merry christmas and happy new year 2016

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Public-sector outsourcing is distinct from privatization: the desirability of outsourcing in the provision of public services

The desirability of outsourcing the provision of public services depends on their characteristics and market conditions.

This sentence is made by Panu Poutvaara from IZA World of Labor who recently has published an article about public sector outsourcing.

Pros:

• The competition effects of privatization make private provision more efficient than public provision.
• Outsourcing public services can lower costs and increase consumer choice.
• Competition in service provision stimulates innovation, and more efficient use of resources.

Cons:

• Private-sector cost minimization efforts risk worsening the quality of public services, depending on the type of service outsourced.
• Some public-sector employees may lose their jobs.
• Natural monopolies cannot be privatized without risking a hold-up problem or corruption.

What happen within health care sector?

The health sector picture is more complicated.

• Adverse selection is particularly strong in the health sector, and information asymmetries are arguably higher in the health sector than in other sectors like education. Outsourcing to private institutions could lead to the exclusion of the sickest individuals in an effort to reduce costs. 
• Public competition by comparison:

1. The introduction of patient choice triggers a change in the choice of hospitals, with patients choosing higher-quality hospitals as measured by the mortality rate for heart-attack patients
2. Hospitals facing more competition due to lower market concentration shows an increase in quality without an increase in cost. 

Taking to account for those who likes to confound apples with pears

Public-sector outsourcing is distinct from privatization.

• Outsourcing, broadly defined, entails the private-sector provision of public goods or services under procurement contracts or vouchers that offer consumers of public services a choice of private-sector providers.
• Privatization entails the sale or other transfer of ownership of a public business or entity to a private entity.

Access to the article

IZA World of Labor is a private independent nonprofit economic research institute that analyzes global labor market using evidence based information.

photo: banksy 
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Board meetings should be the place and time to engage board members

Board meetings provide an opportunity to actively review a company’s performance, analyse business processes, and strategize for the future.

But board meetings can also be frustratingly disorganized at times, too frequent (or infrequent, depending on the company), and a waste of everyone’s time if they’re not run properly.

As a manager who spends lots of time preparing the board meetings you probably have to think about these simple questions:

• Does everybody know all the meeting's annual calendar in advance?
• Does everybody know the time they will have to spend in each meeting to avoid people leave it in advance?
• Are you presenting a good metrics? Are they standardized?
• Are the presentations always done in the same model specially the financial and performance reports
• Are the discussions and the time spend in each item listed good enough?

Here there is an interesting article to read from Lisa Kay Salomon: "Designing Better Board Meetings: Securing Strategic Return on Time".

Acces to the article

Nat Farbman. The LIFE Picture Collection/Getty Images 1947. At Temple Public House, club members hold formal beer session. 
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Angus Deaton: In the end, it's individual peoples' well-being that counts

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015 was awarded to Angus Deaton "for his analysis of consumption, poverty, and welfare". The work for which Deaton is now being honored revolves around three central questions:

How do consumers distribute their spending among different goods? Answering this question is not only necessary for explaining and forecasting actual consumption patterns, but also crucial in evaluating how policy reforms, like changes in consumption taxes, affect the welfare of different groups. In his early work around 1980, Deaton developed the Almost Ideal Demand System – a flexible, yet simple, way of estimating how the demand for each good depends on the prices of all goods and on individual incomes. His approach and its later modifications are now standard tools, both in academia and in practical policy evaluation.

How much of society's income is spent and how much is saved? To explain capital formation and the magnitudes of business cycles, it is necessary to understand the interplay between income and consumption over time. In a few papers around 1990, Deaton showed that the prevailing consumption theory could not explain the actual relationships if the starting point was aggregate income and consumption. Instead, one should sum up how individuals adapt their own consumption to their individual income, which fluctuates in a very different way to aggregate income. This research clearly demonstrated why the analysis of individual data is key to untangling the patterns we see in aggregate data, an approach that has since become widely adopted in modern macroeconomics.

How do we best measure and analyze welfare and poverty? In his more recent research, Deaton highlights how reliable measures of individual household consumption levels can be used to discern mechanisms behind economic development. His research has uncovered important pitfalls when comparing the extent of poverty across time and place. It has also exemplified how the clever use of household data may shed light on such issues as the relationships between income and calorie intake, and the extent of gender discrimination within the family. Deaton's focus on household surveys has helped transform development economics from a theoretical field based on aggregate data to an empirical field based on detailed individual data. (Extracted from Nobelprize.org)

photo: Princeton University 2015
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we have to prepare the next generation with the capacity for lifelong learning.

