Investor Owned Research Articles

Resistance Is Not Futile: Co-operatives, Demutualization, Agriculture, and Neoliberalism in Australia

AbstractRecognition of co-operatives as a legitimate business model and form of economic participation was significantly challenged by the rise of neo-liberalism in the 1980s with its emphasis on individuals and markets. This fueled an externally and internally driven push to demutualize co-operatives and convert them into Investor Owned Businesses (IOB). While the international trend to demutualize emerged from the end of the Second World War, evidence indicates it accelerated from the late 1980s until the onset of the Global Financial Crisis. Drawing on an ongoing project of historical data collection and visual analysis of Australian co-operatives, this paper explores the Australian experience with demutualization, particularly with regard to agriculture. In line with the international experience, there has been a surge in Australian demutualization since the 1980s. However, while demutualization continues to be a feature of the Australian landscape post-GFC as co-operatives tackle with the changed political and economic environment, the paper also challenges the view that demutualization is inevitable for agricultural co-operatives. Co-operative managers can make strategic choices to avoid demutualization and retain member control. Further, co-operative culture and the persistence of co-operative clusters in particular regions can blunt the push to demutualize.

Collaboration mitigates barriers of utility ownership on policy adoption: evidence from the United States

Informed by literature on collaboration, policy adoption, and utility governance, this paper develops and empirically tests hypotheses addressing the implications of collaboration, utility ownership and city-level commitment to sustainability on city-level clean energy policy decisions. This paper offers an answer to the question, “to what extent does collaboration between utilities and local governments influence policy adoption.” We utilize cross-sectional data from the United States focused Integrated City Sustainability Database (ICSD) to perform an ordinary least squares regression analysis that investigates the degree that specific city attributes and state policy influence the creation of city-scale policy. This analysis shows that cities with a Publicly Owned Utility (POU) adopt close to two energy policies more than similar cities served by an IOU. Higher levels of collaboration among cities and with an Investor Owned Utility (IOU) can offset a portion of the adoption gap for community-oriented energy policy, but has little to no impact on governmental or renewable policies.

The Evolving Role of Oil and Gas Companies in the Energy Industry

This paper provides a review of the evolving role and characteristics of the global oil and gas companies, which increasingly come in a variety of flavors. It also surveys the different types of global oil and gas companies that include national oil companies (NOCs), international oil companies (IOCs), Independents, and oilfield services companies (OFSCs). The continued rise of NOCs, accelerated by high oil prices, has seen the balance of control over most of the world’s hydrocarbon resources shift decisively in their favor. Their ability to access capital, human resources and technical services directly from oil field service companies, and to build in-house competencies, allows them to operate independently of Investor Owned Companies in most instances. The demand on NOCs continues to evolve with the global energy landscape to reflect variations in demand, discovery of new ultra-deep water oil deposits, and national and geopolitical developments. NOCs, traditionally viewed as the custodians of their country's natural resources, have generally owned and managed the complete national oil and gas supply chain from upstream to downstream activities. Having secured their home base, NOCs have emerged as joint venture partners with the IOCs and increasingly as their competitors, seeking international upstream and downstream acquisition and asset targets. The key question is whether this emerging landscape will undermine the sustainability of the IOC resource-ownership business model. Are the challenges of declining production in existing oil fields replacing oil and gas reserves in restricted access or higher cost areas, and the declining of the operating profit margins yet sufficient to reach a tipping point?

Standardizing community benefit between not-for-profit and investor-owned hospitals

ABSTRACT This research investigates whether investor-owned (IO) hospitals provide equivalent charity care as not-for-profit (NFP) hospitals in a reduced uncompensated care environment (post Affordable Care Act). Gross revenues, Total Uncompensated Charges (TUC), and a new measure, Standardized Patient Service Benefits (SPSB), are computed for not-for-profit and investor-owned hospitals. The SPSB is calculated based on Diagnostic Related Groups (DRGs) for each discharge and does not allow for local hospital price manipulation. This eliminates pricing differences between hospitals for similar services when evaluating charity care. Using patient discharges classified as charity care, IO hospitals appear to provide more charity care than NFP hospitals when measuring by the TUC. When the TUC is adjusted for the corresponding DRG value (SPSB), the amount of charity care for not-for-profit hospitals exceeds investor-owned hospitals, a reversal from the TUC results. This research adds to the existing body of knowledge by introducing a new standardized measure, SPSB. This method eliminates pricing differences and may be used for ownership comparisons when hospitals charge varying amounts for similar services. Additionally, the results indicate that revenue manipulation may inflate the perceived amount of charity care and potential tax benefit.

