Effectiveness of public health spending on infant mortality in Florida, 2001-2014.

Studies investigating the effectiveness of public health spending typically face two major challenges. One is the lack of data on individual program spending, which restricts researchers to rely on aggregate expenditures. The other is the failure to address issues of endogeneity and serial correlation between health outcomes and spending. In this study, we demonstrate that the use of specific spending items as opposed to overall spending, combined with Generalized Method of Moments estimation techniques can do a far better job in revealing the effectiveness of public health services on health outcomes. As an example, we consider the effects of infant-related public health programs on infant mortality rates. Focus on programs expressly related to maternal and infant health was made possible by a unique longitudinal dataset from the Florida Department of Health containing information for all 67 Florida counties spanning 2001 through 2014. Our empirical methodology, by addressing potential endogeneity issues along with serial correlation, allows us to estimate the causal impact of specific public health investments in maternal and infant-related programs on infant mortality. We find that a 10 percent increase in targeted public health spending per infant leads to a 2.07 percent decrease in infant mortality rates. We also find that targeted spending may be more effective in reducing infant mortality among blacks than among whites. The use of targeted spending data along with the Generalized Method of Moments technique can provide stronger evidence to guide future resource allocation and policy decisions in public health.

Economies of scale in the production of public health services: an analysis of local health districts in Florida.

OBJECTIVES: We examined the existence and the extent of scale and scope economies in the delivery of public health services. We also tested the strength of agency, population, and community characteristics that moderate scale and scope economies. METHODS: We collected service count and cost data for all Florida local health districts for 2008 and 2010, complemented with data on agency, population, and community characteristics. Using translog cost functions, we built models of operating efficiencies for 5 core public health activities: communicable disease surveillance, chronic disease prevention, food hygiene, on-site sewage treatment, and vital records. RESULTS: Economies of scale were found in most activities, with cost per unit decreasing as volume increased. The models did not, however, identify meaningful economies of scope. CONCLUSIONS: Consolidation or regionalization might lower cost per unit for select public health activities. This could free up resources for use in other areas, further improving the public's health.

How the choice of issuing authority affects hospital debt financing costs.

All other things being equal, bonds issued by statewide authorities have lower yields than bonds issued by local authorities. However, lower yields may be offset by higher issuance costs for statewide authorities, as reflected in the true interest cost. Higher issuance costs may provide benefits for investors and for issuing hospitals.

Public health services and systems research: current state of finance research.

There is a growing recognition that the US public health system should strive for efficiency-that it should determine the optimal ways to utilize limited resources to improve and protect public health. The field of public health finance research is a critical part of efforts to understand the most efficient ways to use resources. This article discusses the current state of public health finance research through a review of public health finance literature, chronicles important lessons learned from public health finance research to date, discusses the challenges faced by those seeking to conduct financial research on the public health system, and discusses the role of public health finance research in relation to the broader endeavor of Public Health Services and Systems Research.

Resource and cost adjustment in the design of allocation funding formulas in public health programs.

CONTEXT: Multiple federal public health programs use funding formulas to allocate funds to states. OBJECTIVE: To characterize the effects of adjusting formula-based allocations for differences among states in the cost of implementing programs, the potential for generating in-state resources, and income disparities, which might be associated with disease risk. SETTING: Fifty US states and the District of Columbia. INTERVENTION: Formula-based funding allocations to states for 4 representative federal public health programs were adjusted using indicators of cost (average salaries), potential within-state revenues (per-capita income, the Federal Medical Assistance Percentage, per-capita aggregate home values), and income disparities (Theil index). MAIN OUTCOME: Percentage of allocation shifted by adjustment, the number of states and the percentage of US population living in states with a more than 20% increase or decrease in funding, maximum percentage increase or decrease in funding. RESULTS: Each adjustor had a comparable impact on allocations across the 4 program allocations examined. Approximately 2% to 8% of total allocations were shifted, with adjustments for variations in income disparity and housing values having the least and greatest effects, respectively. The salary cost and per-capita income adjustors were inversely correlated and had offsetting effects on allocations. With the exception of the housing values adjustment, fewer than 10 states had more than 20% increases or decreases in allocations, and less than 10% of the US population lived in such states. CONCLUSIONS: Selection of adjustors for formula-based funding allocations should consider the impacts of different adjustments, correlations between adjustors and other data elements in funding formulas, and the relationship of formula inputs to program objectives.

Funding formulas for public health allocations: federal and state strategies.

Public health funding formulas have received less scrutiny than those used in other government sectors, particularly health services and public health insurance. We surveyed states about their use of funding formulas for specific public health activities; sources of funding; formula attributes; formula development; and assessments of political and policy considerations. Results show that the use of funding formulas is positively correlated with the number of local health departments and with the percentage of public health funding provided by the federal government. States use a variety of allocative strategies but most commonly employ a "base-plus" distribution. Resulting distributions are more disproportionate than per capita or per-person-in-poverty allotments, an effect that increases as the proportion of total funding dedicated to equal minimum allotments increases.

Reference allocations and use of a disparity measure to inform the design of allocation funding formulas in public health programs.

