Cost Of Public Services Research Articles

Changing costs of public services

This article presents new estimates of how much the unit costs of public services, such as the NHS and schools, have changed compared to unit costs in general: the change in the relative cost of public service output. Between 1997 and 2007, the unit cost of public service output in total grew by 13.7 per cent more than unit costs for the whole economy, an annual average relative rise of 1.3 per cent. In 2007, the unit cost of public service output rose by 0.6 per cent less than costs in general, the only time relative costs fell over the 10 year period. The relative cost of public service output changes as a result of a combination of two factors: changes in the price of inputs used in the public service, such as pay rates for people employed and prices paid for the goods and services used as inputs. The aggregate price index for these inputs rose by 9.8 per cent more than prices in general for the whole economy between 1997 and 2007, an annual average rise of 0.9 per cent changes in the efficiency and effectiveness with which resources are used to produce the output. In other words, there is a change in productivity. Between 1997 and 2007, public service productivity fell by 3.4 per cent, meaning that the volume of input needed to produce a unit of output rose by an annual average of 0.3 per cent These are experimental statistics and work continues to develop the measures.

Health Care and Public Service Use and Costs Before and After Provision of Housing for Chronically Homeless Persons with Severe Alcohol Problems: Larimer ME, Malone DK, Garner MD, et al. JAMA 2009;301:1349–57

This observational study based in Washington evaluated the impact on public services usage and public cost data over a 1-year period after providing housing to homeless individuals with alcohol abuse problems. It also compared self-reported severity and frequency of alcohol usage for these individuals during this time. There were 126 subjects identified from a rank-ordered list of chronically homeless people that had incurred the highest total costs in 2004 for the area. All identified individuals were offered housing on a first-come-first-served basis in a “Housing First” (HF) program, which provides housing without any regulations requiring subjects to abstain from substance abuse or participate in substance abuse education.

Housing Homeless Alcohol Abusers Brings Substantial Cost Savings

Back to table of contents Previous article Next article Professional NewsFull AccessHousing Homeless Alcohol Abusers Brings Substantial Cost SavingsAaron LevinAaron LevinSearch for more papers by this authorPublished Online:15 May 2009https://doi.org/10.1176/pn.44.10.0009aPlacing homeless people with severe alcohol-use problems into free housing without requiring abstinence or treatment reduced costs, medical use, and contacts with the criminal justice system, according to University of Washington researchers.Such Housing First programs “can reduce the public burden associated with overuse of crisis services and reduce alcohol consumption,” wrote Mary Latimer, Ph.D., and colleagues in the April 1 Journal of the American Medical Association. Other research has shown Housing First programs to be successful in getting homeless mentally ill people off the streets while reducing some costs.Chronic public inebriates—sometimes referred to as “frequent flyers” by police and emergency medical system crews—disproportionately use publicly funded health- and justice-system resources. Conventional interventions, like shelters, treatment programs, and abstinence-based housing, have poor records in breaking those patterns.The Seattle researchers developed a list of 388 individuals who incurred the highest costs in 2004 for use of alcohol-related hospital emergency services, the local sobering center, and the King County jail. A total of 134 participants were eventually recruited for the study from November 2005 to March 2007. There were 119 people in the interventional housed group and 39 in a wait-list control group. Their average age was 48, and they had first become homeless at an average age of 31. Nearly all (94 percent) were male, and 30 percent had attended college at some time. Many had serious medical problems such as hepatitis (40 percent) and tuberculosis (18 percent). They each had been treated an average of 16 times for alcohol abuse.The trial was not randomized for ethical reasons. Also, because participants were approached in rank order of services used and consequent costs in the year prior to the study, the treatment group had incurred larger expenses than did the control group.The treatment group was housed at a Housing First facility where participants were offered meals and on-site health services. They had no treatment requirements, but case managers did engage residents about substance-use issues. Costs for housing and services averaged $1,120 a month.The researchers collected administrative data at six months and one year from area medical, social services, and correctional departments, as well as Medicaid. The individuals who received housing had incurred more than $8 million in costs in the year preceding the trial, but only about $4 million in the first year of intervention. Monthly charges dropped for both housed and wait-list cohorts, but the average had dropped for the housed group at six months and still further at 12 months (see table). Treatment differences were produced mainly by fewer nights in shelters and reduced use of the sobering center.All measures of service use (except days in detoxification) dropped more with longer time in housing. Cost reductions occurred in charges to Medicaid, Harborview Medical Center, and emergency medical systems.At one year, average daily alcohol use dropped from an average of 15.7 drinks a day to 10.6 a day.The study demonstrates the value of stable housing, which is seen as a greater need than alcohol treatment by homeless persons with alcohol problems, said the authors. The lower burden on shelters, hospitals, and jails could mean greater access to care for other people who need it and more attention by police and emergency services to more significant matters of public safety, they suggested.The study was funded by grants from the Substance Abuse Policy Research Program of the Robert Wood Johnson Foundation, National Institute on Alcohol Abuse and Alcoholism, and National Institutes of Health and received support from Seattle's Downtown Emergency Service Center, which runs the housing program site.An abstract of “Health Care and Public Service Use and Costs Before and After Provision of Housing for Chronically Homeless Persons With Severe Alcohol Problems” is posted at<http://jama.ama-assn.org/cgi/content/abstract/301/13/1349>.▪ ISSUES NewArchived