Talent, not capital, will be the key factor linking innovation, competitiveness and growth in the 21st century, and we must each understand better the global talent value chain.

Better data and metrics are critical to this understanding. The Human Capital Index measures countries’ ability to maximize and leverage their human capital endowment. The index assesses Learning and Employment outcomes across 5 distinct age groups, on a scale from 0 (worst) to 100 (best), and assesses 124 economies.

The index is focused on learning and employment outcomes and in demographics and it covers 46 indicators.

Finland: Rank 1; Score 85.78
Spain: Rank 41; Score 73.30

The world economic forum new report provides comprehensive information on the talent base in each country, including information on education levels of the employed, unemployed and the inactive members of the population as well as the specific qualifications of the latest entrants to the workforce.

• Human Capital Website In this website you could find some infographics, a heat map and country profiles.
• Human Capital Report 2015 (pdf)

photo: (*) Photosolde

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Time loop in Day Surgery (groundhod day)

In 1998 I presented my PH.d in Health Economics. Some of the articles presented were about Day Care Surgery Free access thesis.

I said in the introduction: "The concept of day surgery is new in the Spanish health care system, but this innovatory practice has incentives to be further developed in the context of the reform of the NHS. It is often said that it reduces expenditure on health care or increases surgical activity within a given budget, whilst at the same time maintains or improves the quality of care offered to patients (The Royal College of Surgeons, 1992; The Audit Commission, 1992; Beech and Morgan, 1992). Day case surgery appears to be an ideal altemative to inpatient care, from the point of view of the purchasers (those who pay for medical care, the NHS) as well as for those who provide it (hospitals and health professionals), and fínally the patients."

15 years later data in Catalonia (2013) shows that the number of surgical procedures being performed as day surgery is 47,8% (substitution index) 2013 Results Centre Reports*. In Denmark 70-75%.

An European Report (2013) Day Surgery policy brief (2013) says:
" Day Surgery constitutes a missed opportunity for the improvement of surgical services, especially within the public sector component of many health systems, typifying the huge know-do gap between clinical and organizational evidence and service provision. In the future, European health systems will increasingly face an ethical and political dilemma regarding approaches that assure sustainable and equitable access to effective and safe procedures. Day Surgery adoption is part of the answer to such complexity.

The question "Is this patient suitable for day surgery’ should be replaced by ‘Is there any justification for admitting this case as an inpatient?"

* Next month the 2014 data will be available 

2014 Results Centre Reporta:
Substitution index 2013: 57,5%  Why this difference? (47,8% published in 2013)
Substitution index 2014: 58,4%
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2060 Population Odyssey: living longer, older people, less people working

 

We are living longer than ever before. But we are also having fewer children. So, over the coming decades, the proportion of retired and elderly people will increase. At the same time, the proportion of people of working age will fall.

By 2060, there will be only two workers for every person aged 65 or over. Half as many as today. Although immigration should give a helping hand, population in about half the EU Member States is expected to shrink. The EU population will only grow slightly before peaking in 2050.

Some data

• 2013: 507 million people       2060: 523 million people
• 2013: 211 million workers     2060: 202 million workers
• 2013: health care expediture 6,9% GPD       2060: 7,8% GPD 
• 2013: long term expenditures 1,6% GPD      2060: 2,7% GPD

The 2015 Ageing Report, published by the European Commission in May, sheds light on the economic, budgetary and societal challenges that policy makers will have to face in the future as a result of these trends. The report’s long-term projections provide an indication of the timing and scale of challenges that can be expected so as to inform European policy makers about the scale and timing of the challenges they must face.

photo: (*) Photosolde
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Why projects fail?

 

The postmortem examination of failed projects reveals that long before the failure there were significant symptons or as Leon Kappelman says "EARLY WARNING SIGNS (EWSs)". Kappelmann et. al., wrote an article where they explained that the EWS were related to "people" and "process".