Funding formulas are commonly used by federal agencies to allocate program funds to states. As one approach to evaluating differences in allocations resulting from alternative formula calculations, we propose the use of a measure derived from the Gini index to summarize differences in allocations relative to 2 referent allocations: one based on equal per-capita funding across states and another based on equal funding per person living in poverty, which we define as the "proportionality of allocation" (PA). These referents reflect underlying values that often shape formula-based allocations for public health programs. The size of state populations serves as a general proxy for the amount of funding needed to support programs across states. While the size of state populations living in poverty is correlated with overall population size, allocations based on states' shares of the national population living in poverty reflect variations in funding need shaped by the association between poverty and multiple adverse health outcomes. The PA measure is a summary of the degree of dispersion in state-specific allocations relative to the referent allocations and provides a quick assessment of the impact of selecting alternative funding formula designs. We illustrate the PA values by adjusting a sample allocation, using various measures of the salary costs and in-state wealth, which might modulate states' needs for federal funding.

Assessing the level of public health partner spending using the funding formula analysis tool.

Public health services are delivered through a variety of organizations. Traditional accounting of public health expenditures typically captures only spending by government agencies. New Hampshire collected information from public health partners, such as community centers that host smoking cessation classes or health education done by Girls, Inc. This study compares the new data to spending by government agencies, focusing on breakdowns by fund source and service categories. Expanded funds secured by these partners account for a 42% of all local public health spending, and they spent 4 times more than government agencies on promoting healthy behavior. The funding formula analysis tool revealed that these partners spent in ways that would be politically difficult to achieve. In an era of declining budgets, an understanding of public health's partners is increasingly vital.

The impact of competition among health care financing authorities on market yields and issuer interest expenses.

The main source of capital for non-for-profit health care organizations is tax-exempt municipal bonds. The tax-exempt nature of this debt requires that they be issued through financing authorities, which are run by, or affiliated with, state or local government agencies. In some states, all tax-exempt health care bonds must be issued through a single financing authority, but in other states the issuing health care organization has a choice of multiple authorities. Using a Herfindahl index of issuer concentration, prior research has found that greater competition among authorities results in lower interest costs to the issuing health care organization. We pick up where this earlier study left off, examining the links between authority competition, the interest expenses to the issuer, and the yield to the market investor. Although our analysis of all hospital bonds issued between 1994 and 2002 corroborates earlier findings with regard to interest expenses to the issuing health care organization, we also find market yield is lower for statewide authorities where issuer concentration is lower. Thus, authority competition is good from the issuers' point of view, but holds no favor in the investors' eyes. On the other hand, the lower market yield associated with statewide authorities does not make its way down to the issuer in the form of lower interest costs. To help sort through this paradox, we explore our findings through interviews of executives in state issuing authorities.

Social efficiency of hospital care delivery: frontier analysis from the consumer's perspective.

The efficiency of hospital services and patients' access to hospitals are both important health care policy issues. In the past, research has relied on studying these topics separately. In this article, we measure both efficiency and access at the same time using data envelopment analysis (DEA). By including both the technically efficient use of resources, as well as the patients' travel distances, we found increases in social efficiency when patients' travel distances were taken into account. When compared with patients with nonurgent conditions, we found that patients suffering from conditions requiring urgent attention were treated at closer hospitals, increasing the social efficiency. Insurance coverage and hospital ownership were also examined. Our findings corroborated past literature in the hospital and travel distance literature and set out a framework for future research. Perhaps most important, we demonstrate the techniques needed to incorporate broader measures of social costs into studies of hospital efficiency.

Can a violation of investor trust lead to financial contagion in the market for tax-exempt hospital bonds?

Not-for-profit hospitals rely heavily on tax-exempt debt. Investor confidence in such instruments was shaken by the 1998 bankruptcy of the Allegheny Health and Education Research Foundation (AHERF), which was the largest U.S. not-for-profit failure up to that date and whose default was accompanied by claims of accounting irregularities. Such shocks can result in contagion whereby all hospitals are viewed as riskier. We test for the significance and duration of resulting contagion using an industry-specific model of interest cost determinants. Empirical tests indicate that contagion does occur, resulting in higher interest on new debt issues from other hospitals.

East-west: does it make a difference to hospital efficiencies in Ukraine?

Ukraine's history has given it a split personality (e.g. divergent cultural influences on economic and managerial behavior), as was observed in the recent political developments both prior to and following the December 2004 elections. Eastern regions were heavily influenced by Russo-Soviet rule, while western regions have more of a European outlook. This study, which is largely exploratory, compares recent trends in hospital efficiency in Ukraine to see if this split personality manifests itself in differential rates of improvement. Given the inflexibility of Soviet-style planned economies, it is hypothesized that western regions will show greater improvement in economic efficiency that can be attributed to higher levels of managerial and medical entrepreneurship. Data for this study comes from three oblasts (i.e. geopolitical regions), one in the west and two in the east, spanning from 1997 to 2001. Data envelopment analysis (DEA) was used to estimate technical efficiency for the hospitals. After correcting for bias, a second-stage Tobit regression was estimated. Results indicate that hospitals in the west improved efficiencies, while those in the east stayed constant. These western areas of the nation, being more amenable to western management and medical 'business' practice, may be quicker to pick up on new techniques to increase healthcare delivery efficiencies. This may stem from the more limited effects of a shorter history of incorporation into a Soviet-style planned and controlled economy in which individual decision-making and entrepreneurship was suppressed in favor of central decision-making by the state.