Market and organizational factors associated with hospital vertical integration into sub-acute care.

Changes in payment models incentivize hospitals to vertically integrate into sub-acute care (SAC) services. Through vertical integration into SAC, hospitals have the potential to reduce the transaction costs associated with moving patients throughout the care continuum and reduce the likelihood that patients will be readmitted. The purpose of this study is to examine the correlates of hospital vertical integration into SAC. Using panel data of U.S. acute care hospitals (2008-2012), we conducted logit regression models to examine environmental and organizational factors associated with hospital vertical integration. Results are reported as average marginal effects. Among 3,775 unique hospitals (16,269 hospital-year observations), 25.7% vertically integrated into skilled nursing facilities during at least 1 year of the study period. One measure of complexity, the availability of skilled nursing facilities in a county (ME = -1.780, p < .001), was negatively associated with hospital vertical integration into SAC. Measures of munificence, percentage of the county population eligible for Medicare (ME = 0.018, p < .001) and rural geographic location (ME = 0.069, p < .001), were positively associated with hospital vertical integration into SAC. Dynamism, when measured as the change county population between 2008 and 2011 (ME = 1.19e-06, p < .001), was positively associated with hospital vertical integration into SAC. Organizational resources, when measured as swing beds (ME = 0.069, p < .001), were positively associated with hospital vertical integration into SAC. Organizational resources, when measured as investor owned (ME = -0.052, p < .1) and system affiliation (ME = -0.041, p < .1), were negatively associated with hospital vertical integration into SAC. Hospital adaption to the changing health care landscape through vertical integration varies across market and organizational conditions. Current Centers for Medicare and Medicaid reimbursement programs do not take these factors into consideration. Vertical integration strategy into SAC may be more appropriate under certain market conditions. Hospital leaders may consider how to best align their organization's SAC strategy with their operating environment.

Shaping the Rules of Engagement: Discursive Corporate Political Strategies in Nascent Markets

We explore how strategic actors in a nascent market shape the competitive regulation of the market in their favor. Our qualitative longitudinal study follows the competing discursive strategies of entrepreneurial Electric Vehicle Service Providers (EVSPs) and established Investor Owned Utilities (IOUs) in California, as they sought to influence three sequential decisions by a regulatory agency to shape the competitive structure of the nascent electric vehicle (EV) charging market. We find that actors seek to influence market regulation through a confluence of three distinct yet mutually enabling discursive strategies: framing the shared environment, constructing a problem of competition, and situating regulation in time, which respectively seek to construct shared meanings, shape the attention and priorities of the regulatory agency, and appeal to the procedural legitimacy of the regulatory agency. The core output of our study is a framework of discursive corporate political strategies for shaping regulat...

Efficiency and environmental impacts of electricity restructuring on coal-fired power plants

We investigate the efficiency and environmental impacts of electricity market restructuring by examining changes in fuel efficiency, cost of coal purchases, and utilization among coal-fired power plants based on a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructuring changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a 1.4 percent improvement in fuel efficiency, (2) an 8 percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. The estimates imply that restructuring has led to nearly 15 percent savings in operating expenses and up to 7.5 percent emissions reduction among these plants.

The Capital Budgeting Process of Healthcare Organizations: A Review of Surveys

Several surveys have been administered over the last 40 plus years to learn about capital budgeting practices of healthcare organizations. In this report, we analyze and synthesize these surveys in a four-stage framework of the capital budgeting process: identification, development, selections, and post-audit. We examine three issues in particular: (1) efficiency of for-profit hospitals relative to not-for-profit hospitals, (2) capital budgeting practices of the healthcare industry vis-à-vis other industries, and (3) effects of healthcare mergers and acquisitions on capital budgeting decisions. We found indirect evidence that for-profit hospitals exhibited greater efficiency than not-for-profit hospitals in recent years. The acquisition of not-for-profits by for-profits is credited as the primary reason for growth of multihospital systems; these acquisitions may have contributed to the more efficient capital budgeting practices. One unique attribute of healthcare is the dominant role of physicians in almost all aspects of the capital budgeting process. In agreement with some researchers, we conclude that the disproportionate influence of physicians is likely to impede efficient decision making in capital budgeting, especially for nonprofit organizations.

