The Secret Life of Mundane Transaction Costs

Transaction costs, one often hears, are the economic equivalent of friction in physical systems. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does let alone should work. Interestingly, however, the present-day economics of organization also ignores friction. That is, almost single-mindedly, the literature analyzes transactions from the point of view of misaligned incentives and (especially) transaction-specific assets. The costs involved are certainly costs of running the economic system in some sense, but they are not obviously frictions. Stories about frictions in trade are not nearly as intriguing as stories about guileful trading partners and expensive assets placed at risk. But I will argue that these seemingly dull categories of cost what Baldwin and Clark (2003) call mundane transaction costs actually have a secret life. They are at least as important as, and quite probably far more important than, the more glamorous costs of asset specificity in explaining the partition between firm and market. These costs also have a secret life in another sense: they have a secret life cycle. I will argue that these mundane transaction costs provide much better material for helping us understanding how the boundaries among firms, markets, and hybrid forms change over time.

Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire

Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways.

The local safety net, health insurance, preventable hospitalizations and costs: Harris County (Houston), Texas

The aim of this study was to examine the association between determinants of access to healthcare and preventable hospitalizations, based on Davidson et al.'s framework for evaluating the effects of individual and community determinants on access to healthcare. The study population consisted of the low income, non-elderly, hospitalized adults residing in Harris County, Texas in 2004. The objectives of this study were to examine the proportion of the variance in preventable hospitalizations at the ZIP-code level, to analyze the association between the proximity to the nearest safety net clinic and preventable hospitalizations, to examine how the safety net capacity relates to preventable hospitalizations, to compare the relative strength of the associations of health insurance and the proximity to the nearest safety net clinic with preventable hospitalizations, and to estimate and compare the costs of preventable hospitalizations in Harris County with the average cost in the literature. The data were collected from Texas Health Care Information Collection (2004), Census 2000, and Project Safety Net (2004). A total of 61,841 eligible individuals were included in the final data analysis. A random-intercept multi-level model was constructed with two different levels of data: the individual level and the ZIP-code level. The results of this study suggest that ZIP-code characteristics explain about two percent of the variance in preventable hospitalizations and safety net capacity was marginally significantly associated with preventable hospitalizations (p= 0.062). Proximity to the nearest safety net clinic was not related to preventable hospitalizations; however, health insurance was significantly associated with a decreased risk of preventable hospitalization. The average direct cost was $6,466 per preventable hospitalization, which is significantly different from reports in the literature. ^

Environmental sustainability and the human element: Decision making in National Cancer Institute-designated cancer centers and Practice Greenhealth subscribing institutions

Background. Various aspects of sustainability have taken root in the hospital environment; however, decisions to pursue sustainable practices within the framework of a master plan are not fully developed in National Cancer Institute (NCI) -designated cancer centers and subscribing institutions to the Practice Greenhealth (PGH) listserv.^ Methods. This cross sectional study was designed to identify the organizational characteristics each study group pursed to implement sustainability practices, describe the barriers they encountered and reasons behind their choices for undertaking certain sustainability practices. A web-based questionnaire was pilot tested, and then sent out to 64 NCI-designated cancer centers and 1638 subscribing institutions to the PGH listserv.^ Results. Complete responses were received from 39 NCI-designated cancer centers and 58 subscribing institutions to the PGH listserv. NCI-designated cancer centers reported greater progress in integrating sustainability criteria into design and construction projects than hospitals of institutions subscribing to the PHG listserv (p-value = <0.05). Statistically significant differences were also identified between these two study groups in undertaking work life options, conducting energy usage assessments, developing energy conservation and optimization plans, implementing solid waste and hazardous waste minimization programs, using energy efficient vehicles and reporting sustainability progress to external stakeholders. NCI-designated cancer centers were further along in implementing these programs (p-value = <0.05). In comparing the self-identified NCI-designated cancer centers to centers that indicated they were both and NCI and PGH, the later had made greater progress in using their collective buying power to pursue sustainable purchasing practices within the medical community (p-value = <0.05). In both study groups, recycling programs were well developed.^ Conclusions. Employee involvement was viewed as the most important reason for both study groups to pursue recycling initiatives and incorporated environmental criteria into purchasing decisions. A written sustainability commitment did not readily translate into a high percentage that had developed a sustainability master plan. Coordination of sustainability programs through a designated sustainability professional was not being undertaken by a large number of institutions within each study group. This may be due to the current economic downturn or management's attention to the emerging health care legislation being debated in congress. ^ Lifecycle assessments, an element of a carbon footprint, are seen as emerging areas of opportunity for health care institutions that can be used to evaluate the total lifecycle costs of products and services.^

