colonies laid almost exclusively haploid eggs, which constrains worker manipulation. However, the change in sex ratio between the egg and pupae stages suggests that workers eliminated some male brood, and the population sex-investment ratio was between the queens' and workers' equilibria. Altogether, these data provide evidence for an ongoing conflict between queens and workers, with a prominent influence of queens as a result of their control of egg sex ratio.

Minimally invasive fixation versus conservative treatment of undisplaced scaphoid fractures: a cost-effectiveness study.

This study compares the direct and indirect costs of conservative and minimally invasive treatment for undisplaced scaphoid fractures. Costs data concerning groups of non-operated and operated patients were analysed. Direct costs were higher in operated patients. Although highly variable, indirect costs were significantly smaller in operated patients and the total costs were higher in non-operated patients. In conclusion, operative treatment of scaphoid fractures is initially more expensive than conservative treatment but markedly decreases the work compensation costs.

Robust parametric indirect estimates of the expected cost of a hospital stay with covariates and censored data.

We consider the problem of estimating the mean hospital cost of stays of a class of patients (e.g., a diagnosis-related group) as a function of patient characteristics. The statistical analysis is complicated by the asymmetry of the cost distribution, the possibility of censoring on the cost variable, and the occurrence of outliers. These problems have often been treated separately in the literature, and a method offering a joint solution to all of them is still missing. Indirect procedures have been proposed, combining an estimate of the duration distribution with an estimate of the conditional cost for a given duration. We propose a parametric version of this approach, allowing for asymmetry and censoring in the cost distribution and providing a mean cost estimator that is robust in the presence of extreme values. In addition, the new method takes covariate information into account.

Fitness cost and impaired survival in penicillin-resistant Streptococcus gordonii isolates selected in the laboratory.

Cycling of Streptococcus gordonii (115 times) with penicillin resulted in a MIC increase of more than 100-fold, from 0.008 to 2 microg/ml. The 2-microg/ml MIC maximum was already reached after 36 passages but resulted in impaired fitness. Although the MIC did not increase further, fitness was partially recovered during the 79 additional cycles.

Low-cost MR-compatible moving heart phantom.

For the development and evaluation of cardiac magnetic resonance (MR) imaging sequences and methodologies, the availability of a periodically moving phantom to model respiratory and cardiac motion would be of substantial benefit. Given the specific physical boundary conditions in an MR environment, the choice of materials and power source of such phantoms is heavily restricted. Sophisticated commercial solutions are available; however, they are often relatively costly and user-specific modifications may not easily be implemented. We therefore sought to construct a low-cost MR-compatible motion phantom that could be easily reproduced and had design flexibility. A commercially available K'NEX construction set (Hyper Space Training Tower, K'NEX Industries, Inc., Hatfield, PA) was used to construct a periodically moving phantom head. The phantom head performs a translation with a superimposed rotation, driven by a motor over a 2-m rigid rod. To synchronize the MR data acquisition with phantom motion (without introducing radiofrequency-related image artifacts), a fiberoptic control unit generates periodic trigger pulses synchronized to the phantom motion. Total material costs of the phantom are US$ < 200.00, and a total of 80 man-hours were required to design and construct the original phantom. With schematics of the present solution, the phantom reproduction may be achieved in approximately 15 man-hours. The presented MR-compatible periodically moving phantom can easily be reproduced, and user-specific modifications may be implemented. Such an approach allows a detailed investigation of motion-related phenomena in MR images.

Cost Analysis of Long-Term Treatment of Patients with Symptomatic Gastroesophageal Reflux Disease (GERD) with Esomeprazole On-Demand Treatment or Esomeprazole Continuous Treatment: An Open, Randomized, Multicenter Study in Switzerland.

Objectives: To assess the difference in direct medical costs between on-demand (OD) treatment with esomeprazole (E) 20 mg and continuous (C) treatment with E 20 mg q.d. from a clinical practice view in patients with gastroesophageal reflux disease (GERD) symptoms. Methods: This open, randomized study (ONE: on-demand Nexium evaluation) compared two long-term management options with E 20 mg in endoscopically uninvestigated patients seeking primary care for GERD symptoms who demonstrated complete relief of symptoms after an initial treatment of 4 weeks with E 40 mg. Data on consumed quantities of all cost items were collected in the study, while data on prices during the time of study were collected separately. The analysis was done from a societal perspective. Results: Forty-nine percent (484 of 991) of patients randomized to the OD regimen and 46% (420 of 913) of the patients in the C group had at least one contact with the investigator that would have occurred nonprotocol-driven. The difference of the adjusted mean direct medical costs between the treatment groups was CHF 88.72 (95% confidence interval: CHF 41.34-153.95) in favor of the OD treatment strategy (Wilcoxon rank-sum test: P < 0.0001). Adjusted direct nonmedical costs and productivity loss were similar in both groups. Conclusions: The adjusted direct medical costs of a 6-month OD treatment with esomeprazole 20 mg in uninvestigated patients with symptoms of GERD were significantly lower compared with a continuous treatment with E 20 mg once a day. The OD therapy represents a cost-saving alternative to the continuous treatment strategy with E.