An investigation of private public partnerships using real options analysis

<p>This thesis develops a model that investigates aspects of New Zealand’s largest public-private partnership project, the rollout of Ultra Fast Broadband. The model features four cities with different demand and construction-cost characteristics. It is used to study the different choices of the private party (Chorus) and the public party (Crown Fibre Holdings (CFH)). Using a real options approach, we identify two sorts of potential conflicts between the two parties: a timing conflict about the number of cities the two parties would like to develop in each period and a sequencing conflict about the order in which the UFB network is rolled out in different cities. Inspired by the incomplete contracting and information asymmetry literatures, we introduce several incentive schemes (including four subsidy schemes and two fine schemes) that help manage the possible conflicts. We compare both their ability to reduce the conflicts and their sensitivity to the model’s underlying parameters. Overall, there are four main findings. First, the magnitude of the conflict is a non-monotonic function of the inter-city demand differences and the inter-city construction-cost differences; it is an increasing function of the ratio of consumer surplus to producer surplus and of demand volatility. Second, a demand-dependent lump sum subsidy has the best performance among all included incentive schemes in controlling the possible conflicts. Third, the conflict level becomes quite sensitive to the subsidy scheme in two cases. A) When either the inter-city demand differences or the inter-city construction-cost differences turn out to be modest; B) When either the ratio of consumer surplus to producer surplus or demand volatility turns out to be large. The above result may provide some suggestions in managing the optimal subsidy. Last but not least, the requirement that Chorus is willing to participate in the partnership means that the fine schemes are generally outperformed by the subsidy schemes. Relating our findings to the undertaking UFB project, we provide CFH with several practical suggestions that may improve its management of possible conflicts.</p>

An investigation of private public partnerships using real options analysis

<p>This thesis develops a model that investigates aspects of New Zealand’s largest public-private partnership project, the rollout of Ultra Fast Broadband. The model features four cities with different demand and construction-cost characteristics. It is used to study the different choices of the private party (Chorus) and the public party (Crown Fibre Holdings (CFH)). Using a real options approach, we identify two sorts of potential conflicts between the two parties: a timing conflict about the number of cities the two parties would like to develop in each period and a sequencing conflict about the order in which the UFB network is rolled out in different cities. Inspired by the incomplete contracting and information asymmetry literatures, we introduce several incentive schemes (including four subsidy schemes and two fine schemes) that help manage the possible conflicts. We compare both their ability to reduce the conflicts and their sensitivity to the model’s underlying parameters. Overall, there are four main findings. First, the magnitude of the conflict is a non-monotonic function of the inter-city demand differences and the inter-city construction-cost differences; it is an increasing function of the ratio of consumer surplus to producer surplus and of demand volatility. Second, a demand-dependent lump sum subsidy has the best performance among all included incentive schemes in controlling the possible conflicts. Third, the conflict level becomes quite sensitive to the subsidy scheme in two cases. A) When either the inter-city demand differences or the inter-city construction-cost differences turn out to be modest; B) When either the ratio of consumer surplus to producer surplus or demand volatility turns out to be large. The above result may provide some suggestions in managing the optimal subsidy. Last but not least, the requirement that Chorus is willing to participate in the partnership means that the fine schemes are generally outperformed by the subsidy schemes. Relating our findings to the undertaking UFB project, we provide CFH with several practical suggestions that may improve its management of possible conflicts.</p>

870. Coverage, Cost Sharing, and Out-of-Pocket Costs for Single-Tablet HIV Antiretroviral Regimens in Qualified Health Plans in the United States, 2018-2020

Background A key pillar of the US “Ending the HIV Epidemic” (EHE) plan is rapidly providing antiretroviral therapy (ART) to achieve viral suppression. However, access to ART is hindered by discriminatory benefit design through non-coverage, adverse tiering (including pricier cost sharing via coinsurance instead of copays), and excessive and arbitrary utilization management for ART, all of which make rapid access to HIV treatment challenging. To understand how ACA Qualified Health Plan (QHP) formularies adapt in response to new ART single tablet regimens (STRs), we analyzed QHP coverage of two first-line STRs: dolutegravir/abacavir/lamivudine (Triumeq; approved 2014) and bictegravir/emtricitabine/tenofovir alafenamide (Biktarvy; approved 2018). Methods For all QHPs offered in the 2018-2020 ACA Marketplaces, we analyzed Biktarvy and Triumeq coverage, cost sharing, and out-of-pocket (OOP) costs at state, regional, and EHE priority jurisdiction levels. Figure 1. Qualified Health Plan Coverage of Triumeq and Biktarvy by State, 2018-2020 Results For 2018, 2019, and 2020, respectively, we identified 19,533, 17,007, and 21,547 QHPs. In 2018, 26 states had &lt; 50% of QHPs covering Biktarvy, and 9 states had 0%. Conversely, 41 states had 100% of QHPs covering Triumeq, and only 2 states had &lt; 50% (Fig. 1). Biktarvy coverage improved from 2018-2020, especially in the Midwest (27% to 88%). Improvements were driven by increased coverage with copay except in the South, where coverage with copay remained stagnant and coverage with coinsurance increased (22% to 33%) (Fig. 2). Biktarvy coverage increased in EHE jurisdictions from 74% to 90%, driven by increased coverage with coinsurance (20% to 34%) (Fig. 3). Although Biktarvy had a higher national average wholesale price than Triumeq (&4,073 vs. &3,639 per month in 2020, respectively), monthly OOP cost trends only differed regionally in the Midwest and did not differ by EHE priority jurisdiction status (Fig. 4). Figure 2. Qualified Health Plan Coverage and Cost Sharing for Triumeq and Biktarvy by Region, 2018-2020 Figure 3. Qualified Health Plan Coverage and Cost Sharing for Triumeq and Biktarvy by “Ending the HIV Epidemic” Priority Jurisdiction Status, 2018-2020 Figure 4. Monthly Out-of-Pocket Cost for Qualified Health Plan Premium and Triumeq or Biktarvy by Cost Sharing Type and (A) Region or (B) “Ending the HIV Epidemic” Priority Jurisdiction Status, 2018-2020 Conclusion STR coverage remains heterogenous across the United States. Over time, coverage of the newer STR increased, but many QHPs in EHE jurisdictions still required coinsurance. Access to newer ART regimens may be slowed by delayed QHP coverage or complex negotiations with manufacturers about formulary inclusion as ART options become more competitive, even if patients are insulated from cost differences. Disclosures Kathleen A. McManus, MD, MSCR, Gilead Sciences, Inc. (Research Grant or Support, Shareholder)