Health Care and Public Service Use and Costs Before and After Provision of Housing for Chronically Homeless Persons With Severe Alcohol Problems

Chronically homeless individuals with severe alcohol problems often have multiple medical and psychiatric problems and use costly health and criminal justice services at high rates. To evaluate association of a "Housing First" intervention for chronically homeless individuals with severe alcohol problems with health care use and costs. Quasi-experimental design comparing 95 housed participants (with drinking permitted) with 39 wait-list control participants enrolled between November 2005 and March 2007 in Seattle, Washington. Use and cost of services (jail bookings, days incarcerated, shelter and sobering center use, hospital-based medical services, publicly funded alcohol and drug detoxification and treatment, emergency medical services, and Medicaid-funded services) for Housing First participants relative to wait-list controls. Housing First participants had total costs of $8,175,922 in the year prior to the study, or median costs of $4066 per person per month (interquartile range [IQR], $2067-$8264). Median monthly costs decreased to $1492 (IQR, $337-$5709) and $958 (IQR, $98-$3200) after 6 and 12 months in housing, respectively. Poisson generalized estimating equation regressions using propensity score adjustments showed total cost rate reduction of 53% for housed participants relative to wait-list controls (rate ratio, 0.47; 95% confidence interval, 0.25-0.88) over the first 6 months. Total cost offsets for Housing First participants relative to controls averaged $2449 per person per month after accounting for housing program costs. In this population of chronically homeless individuals with high service use and costs, a Housing First program was associated with a relative decrease in costs after 6 months. These benefits increased to the extent that participants were retained in housing longer.

Lifetime and current costs of supporting young adults who deliberately poisoned themselves in childhood and adolescence

Background: Little is known about the long-term economic consequences of child and adolescent mental health problems, despite concerns that costs in later life may be significant.Aims: To evaluate current and lifetime costs of young adults who deliberately poisoned themselves in childhood.Method: Prospective cohort study of 129 young adults (mean age 21) who as teenagers had taken part in a randomized trial following deliberate self-poisoning. Lifetime and current costs of public sector services were calculated and compared to those of a matched general population control group.Results: The self-poisoning group incurred significantly greater lifetime costs than the controls. They used more service-provided accommodation, special education and hospital services, incurred greater criminal justice costs and received more social security benefits. Higher costs in the self-poisoning group were significantly associated with conduct disorder, hopelessness, previous suicide attempts, being male and being in care prior to the self-poisoning event.Conclusions: Child and adolescent mental health problems predict significant costs compared to general population controls. This study provides indications of those groups of young people who incur high costs and for whom early intervention should be considered.

Thin Markets and Property Tax Inequities: A Multinomial Logit Approach

When property tax assessment ratios vary, the costs of public services are unevenly redistributed. More sales in a census tract should help to improve assessment uniformity while provid- ing homeowners with a stronger basis for appeals. Using data from Chicago to estimate a multinomial logit model that characterizes the distribution of assessment ratios, we fi that a variable measuring sales frequency is highly signifi cant with the predicted effect: both unusually high and low ratios are more likely to occur in areas with few comparable sales. We fi less evidence to support the notion that thin markets are responsible for regressive distributions, whereby assessment ratios are higher for low-value homes than they are for high-value ones. Accounting for sales frequency reduces but does not eliminate our fi nding of regressivity.

Are We Getting There? Evidence of Decentralized Forest Management from the Tanzanian Miombo Woodlands

Summary Based on a village study in Tanzania, the effects of decentralized forest management on forest conservation, rural livelihoods and good governance are evaluated. Tree growth is estimated to exceed harvest, and forest utilization appears effectively controlled. Forest revenues cover the costs of management and finance local public services, but the underlying taxes and regulations have made the poorest worse off. Governance outcomes are also ambiguous. Revenues are administered transparently, but village leaders are coercive toward forest dependent minorities. The case provides a rare example of how decentralized forest management works in Africa when meaningful powers are devolved to local communities.