The Emergency Department: Rising wait times, costs, and possible remedies

Emergency Departments (EDs) and Emergency Rooms (ERs) are designed to manage trauma, respond to disasters, and serve as the initial care for those with serious illnesses. However, because of many factors, the ED has become the doorway to the hospital and a “catch-all net” for patients including those with non-urgent needs. This increase in the population in the ED has lead to an increase in wait times for patients. It has been well documented that there has been a constant and consistent rise in the number of patients that frequent the ED (National Center for Health Statistics, 2002); the wait time for patients in the ED has increased (Pitts, Niska, Xu, & Burt, 2008); and the cost of the treatment in the ER has risen (Everett Clinic, 2008). Because the ED was designed to treat patients who need quick diagnoses and may be in potential life-threatening circumstances, management of time can be the ultimate enemy. If a system was implemented to decrease wait times in the ED, decrease the use of ED resources, and decrease costs endured by patients seeking care, better outcomes for patients and patient satisfaction could be achieved. The goal of this research was to explore potential changes and/or alternatives to relieve the burden endured by the ED. In order to explore these options, data was collected by conducting one-on-one interviews with seven physicians closely tied to a Level 1 ED (Emergency Room physicians, Trauma Surgeons and Primary Care physicians). A qualitative analysis was performed on the responses of one-on-one interviews with the aforementioned physicians. The interviews were standardized, open-ended questions that probe what makes an effective ED, possible solutions to improving patient care in the ED, potential remedies for the mounting problems that plague the ED, and the feasibility of bringing Primary Care Physicians to the ED to decrease the wait times experienced by the patient. From the responses, it is clear that there needs to be more research in this area, several areas need to be addressed, and a variety of solutions could be implemented. The most viable option seems to be making the ED its own entity (similar to the clinic or hospital) that includes urgent clinics as a part of the system, in which triage and better staffing would be the most integral part of its success.^

Factors associated with home health care costs

Characteristics of Medicare-certified home health agencies in Texas and the contributions of selected agency characteristics on home health care costs were examined. Cost models were developed and estimated for both nursing and total visit costs using multiple regression procedures. The models included home health agency size, profit status, control, hospital-based affiliation, contract-cost ratio, service provision, competition, urban-rural input-price differences, and selected measures of patient case-mix. The study population comprised 314 home health agencies in Texas that had been certified at least one year on July, 1, 1986. Data for the analysis were obtained from Medicare Cost Reports for fiscal year ending between July 1, 1985 to June 30, 1986.^ Home health agency size, as measured by the logs of nursing and total visits, has a statistically significant negative linear relationship with nursing visit and total visit costs. Nursing and total visit costs decrease at a declining rate as size increases. The size-cost relationship is not altered when controlling for any other agency characteristic. The number of visits per patient per year, a measure of patient case-mix, is also negatively related to costs, suggesting that costs decline with care of chronic patients. Hospital-based affiliation and urban location are positively associated with costs. Together, the four characteristics explain 19 percent of the variance in nursing visit costs and 24 percent of the variance in total visit costs.^ Profit status and control, although correlated with other agency characteristics, exhibit no observable effect on costs. Although no relationship was found between costs and competition, contract cost ratio, or the provision on non-reimburseable services, no conclusions can be made due to problems with measurement of these variables. ^

Comparison of medical care costs, utilization, and satisfaction of AIDS patients with and without home care