Cooperation Between Co-operative Business Organization and Investor Owned Firm to Stimulate Economic Growth of a Country: A Cooperative Advantage Approach

Cooperation Between Co-operative Business Organization and Investor Owned Firm to Stimulate Economic Growth of a Country: A Cooperative Advantage Approach

Risk and Return Trade‐Offs in Partnering Strategies between Co‐ops and IOFs

ABSTRACTChanges in grain handling technologies and favorable terms on rail services are encouraging construction of state of the art grain handling facilities. Given these are high fixed and low marginal cost operations that are becoming increasingly vertically interdependent, the investments have substantial risks and opportunities. Partnerships are being formed to capitalize construction of fixed assets, provide a means to share specialized services, or to facilitate acquisitions or mergers. Given the mixture of corporate structures in this industry, including investor owned (IOF) and cooperatives, partnership agreement terms must accommodate the interest of a variety of stakeholder types. The purpose of this paper is to develop a financial model to evaluate classes of these partnerships and then compare distributions of risk and returns to each partner. A stochastic simulation model, specified as being highly representative of some contemporary partnerships, was developed for these purposes. Alternative partnership terms are specified and evaluated.

A Study on the Revitalization for International Medical Tourism by Application Investor Owned Hospital

A Study on the Revitalization for International Medical Tourism by Application Investor Owned Hospital

The Role of National and International Oil Companies in the Petroleum Industry

This paper provides a review of the evolving role and characteristics of the oil and gas companies, which increasingly come in a variety of flavors. It also surveys the different types of oil and gas companies that include national oil companies (NOCs), international oil companies (IOCs), independents, and oilfield services companies (OFSCs). The continued rise of NOCs, accelerated by high oil prices, has seen the balance of control over most of the world’s hydrocarbon resources shift decisively in their favor. Their ability to access capital, human resources and technical services directly from oil field service companies, and to build in-house competencies, allows them to operate independently of Investor Owned Companies in most instances. The demand on NOCs continues to evolve with the global energy landscape to reflect variations in demand, discovery of new ultra-deep water oil deposits, and national and geopolitical developments. NOCs, traditionally viewed as the custodians of their country's natural resources, have generally owned and managed the complete national oil and gas supply chain from upstream to downstream activities. Having secured their home base, NOCs have emerged as joint venture partners with the IOCs and increasingly as their competitors, seeking international upstream and downstream acquisition and asset targets. The key question is whether this emerging landscape will undermine the sustainability of the IOC resource-ownership business model. Are the challenges of declining production in existing oil fields replacing oil and gas reserves in restricted access or higher cost areas, and the declining of the operating profit margins yet sufficient to reach a tipping point? NOCs and OFSCs have increasing power and influence in global oil markets. In parallel, IOCs’ significance and role in the oil markets has been in decline due to shrinking technical skills and expertise, reduced access to low cost reserves, and lower operating profit margins. As a result, IOCs have tended to focus on more challenging and less profitable domains, shale gas, unconventional oil, and deep-water operations. OFSCs have been offering NOCs more services and specialized operations with high technical experience at a lower cost than IOCs offer. As these trends continue, IOCs are likely to adopt a new business model that may require changes in collaborative efforts and cooperative relationships. Partnering with IOCs and OFSCs is a good step for NOCs that undertake a globalization strategy. In fact, this is a win-win strategy for all parties, as it will enable IOCs to gain more access to NOCs’ resources. Further, IOCs and OFSCs in partnership with NOCs should contribute to the socioeconomic development of the countries in which they operate.

Efficiency and Environment Impacts of Electricity Restructuring on Coal-Fired Power Plants

We investigate the impacts of electricity market restructuring on fuel efficiency, utilization and, new to this area, cost of coal purchases among coal-fired power plants using a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructuring changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a two percent improvement in fuel efficiency for IOs, (2) a ten percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. Based on these estimates, back-of-the-envelope calculations find that restructuring has led to about 6.5 million dollars in annual cost savings or nearly 12 percent of operating expenses and up to a 7.6 percent emissions reduction per plant.