Active and Passive Waste in Government Spending: Evidence from a Policy Experiment

We propose a distinction between active waste and passive waste as determinants of the cost of public services. Active waste entails utility for the public decision maker (as in the case of bribery) whereas passive waste does not (as in the case of inefficiency due to red tape). To assess the empirical relevance of both forms of waste, we analyze purchases of standardized goods by Italian public bodies and exploit a policy experiment associated with a national procurement agency. A revealed preference argument implies that if public bodies with higher costs are more likely to buy from the procurement agency rather than from traditional suppliers, cost differences are more likely to be due to passive waste. We find that: (i) Some public bodies pay systematically more than others for observationally equivalent goods and such price differences are sizeable; (ii) Differences are correlated with governance structure: the central administration pays at least 22% more than semi-autonomous agencies (local government is at an intermediate level); (iii) The variation in prices across public bodies is principally due to variation in passive rather than active waste; (iv) Passive waste accounts for 83% of total estimated waste.

Active and Passive Waste in Government Spending: Evidence from a Policy Experiment

We propose a distinction between active and passive waste as determinants of the cost of public services. Active waste entails utility for the public decision maker, whereas passive waste does not. We analyze purchases of standardized goods by Italian public bodies and exploit a policy experiment associated with a national procurement agency. We find that: (i) some public bodies pay systematically more than others for equivalent goods; (ii) differences are correlated with governance structure; (iii) the variation in prices is principally due to variation in passive rather than active waste; and (iv) passive waste accounts for 83 percent of total estimated waste. (JEL H11, H57, H83)

Measuring the Societal Impact of Behavior Choices

Social marketing has a key role to play in helping to shape the choices people make and supporting the decisions and actions that determine their health and well-being. These choices have a broad impact on society, affecting not only the quality of life of individuals and communities and the cost of public services, but also the performance of business and the economy. In this article we discuss how the impact of behavior choices and the interventions that support them can be evaluated. We briefly set out the problems of measuring the cost effectiveness of behavior choice interventions and propose an approach to these challenges. The article illustrates how a pragmatic, layered framework for evaluating cost effectiveness can be developed and applied in five fields in which positive behavior choices can prevent illness (alcohol misuse, smoking, obesity, coronary vascular disease, and mental health). The review identifies the value of a quality adjusted life year in each of these fields and uses these estimates to generate “return on investment” for typical projects, at different levels in society (individual and family, health and care services, other public sector, private sector, and wider society). Finally we propose a consensus conference to develop and apply such a framework.

Does Urban Sprawl Increase the Costs of Providing Local Public Services? Evidence from Spanish Municipalities

This paper examines the impact of urban sprawl, a phenomenon of particular interest in Spain, which is currently experiencing this process of rapid, low-density urban expansion. Many adverse consequences are attributed to urban sprawl (e.g., traffic congestion, air pollution and social segregation), though here we are concerned primarily with the rising costs of providing local public services. Our initial aim is to develop an accurate measure of urban sprawl so that we might empirically test its impact on municipal budgets. Then, we undertake an empirical analysis using a cross-sectional data set of 2,500 Spanish municipalities for the year 2003 and a piecewise linear function to account for the potentially nonlinear relationship between sprawl and local costs. The estimations derived from the expenditure equations for both aggregate and six disaggregated spending categories indicate that low-density development patterns lead to greater provision costs of local public services.

Social Costs of Suburbanization in Europe, Japan and the USA: A Literature Review

The long-run cost of different forms of urban development is one of the major problems in the field of land use and transport and the sustainability of cities. This paper summarizes and evaluates the international literature that deals with social costs as a consequence of suburbanization: comprehensive ‘development impact studies’; studies on ‘public service costs’; and those simulating the local ‘fiscal impact’ of various development scenarios. Such a review is needed because all studies are based on different approaches, methods and scope, as well as differences in the cost items considered. They show significantly different results. Due to the resulting complexity of comparison and evaluation, and the lack of transferability of the results to other areas, a state-of-the-art evaluation is helpful. This paper focuses mainly on the involvement of demographical changes beyond the growth paradigm, the consideration of environmental effects, and the consideration of cost burden/repayment of public costs according to the cost-by-causer principle. Using tabular comparisons of different study types, it is shown that various studies obtained different qualitative and numerical results, depending on the methodology and detail or representing different land-use patterns. Notwithstanding the different international legal frameworks, an international agreement by researchers towards a common methodology is necessary in order to enable more efficient ‘fiscal impact’ analyses as an instrument towards more compact, cost-saving development, and thus avoid unnecessary social costs by increasing the efficiency.

