Economies Of Scale In Provision Research Articles

Stunting, double orphanhood and unequal access to public services in democratic South Africa

Orphans who lack household or community support face significant socio-economic disadvantages. In particular, they are at greater risk of malnutrition and stunting in developing countries. Children who have no living parents, also called double orphans, are most likely to require support from extended families or public institutions. This paper explores how WASH infrastructure, and public health and social services relate to stunting. It is one of the first studies to analyse these factors with a specific focus on double orphans, who tend to live in under-serviced areas with high stunting rates and poor access to public resources. We collate a cross sectional spatial dataset with local child stunting rates from 2013, rates of double orphanhood, private household resources, and public services from 2011 for South Africa, a country where the HIV/AIDS pandemic has led to high rates of double orphanhood. We estimate spatial econometric models that account for unobserved regional shocks and measurement bias, but which do not address other biases. Our results show that high stunting rates, particularly in areas with high proportions of double orphans, overlap strongly with poor provision of WASH and the availability of household resources. By contrast, other softer services accessed outside the home, such as access to health, social welfare and early childhood development facilities are not correlated with stunting in the same way. WASH is more strongly related to reduced stunting when infrastructure covers larger geographic areas and with the combined use of services from adjacent areas. This occurs because of economies of scale in provision and preventing transmission of disease across regions. Policy makers can explore the option to reduce stunting by expanding geographic networks of WASH service delivery into under-serviced areas where double orphans tend to locate.

The role of economies of scale in the cost of dialysis across the world: a macroeconomic perspective

The treatment of chronic kidney disease through dialysis is a considerable expense in most health systems. The two chief methods of providing dialysis, haemodialysis (HD) and peritoneal dialysis (PD) have significant differences in cost composition and factors of production. The aim of this article is to identify and quantify the macroeconomic variables that influence the relative cost of such modalities across different countries. From previously published literature, we extracted the estimates of HD/PD cost ratios in a total of 46 countries. We conducted a multivariate regression analysis using the estimated HD/PD cost ratio in each country, with several country level indicators as explanatory variables. We found a strong statistical effect of the following variables on the HD/PD cost ratio: country's level of development, economies of scale and percentage of private health-care expenditure. The statistical effects on HD/PD ratio by local manufacturing and relaxed import regulation of PD equipment were calculated and were found to be very significant. it is possible for a country to still reap the benefits of economies of scale in provision of PD, even in the absence of a large enough market to make local production of PD equipment feasible in that country.

Public Policy Objectives and Urban Transit

Transit is closely associated with public-sector involvement, including capital costs and significant subsidies of operating costs. The rationale for this involvement is justified on several grounds, including the presence of economies of scale in provision of transit service and the presence of external benefits associated with transit. In a recent study Parry and Small demonstrated that these two effects provide justification for existing subsidy levels for transit service in several cities. In the world of public transit, passenger ferry service in the New York City region is unusual: with the exception of the subsidized and publicly run Staten Island Ferry, the regional ferry system is run primarily with operating costs covered by farebox revenues. Can the arguments for public subsidies for transit extend to this system of private passenger ferries? Would economies of scale and external benefits justify an expanded and subsidized ferry system in the New York City region? These issues are explored by defining the public interest in the context of the system, discussing whether this public interest would justify a structural change in the way passenger ferries are funded in the region, and providing a timely case study, the East River Ferry service started in June 2011. This subsidized service, a ridership success, has capitalized on growing densities along the East River between Queens, Brooklyn, and Manhattan, New York.

Economic aspects of mental health carve-outs.

BACKGROUND: Recent empirical research has found behavioral health carve-outs in the US to reduce costs immediately and considerably, compared to indemnity insurance and HMOs. Carve-outs have quickly captured a large part of the organized market in US behavioral health. At the same time, market concentration has increased significantly. METHODS: The current paper uses concepts and results from the industrial organization and transaction cost literature to explain (i) why carve-outs hold cost advantages over other institutional arrangements, (ii) why these hold in particular for behavioral health and (iii) why this did not happen earlier. RESULTS: The main explanatory variables relate to economies of scale, the avoidance of diseconomies of scope, and the avoidance of personal relationships. The sometimes surprising lack of explicit risk-taking by carve-outs and of explicit cost-reducing incentives in carve-out contracts are more than overcome by incentives created from gaining large contracts. The specific advantages of carve-outs in behavioral health derive from a combination of lack of economies of scope with other health services, lack of economies of scale in provision of behavioral health and presence of economies of scale in management. It is conjectured that behavioral health carve-outs have benefited from biomedical innovations that changed the direction of treatments, from computerization that enables large-scale standardized management and from financial pressures on the behavioral health sector. DISCUSSION: The empirical basis for the current study is a number of case studies and the rapid penetration of mental health carve-outs in the US. Cost reductions caused by such carve-outs appear to be quite robust. Explaining cost reductions from institutional changes has to start with the question of why the old institution did not implement the same or similar changes. We have emphasized reasons why such changes were not feasible under indemnity insurance and HMOs. Nevertheless, we have not been able to evaluate quality changes that might have accompanied those cost reductions. IMPLICATIONS FOR HEALTH POLICY: While further cost reductions may follow a logistic curve, which simply flattens out, there are developments, regulatory and legal in particular, that could lead to a regression of carve-out costs towards those under other institutional arrangements. Thus, the main health policy questions arising from this study are to what extent the freedom of carve-outs to hold costs down should be upheld and to what extent the cost reductions should be used to increase behavioral health coverage. IMPLICATIONS FOR FURTHER RESEARCH: I see three main avenues for further research. The first is to find more empirical evidence for the hypotheses developed in this paper. The second is to look for other countries and other areas of health care with characteristics that would lend themselves to the application of carve-outs. The third is to analyze the quality aspect of carve-outs. The empirical question here is "What has been the effect of carve-outs on the quality of behavioral health care in the US?". The theoretical question is "What are the incentives of the sponsors of carve-out plans and of the carve-out management to assure quality provision of care?".