A sample of 157 AIDS patients 17 years of age or over were followed for six months from the date of hospital discharge to derive average total cost of medical care, utilization and satisfaction with care. Those referred for home care follow-up after discharge from the hospital were compared with those who did not receive home care.^ The average total cost of medical care for all patients was $34,984. Home care patient costs averaged \$29,614 while patients with no home care averaged $37,091. Private hospital patients had average costs of \$50,650 compared with $25,494 for public hospital patients. Hospital days for the six months period averaged 23.9 per patient for the no home care group and 18.5 days for home care group. Patient satisfaction with care was higher in the home care group than no home care group, with a mean score of 68.2 compared with 61.1.^ Other health services information indicated that 98% of the private hospital patients had insurance while only 2% of public hospital patients had coverage. The time between the initial date of diagnosis with AIDS and admission to the study was longer for private hospital patients, survival time over the study period was shorter, and the number of hospitalizations prior to entering the study was higher for private hospital patients. These results suggest that patients treated in the private hospital were sicker than public hospital patients, which may explain their higher average total cost. Statistical analyses showed that cost and utilization have no significant relationship with home care or no home care when controlling for indicators of the severity of illness and treatment in public or private hospital.^ In future studies, selecting a matched group of patients from the same hospital and following them for nine months to one year would be helpful in making a more realistic comparison of the cost effectiveness of home care. ^

COSTS AND EFFECTS OF ARKANSAS' LONG-TERM CARE DEMONSTRATION PROJECT (MEDICAID, CHANELLING, COMMUNITY ASSESSMENT)

The purpose of this study was to assess the impact of the Arkansas Long-Term Care Demonstration Project upon Arkansas' Medicaid expenditures and upon the clients it serves. A Retrospective Medicaid expenditure study component used analyses of variance techniques to test for the Project's effects upon aggregated expenditures for 28 demonstration and control counties representing 25 percent of the State's population over four years, 1979-1982.^ A second approach to the study question utilized a 1982 prospective sample of 458 demonstration and control clients from the same 28 counties. The disability level or need for care of each patient was established a priori. The extent to which an individual's variation in Medicaid utilization and costs was explained by patient need, presence or absence of the channeling project's placement decision or some other patient characteristic was examined by multiple regression analysis. Long-term and acute care Medicaid, Medicare, third party, self-pay and the grand total of all Medicaid claims were analyzed for project effects and explanatory relationships.^ The main project effect was to increase personal care costs without reducing nursing home or acute care costs (Prospective Study). Expansion of clients appeared to occur in personal care (Prospective Study) and minimum care nursing home (Retrospective Study) for the project areas. Cost-shifting between Medicaid and Medicare in the project areas and two different patterns of utilization in the North and South projects tended to offset each other such that no differences in total costs between the project areas and demonstration areas occurred. The project was significant ((beta) = .22, p < .001) only for personal care costs. The explanatory power of this personal care regression model (R('2) = .36) was comparable to other reported health services utilization models. Other variables (Medicare buy-in, level of disability, Social Security Supplemental Income (SSI), net monthly income, North/South areas and age) explained more variation in the other twelve cost regression models. ^

Costs and quality of medication reconciliation practice in primary care clinics

Medication reconciliation, with the aim to resolve medication discrepancy, is one of the Joint Commission patient safety goals. Medication errors and adverse drug events that could result from medication discrepancy affect a large population. At least 1.5 million adverse drug events and $3.5 billion of financial burden yearly associated with medication errors could be prevented by interventions such as medication reconciliation. This research was conducted to answer the following research questions: (1a) What are the frequency range and type of measures used to report outpatient medication discrepancy? (1b) Which effective and efficient strategies for medication reconciliation in the outpatient setting have been reported? (2) What are the costs associated with medication reconciliation practice in primary care clinics? (3) What is the quality of medication reconciliation practice in primary care clinics? (4) Is medication reconciliation practice in primary care clinics cost-effective from the clinic perspective? Study designs used to answer these questions included a systematic review, cost analysis, quality assessments, and cost-effectiveness analysis. Data sources were published articles in the medical literature and data from a prospective workflow study, which included 150 patients and 1,238 medications. The systematic review confirmed that the prevalence of medication discrepancy was high in ambulatory care and higher in primary care settings. Effective strategies for medication reconciliation included the use of pharmacists, letters, a standardized practice approach, and partnership between providers and patients. Our cost analysis showed that costs associated with medication reconciliation practice were not substantially different between primary care clinics using or not using electronic medical records (EMR) ($0.95 per patient per medication in EMR clinics vs. $0.96 per patient per medication in non-EMR clinics, p=0.78). Even though medication reconciliation was frequently practiced (97-98%), the quality of such practice was poor (0-33% of process completeness measured by concordance of medication numbers and 29-33% of accuracy measured by concordance of medication names) and negatively (though not significantly) associated with medication regimen complexity. The incremental cost-effectiveness ratios for concordance of medication number per patient per medication and concordance of medication names per patient per medication were both 0.08, favoring EMR. Future studies including potential cost-savings from medication features of the EMR and potential benefits to minimize severity of harm to patients from medication discrepancy are warranted. ^