Dupuit, Pigou and cost of inefficiency in public services provision

In this paper we revisit the literature on the economic implications of inefficiency in public services provision. Most authors emphasize the need of changing public sector management practices and the scope of activities carried out by general government. Following Dupuit (1844) and Pigou (1947) we focus instead on the increase in the cost of public services’ provision, when indirect costs, associated with the excess burden of taxation, are taken into account. We rely on Hicks’ compensating variation (following Diamond and McFadden (1974) and Auerbach (1985)), and some public sector inefficiency coefficients from Afonso et al. (2005; 2006) to show that these magnification mechanisms are not only conceptually relevant, they are also important from a quantitative point of view.

Public Savings from the Prevention of Unintended Pregnancy: A Cost Analysis of Family Planning Services in California

To assess the short-term economic savings associated with the prevention of unintended pregnancies through California's Medicaid family planning demonstration project. Secondary data from health and social service programs available to pregnant or parenting women at or below 200 percent of the federal poverty level in California in 2002 and data on the quantity and type of contraceptives dispensed to clients of California's 1115 Federal Medicaid demonstration project. The cost of providing publicly funded family planning services was compared with an estimate of public savings resulting from the prevention of unintended pregnancies. To estimate costs and participation rates in each health and social service program, we examined published program reports, government budgetary data, analyses conducted by federal and state level program managers, and calculations from national datasets. The unintended pregnancies averted by California's family planning demonstration project in 2002 would have incurred $1.1 billion in public expenditures within 2 years and $2.2 billion within 5 years, significantly more than the $403.8 million spent on the project. Each dollar spent generated savings of $2.76 within 2 years and $5.33 within 5 years. The California 1115 Medicaid family planning demonstration project resulted in significant public cost savings. The cost of the project was substantially less than the public sector health and social service costs which would have occurred in its absence.

Evaluating the need assessment in fiscal equalization schemes at the local government level

The assessment of expenditure needs is a contentious issue surrounding European fiscal equalization schemes. While the assessment via output standards is very complex, the measurement via regression techniques is limited by preference and efficiency variations that affect local government spending. The procedure to be presented allows evaluating current need assessments without depending on any kind of output measure. Assuming that the socioeconomic environment critically affects the cost of public services, we test the extent to which current need indicators account for socioeconomic disparities among localities. If some neglected differences can be detected, we argue that the resulting cost differences are also neglected. We illustrate this evaluation method using the example of the German state of Saxony.

Public telesurveillance service for frail elderly living at home, outcomes and cost evolution: a quasi experimental design with two follow-ups

BackgroundTelesurveillance is a technologically based modality that allows the surveillance of patients in the natural setting, mainly home. It is based on communication technologies to relay information between a patient and a central call center where services are coordinated. Different types of telesurveillance systems have been implemented, some being staffed with non-health professionals and others with health professional, mainly nurses. Up to now, only telesurveillance services staffed with non-health professionals have been shown to be effective and efficient. The objective of this study was to document outcomes and cost evolution of a nurse-staffed telesurveillance system for frail elderly living at home.MethodsA quasi experimental design over a nine-month period was done. Patients (n = 38) and caregivers (n = 38) were selected by health professionals from two local community health centers. To be eligible, elders had to be over 65, live at home with a permanent physical, slight cognitive or motor disability or both and have a close relative (the caregiver) willing to participate to the study. These disabilities had to hinder the accomplishment of daily life activities deemed essential to continue living at home safely. Three data sources were used: patient files, telesurveillance center's quarterly reports and personal questionnaires (Modified Mini-Mental State, Functional Autonomy Measurement System, Life Event Checklist, SF-12, Life-H, Quebec User Evaluation of Satisfaction with Assistive Technology, Caregiver Burden). The telesurveillance technology permitted, among various functionalities, bi-directional communication (speaker-receiver) between the patient and the response center.ResultsA total of 957 calls for 38 registered clients over a 6-month period was recorded. Only 48 (5.0%) of the calls were health-related. No change was reported in the elders' quality of life and daily activity abilities. Satisfaction was very high. Caregivers' psychological burden decreased substantially. On a 3 months period, length of hospital stays dropped from 13 to 4 days, and home care services decreased from 18 to 10 visits/client. Total cost of health and social public services used per client dropped by 17% after the first 3 months and by 39% in the second 3 months.ConclusionThe ratio of 0.50 calls per client to the call center for health events is three times higher than that reported in the literature. This difference is probably attributable to the fact that nurses rather than non-health professional personnel were available to answer the clients' questions about their health and medications. Cost evolution showed that registering older adults at a telesurveillance center staffed by nurses, upon a health professional recommendation, costs the health care system less and does not have any negative effects on the well-being of the individuals and their families. Telesurveillance for the elderly is effective and efficient.