Efficiency and Environmental Impacts of Electricity Restructuring on Coal-Fired Power Plants

We investigate the impacts of electricity market restructuring on fuel efficiency, utilization and, new to this area, cost of coal purchases among coal-fired power plants using a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructur- ing changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a two percent improvement in fuel efficiency for IOs, (2) a ten percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. Based on these estimates, back-of-the-envelope calculations find that restructuring has led to about 6.5 million dollars in annual cost savings or nearly 12 percent of operating expenses and up to a 7.6 percent emissions reduction per plant.

Efficiency of Cooperatives and Investor Owned Firms Revisited

AbstractThe objectives of dairy processing cooperatives differ from those of investor‐owned firms (IOFs). However, the literature usually assumes the same performance measures for cooperatives vis‐a‐vis IOFs. This study compares the performance of dairy cooperatives and IOFs in major European dairy producing countries. A traditional input oriented approach is used and two alternative approaches are used to account for the differential objectives of cooperatives. Cooperatives’ performance differs across the two approaches from being outperformed by IOFs using the input oriented approach to outperforming them when using an approach that is more in line with cooperatives’ objectives.

Trends in Asset Structure Between Not-for-Profit and Investor-Owned Hospitals

The delivery of health care is a capital-intensive industry, and thus, hospital investment strategy continues to be an important area of interest for both health policy and research. Much attention has been given to hospitals' capital investment policies with relatively little attention to investments in financial assets, which serve an important role in not-for-profit (NFP) hospitals. This study describes and analyzes trends in aggregate asset structure between NFP and investor-owned (IO) hospitals during the post-capital-based prospective payment system implementation period, providing the first documentation of long-term trends in hospital investment. The authors find hospitals' aggregate asset structure differs significantly based on ownership, size, and profitability. For both NFP and IO hospitals, financial securities have remained consistent over time, while fixed asset representation has declined in IO hospitals.

Investor Owned and Controlled Rating Agencies: A Summary Introduction

Rating agencies have been broadly criticized for their failure to anticipate a range of credit market conditions. The dominant critique, voiced by the President of the United States, the Chairman of the SEC, leading members of Congress, and foreign regulators, is that the leading rating agencies are subject to inherent conflicts of interest arising from the “issuer-pays” model that drives their business: Because these rating agencies are paid by the issuers of the securities they rate, the agencies have embedded incentives to please the sources of their essential cash flow and therefore are neither as objective nor as critical as they might be if driven by an alternative business model. Proposals for reform currently under consideration by Congress and the SEC, however, do nothing to alter these basic incentives. They fiddle at the edges of the marketplace and leave untouched the fundamental incentive conflict about which policymakers appear to agree. This article suggests an alternative regulatory strategy. Under existing statutory authority, the SEC could create a new category of rating agencies - Investor Owned and Controlled Rating Agencies (“IOCRAs”) - and require that every rating issued by an issuer-paid Nationally Recognized Statistical Rating Organization (“NRSRO”) that is not an IOCRA, such as Moody’s and Standard & Poor’s, be accompanied by at least one rating issued by an IOCRA. Because IOCRAs would be under the control of the sophisticated investor community, and because any one investor’s ownership interest in an IOCRA would be capped, the incentives of IOCRAs should be oriented to generating ratings that accurately reflect the risks of holding specific debt instruments, even though their fees would be also paid by issuers. This regulatory strategy introduces immediate competition into a market that is a strong duopoly and incentivizes innovation that has been lacking. Most significantly, however, IOCRAs would constitute rating agencies with an inherently investor-oriented perspective, and if IOCRAs were to fail in anticipating credit market issues, the investor community would, at the end of the day, have only itself to blame.