Relationship of hospital volume to patient mortality, length of stay and total costs in patients receiving brain surgery for cancer: A nationwide analysis

Better morbidity and mortality outcomes associated with increased hospital procedural volume have been demonstrated across a number of different medical procedures. Existence of such a volume-outcome relationship is posited to lead to increased specialization of care, such that patients requiring specific procedures are funneled to physicians and hospitals that achieve a minimum volume of such procedures each year. In this study, the 2009 Nationwide Inpatient Sample is used to examine the relationship between hospital volume and patient outcome among patients undergoing procedures related to malignant brain cancer. Multiple regression models were used to examine the impact of hospital volume on length of inpatient stay and cost of inpatient stay; logistic regression was used to examine the impact of hospital volume on morbidity. Hospital volume was found to be a significant predictor of both length of stay and cost of stay. Hospital volume was associated with a lower length of stay, but was also associated with increased costs. Hospital volume was not found to be a statistically significant predictor of morbidity, though less than three percent of this sample died while in the hospital. Volume is indeed a significant predictor of outcome for procedures related to brain malignancies, though further research regarding the cost of such procedures is recommended.^

Subclavian vein catheter -related infection and hospital costs associated with exchange via a guidewire

An observational study was conducted in a SICU to determine the frequency of subclavian vein catheter-related infection at 72 hours, to identify the hospital cost of exchange via a guidewire and the estimated hospital cost-savings of a 72 hour vs 144 hour exchange policy.^ An overall catheter-related infection ($\geq$15 col. by Maki's technique (1977)) occurred in 3% (3/100) of the catheter tips cultured. Specific infections rates were: 9.7% (3/31) for triple lumen catheters, 0% (0/30) for Swan-Ganz catheters, 0% (0/30) for Cordes catheters, and 0% (0/9) for single lumen catheters.^ An estimated annual hospital cost-savings of $35,699.00 was identified if exchange of 72 hour policy were changed to every 144 hours.^ It was recommended that a randomized clinical trial be conducted to determine the effect of changing a subclavian vein catheter via a guidewire every 72 hours vs 144 hours. ^

Estimates of hospital and physician costs of epilepsy in the United States for 1995 comparing the provider -based survey method and a patient -based medical charts and billing method

This investigation compares two different methodologies for calculating the national cost of epilepsy: provider-based survey method (PBSM) and the patient-based medical charts and billing method (PBMC&BM). The PBSM uses the National Hospital Discharge Survey (NHDS), the National Hospital Ambulatory Medical Care Survey (NHAMCS) and the National Ambulatory Medical Care Survey (NAMCS) as the sources of utilization. The PBMC&BM uses patient data, charts and billings, to determine utilization rates for specific components of hospital, physician and drug prescriptions. ^ The 1995 hospital and physician cost of epilepsy is estimated to be $722 million using the PBSM and $1,058 million using the PBMC&BM. The difference of $336 million results from $136 million difference in utilization and $200 million difference in unit cost. ^ Utilization. The utilization difference of $136 million is composed of an inpatient variation of $129 million, $100 million hospital and $29 million physician, and an ambulatory variation of $7 million. The $100 million hospital variance is attributed to inclusion of febrile seizures in the PBSM, $−79 million, and the exclusion of admissions attributed to epilepsy, $179 million. The former suggests that the diagnostic codes used in the NHDS may not properly match the current definition of epilepsy as used in the PBMC&BM. The latter suggests NHDS errors in the attribution of an admission to the principal diagnosis. ^ The $29 million variance in inpatient physician utilization is the result of different per-day-of-care physician visit rates, 1.3 for the PBMC&BM versus 1.0 for the PBSM. The absence of visit frequency measures in the NHDS affects the internal validity of the PBSM estimate and requires the investigator to make conservative assumptions. ^ The remaining ambulatory resource utilization variance is $7 million. Of this amount, $22 million is the result of an underestimate of ancillaries in the NHAMCS and NAMCS extrapolations using the patient visit weight. ^ Unit cost. The resource cost variation is $200 million, inpatient is $22 million and ambulatory is $178 million. The inpatient variation of $22 million is composed of $19 million in hospital per day rates, due to a higher cost per day in the PBMC&BM, and $3 million in physician visit rates, due to a higher cost per visit in the PBMC&BM. ^ The ambulatory cost variance is $178 million, composed of higher per-physician-visit costs of $97 million and higher per-ancillary costs of $81 million. Both are attributed to the PBMC&BM's precise identification of resource utilization that permits accurate valuation. ^ Conclusion. Both methods have specific limitations. The PBSM strengths are its sample designs that lead to nationally representative estimates and permit statistical point and confidence interval estimation for the nation for certain variables under investigation. However, the findings of this investigation suggest the internal validity of the estimates derived is questionable and important additional information required to precisely estimate the cost of an illness is absent. ^ The PBMC&BM is a superior method in identifying resources utilized in the physician encounter with the patient permitting more accurate valuation. However, the PBMC&BM does not have the statistical reliability of the PBSM; it relies on synthesized national prevalence estimates to extrapolate a national cost estimate. While precision is important, the ability to generalize to the nation may be limited due to the small number of patients that are followed. ^