The six people-related EWSs are:

1. Lack of top management support
2. Weak project manager
3. No stakeholder involvement and/or participation
4. Weak commitment of project team
5. Team members requisite knowledge and/or skills
6. Subject matter experts are overscheduled

 The six processes-related EWSs are:

1. Lack of documented requirements and/or success criteria
2. No change control process
3. Ineffective schedule planning and/or management
4. Communication breakdown among stakeholders
5. Resources assigned to a higher priority project
6. No bussiness case for the project  

Acces to the article: Leon A. Kappelman, et al (2006)

For those interested in project management I would reccomend this blog:
Informatica++ /Gestión de Proyectos,  The blog came from the Universitat Oberta de Catalunya. One of the authors José Ramon Rodríguez recomended it.


Bob Landry—The LIFE Picture Collection/Getty Images. 1946. The chase: the dog is carrying a message, is trailed by British foreign office man, a Nazi, a midget, a red-haired Mata Hari and Groucho.
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Evaluation of industrial policy: methodological issues and policy lessons

Industrial policy, covers a multitude of policy instruments and approaches. While there has been a recent revival of interest in industrial policy around the world, systematic evidence of efficacy is relatively scarce.

This new OECD report (Evaluation of industrial policy (2014)) brings together the work of an OECD expert group that has considered recent evidence from the evaluation of industrial policy.

The report focuses on three specific policy areas, namely:

• support for R&D;
• capital market interventions (with a focus on risk capital);
• public procurement for innovation.

It also examines three areas where packages of industrial policy measures are generally applied:

• sector approaches including public-private partnerships PPP);
• policies towards clusters and business networks;
• national industrial strategies.

In many areas of industrial policy, evaluation faces particular methodological challenges. These challenges are outlined in the report, which concludes by drawing together the main policy lessons from the available evaluation evidence.

In particular the recomendations to the policy makers are:

• Make an explicit commitment to the evaluation of industrial policy
• Insist on the development of data and evaluation strategies before programmes can begin.
• Choose evaluation techniques appropriate to the programmes concerned.
• Evaluate industrial strategy using mixed methods.
• Insist on full disclosure in evaluation reports.
• Create robust governance mechanisms to ensure evaluation is objective and free of political influence.
• Develop effective mechanisms for policy learning

RELATED POST

photo: (*) Photosolde
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Two articles on corporate governance

 

"Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. Nonprofit governance is a political and organizational process involving multiple functions and engaging multiple stakeholders. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders and stakeholders on their stewardship and tu ensure the mission fullfillment and overall accountability".

Forprofit companies:
The Financial Reporting Council is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. They promote high standards of corporate governance through the UK Corporate Governance Code.

In 2014 they have published a new version of the UK corporate governance code

Nonprofit companies:
Vic Murray, adjunct Professor in the School of Public Administration at the University of Victoria.  and Yvonne Harrison  assistant Professor in the Department of Public Administration and Policy in Rockefeller College of Public Affairs and Policy, University at Albany, have published in 2014 Guidelines for Improving the Effectiveness of Boards of Directors of Nonprofit Organizations

Two intersting documents to read and try to learn how to improve our corporate boards. 

photo: 1958 | On the screen of a drive-in theater in Utah, Charlton Heston, as Moses in the The Ten Commandments, throws his arms wide before what appears to be a congregation of cars at prayer. Published in the December 22, 1958, issue of LIFE. 

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Hospitals and market share: Is market power good or bad?

David Cutler, Professor of Applied Economics at the Department of Economics and Kennedy School of Government in Harvard University published with Fiona Scott Morton in 2013 at JAMA Hospitals, market share and consolidation. They said in their conclusion:

" A central economic question about the emerging health system is whether consolidation of large hospital institutions is beneficial or harmful. The answer is not always the same because it depends on the environment in which consolidation occurs, who is consolidating, how large each organization is in its different markets,and whether the combined entity improves quality of care.

Having policy makers be smart about how hospitals and other health care institutions are allowed to consolidate is critical to ensuring that the population is receiving the best care possible at reasonable, affordable prices".

Recently it has appeared a report done by FTI consulting that says: "Hospital mergers offer substantial benefits for patients and communities. This study provides a comprehensive review and analysis of hospital merger studies and trends that uncovers a reality rooted in research and quite different than what many people think". FTI consulting report (2014)

Two interesting papers to read this 2015 and analyse the benefits and harms of market power in the health care sector.

Reading it we probably could understand and anticipate what will happen (or happening now!) in Spain in general and in Catalonia and Barcelona in particular in the private health care sector market and the behaviour of the different actors: health care organiazations, insurances, doctor companies, and consumers.

photo: (*) Photosolde
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