The Canary in the Coal Mine

AMERICA'S NOT-FOR-PROFIT HOSPITALS must survive. Period! They are the foundation of our nation's healthcare system, born out of community need, and have always played a significant role in support of the country's safety net hospitals. Combined, the public/non-profit sectors provide the lion's share of healthcare to America's most vulnerable patient populations. Frontiers first began delving into this subject in 1989.1 find it telling that all these years later the publication is again focusing on the future of not-forprofits. It points to two major issues that continue to need resolution: weaknesses in governance and executive leadership and our industry's broken reimbursement STRONG BUSINESS PRACTICES ALONE AREN'T THE ANSWER Effective leaders long ago rejected what Bryant H. Krenek, Jr. describes as a mentality, or organizational culture that not only permits, but actually encourages a lack of focus on the need for not-for-profit to make money to fulfill their missions. Instead, they honed their executive skills and, like Krenek, changed their organizations' cultures by introducing effective business practices to their operations. Krenek and Dr. Vernon E. Weckwerth are correct in saying that are big businesses and must be run as such, whether investor owned (IO), not for profit (NFP), or government run. But focusing on the bottom line alone won't eliminate the major problems today's face: * the growing number of uninsured; * declining reimbursements; and * competition from specialty organizations. GOVERNANCE As Dr. Weckwerth discusses, hospital trustees are responsible for making sure their hospital runs like a business, but few board members are skilled at the policy level of governance other than in the business elements. During my 25-year career in healthcare management, I've noticed that in large part, incoming trustees are not well prepared for the important work ahead. They have limited knowledge of hospital management and operations, regulatory entities and requirements, quality improvement and care management, or medical staff relations. All too often, trustees are too closely aligned with special interests, meaning decisions may not always be made with the community's best interests in mind. As stated in Boards Under Fire, a publication of the Volunteer Trustees Foundation and The Governance Institute (Miller 2001), Boards need to know that not-for-profit organizations are, by law, operated for the benefit of the community. The directors are literally 'entrusted' to provide stewardship on the public's behalf. The paramount duty of a not-for-profit director is obedience to Every decision a board member makes concerning the use of assets must further the organization's purpose. If NFP are to survive, their trustees must bring much more than business savvy to the boardroom table. They must be bold, visionary leaders who understand the importance of maintaining their hospital's social contract with the communities in which they operate. Dr. Weckwerth describes this as the good, and quotes the researchers at Santa Clara University in that it consists primarily of having the social systems, institutions, and environments on which we all depend, work in a manner that benefits all people. The researchers cite as example of a particular common good an accessible and affordable public healthcare system. That system, as Krenek points out, bears the heaviest burden in regards to providing uncompensated care. Government generally devoted substantially larger shares of their operating expenses [11.2 to 18 percent] to uncompensated care than did NFP and for-profit hospitals in 2003. According to Krenek, the range of uncompensated care costs as a percentage of expenses was 2 to 5.4 percent on the investor-owned (IO) side and 3.2 to 6. …

Abnormal returns and the regulation of nonprofit hospital sales and conversions

During the 1990s, concerns that nonprofit (NP) hospitals were being sold at below-market prices to investor-owned (IO) chains helped to prompt the widespread adoption of state laws regulating the sale and conversion of nonprofits. In this paper, we provide a simple test of under-pricing using the IO acquirer's abnormal stock market returns at the time of the acquisition. Prior to regulation, we find that IO chains did not earn abnormal returns from their acquisitions of NPs and earned greater returns from purchasing other IO and privately owned hospitals. In states that subsequently adopted regulations, acquisition activity slowed significantly and acquirer returns became negative. Efficient markets theory suggests that, absent regulation, expected merger synergies were already being transferred to the NP target and that regulation may have reduced expected synergies or increased the costs of acquiring NP hospitals.

Growth of Investor Owned and Cooperative Firms in Greek Dairy Industry

This paper examines the factors that affect the annual growth of cooperatives and investor owned firms (IOF) in Greek diary industry over the period 1990–94. A comparison based on both cooperative principals and property rights theory is made between IOFs and cooperatives to study their characteristics. However an empirical work is required to explain differences, if any, in the growth of the two types of firms within the same market. The work examines the determinants of the annual growth and it tests whether significant differences between IOFs and cooperatives exist. Ordinary least squares results show that both diversification and advertising strategies are important determinants for IOF growth, while the cooperative growth depends on capital structure and intensity and these organizations do not effectively apply competitive strategies.