The nitrogen costs of photosynthesis in a diatom under current and future pCO2

With each cellular generation, oxygenic photoautotrophs must accumulate abundant protein complexes that mediate light capture, photosynthetic electron transport and carbon fixation. In addition to this net synthesis, oxygenic photoautotrophs must counter the light-dependent photoinactivation of Photosystem II (PSII), using metabolically expensive proteolysis, disassembly, resynthesis and re-assembly of protein subunits. We used growth rates, elemental analyses and protein quantitations to estimate the nitrogen (N) metabolism costs to both accumulate the photosynthetic system and to maintain PSII function in the diatom Thalassiosira pseudonana, growing at two pCO2 levels across a range of light levels. The photosynthetic system contains c. 15-25% of total cellular N. Under low growth light, N (re)cycling through PSII repair is only c. 1% of the cellular N assimilation rate. As growth light increases to inhibitory levels, N metabolite cycling through PSII repair increases to c. 14% of the cellular N assimilation rate. Cells growing under the assumed future 750 ppmv pCO2 show higher growth rates under optimal light, coinciding with a lowered N metabolic cost to maintain photosynthesis, but then suffer greater photoinhibition of growth under excess light, coincident with rising costs to maintain photosynthesis. We predict this quantitative trait response to light will vary across taxa.

A probabilistic model estimating oil spill clean-up costs - a case study for the Gulf of Finland

Existing models estimating oil spill costs at sea are based on data from the past, and they usually lack a systematic approach. This make them passive, and limits their ability to forecast the effect of the changes in the oil combating fleet or location of a spill on the oil spill costs. In this paper we make an attempt towards the development of a probabilistic and systematic model estimating the costs of clean-up operations for the Gulf of Finland. For this purpose we utilize expert knowledge along with the available data and information from literature. Then, the obtained information is combined into a framework with the use of a Bayesian Belief Networks. Due to lack of data, we validate the model by comparing its results with existing models, with which we found good agreement. We anticipate that the presented model can contribute to the cost-effective oil-combating fleet optimization for the Gulf of Finland. It can also facilitate the accident consequences estimation in the framework of formal safety assessment (FSA).

Microalgal CO2 Sequestering - Modeling Microalgae Production Costs

Microalgae CO2 sequestering facilities might become an industrial reality if microalgae biomass could be produced at cost below $500.00 t-1. We develop a model for estimation of total production costs of microalgae as a function of known production-specific expenses, and incorporate into the model the effects of uncontrollable factors which affect known production-specific expenses. Random fluctuations were intentionally incorporated into the model, consequently into generated cost/technology scenarios, because each and every logically interconnected equipment/operation that is used in design/construction/operation/maintenance of a production process is inevitably subject to random cost/price fluctuations which can neither be eliminated nor a priori controlled. A total of 152 costs/technology scenarios were evaluated to find forty four scenarios in which Predicted Total Production Costs of Microalgae (PTPCM) was in the range $200 to $500 t-1 ha-1 y-1. An additional 24 scenarios were found with PTCPM in the range of $102 to $200 t-1 ha-1 y-1. These findings suggest that microalgae CO2 sequestering and the production of commercial compounds from microalgal biomass can be economically viable venture even today when microalgae production technology is still far from its optimum.