Coste-efectividad de la terapia fotodinámica en la degeneración macular asociada a la edad

The aim of this study was to estimate the public health service cost of visual acuity improvement or maintenance with photodynamic therapy in patients with age-related macular degeneration (ARMD). This illness is the most frequent cause of blindness in elderly patients in western countries. A cost-effectiveness analysis was carried out to compare photodynamic therapy versus no treatment. The analysis point of view was that of the health service. The improvement or maintenance of visual acuity and contrast sensitivity were considered efficacy results. Direct costs were estimated by means of cost accountancy. Quality adjusted costs per visual acuity life year gained (QACVAG) were calculated through utility values from other studies. The cost per year of maintenance of visual acuity in a two-year period was 36,530 euro for women and 34,804 euro for men. If this cost was estimated for life expectancy in Asturias, it would be reduced to 4,298 euro for women and 5,354 euro for men. If costs of the QACVAG, in a two-year period, were considered, photodynamic therapy would cost 66,931 euro for women and 70,249 euro for men. This cost-effectiveness analysis allows decisions to be made about public financing. Some research in our country suggests that public health financing should be provided for interventions whose cost-effectiveness is less than 30,000 euro of CVAQA. The treatment evaluated here far exceeds this value. It is recommended that the use of more restrictive patient selection, incorporating diagnostic criteria and patient autonomy indicators, could improve the results of this intervention.

The influence of management on the cost of fire protection

AbstractAn important and unresolved issue central to the study of government performance is how the actions of managers and the nature of organizations affect the cost of public services. This paper presents an empirical analysis of fire departments that estimates the influence of managerial choices on per capita spending within a simultaneous public production system. It does so by refining a theoretical cost model from the field of public management to include fundamental dimensions of government organizations and administration. Two‐stage least squares regression analysis is then employed to examine the fire protection case. The results of the analysis substantiate the intuition that managerial practices and decisions influence the cost of a public service. They show that the cost of fire protection depends significantly on the outcomes of a department's fire prevention and suppression activities, some key aspects of a department's management practices, the configuration of its workforce and equipment, its legal structure, and factors in its external environment. © 2004 by the Association for Public Policy Analysis and Management.

Conventional development versus managed growth: the costs of sprawl.

We examined the effects of sprawl, or conventional development, versus managed (or "smart") growth on land and infrastructure consumption as well as on real estate development and public service costs in the United States. Mathematical impact models were used to produce US estimates of differences in resources consumed according to each growth scenario over the period 2000-2025. Sprawl produces a 21% increase in amount of undeveloped land converted to developed land (2.4 million acres) and approximately a 10% increase in local road lane-miles (188 300). Furthermore, sprawl causes about 10% more annual public service (fiscal) deficits ($4.2 billion US dollars) and 8% higher housing occupancy costs ($13 000 US dollars per dwelling unit). Managed growth can save significant amounts of human and natural resources with limited effects on traditional development procedures.

Urban Sprawl and the Cost of Public Services

One of the principle criticisms of urban sprawl is that it undermines the cost-effective provision of public services. In this paper the authors examine whether or not this is true through an exploratory analysis of the influence that alternative development patterns have on twelve measures of public expenditure: total direct, capital facilities, roadways, other transportation, sewerage, trash collection, housing and community development, police protection, fire protection, parks, education, and libraries. The objectives of the analysis are threefold. First, the authors, through a background discussion, provide a brief overview of previous research on the relationship between urban development patterns and the cost of public services. Second, through empirical analysis, they examine how the character of urban development affects per capita public outlays in a cross-section of 283 metropolitan counties during the 1982–92 time period. A separate equation is estimated for each measure of expenditure, providing substantive evidence on how density, the spatial extent of urbanized land area, property value, and political fragmentation affect the cost of services. Finally, the authors use the results of the empirical analysis to develop a set of policy recommendations and directions for future research.