Cost and Efficiency in Government Outsourcing: Evidence from the Dredging Industry

This paper investigates the how government outsourcing affects efficiency and expenditures by considering how outsourcing decisions are determined along two dimensions: (i) cost differences between private firms and government suppliers of public goods and (ii) dynamics arising from cost complementarities and capacity constraints. I formulate and estimate a dynamic model of government outsourcing using project-level data from the dredging industry. Model estimates indicate substantial cost savings due to outsourcing but also that government presence in the market yields cost reduction. A counterfactual policy featuring direct competition between government and private sector firms finds a total expenditure reduction of 15.7 percent. (JEL D44, H41, H57, L84)

Scheduling for Prosumer Microgrid with Considering Price Based Demand Response

Unit commitment (UC) is the scheduling of power unit operating outages to meet electricity needs at a certain time with the aim of obtaining a total economical generating cost. Differences in the characteristics of each generating unit and limitations result in different scheduling combinations based on equations, and for this research, the renewable energy penetration will also be considered. Firefly Algorithm (FA) is a method to determine load requests and complete renewable energy scheduling power by using unit commitment. FA is a simple but reliable algorithm that solves optimization problems. Firefly Algorithm (FA) method obtained maximum generating power of 81,329 MW with the total cost of 827,556 $ and network losses of 3.6696 Coefficient of operating costs.

Economic Feasibility Analysis of Charging Infrastructure for Electric Ground Fleet in Airports

Many airports are converting their ground fleets to electric vehicles to reduce greenhouse gas emissions and increase airport operation sustainability. Although this paradigm shift is relevant to the environment, it is necessary to understand the economic feasibility to justify the decision. This study used life-cycle cost analysis (LCCA) to compare the economic performance of electrified ground fleets in the airport with a conventional fossil fuel fleet. Three different charging systems (plug-in charging, stationary wireless charging, and dynamic wireless charging) for pushback tractors and inter-terminal buses at a major hub airport were considered in the analysis. Although the conventional fossil fuel options present the lowest initial cost for both fleets, they cost most in a 30-year analysis period. Among three electric charging infrastructures, the plug-in charging station shows the least accumulative cost for pushback tractors, and their cost differences are negligible for inter-terminal buses. Although the electric ground fleet is proved to show economic benefits, the most cost-effective charging infrastructure may vary depending on driving mileage and system design. The use of LCCA to analyze new systems and infrastructures for decision making at the project level is highly recommended.

Economic burden of rivaroxaban and warfarin among nonvalvular atrial fibrillation patients with obesity and polypharmacy

Aim: Evaluate healthcare resource utilization (HRU) and costs associated with rivaroxaban and warfarin among nonvalvular atrial fibrillation (NVAF) patients with obesity and polypharmacy. Materials & methods: IQVIA PharMetrics® Plus (January 2010–September 2019) data were used to identify NVAF patients with obesity (BMI ≥30 kg/m2) and polypharmacy (≥5 medications) initiated on rivaroxaban or warfarin. Weighted rate ratios and cost differences were evaluated post-treatment initiation. Results: Rivaroxaban was associated with significantly lower rates of HRU, including hospitalization (rate ratio [95% CI]: 0.83 [0.77, 0.92]). Medical costs were reduced in rivaroxaban users (difference [95% CI]: -US$6868 [-US$10,628, -US$2954]), resulting in significantly lower total healthcare costs compared with warfarin users (difference [95% CI]: -US$4433 [-US$8136, -US$582]). Conclusion: Rivaroxaban was associated with lower HRU and costs compared with warfarin among NVAF patients with obesity and polypharmacy in commercially insured US patients.

An Empirical Investigation on the Validity of Linder Hypothesis for Manufacturing Exports from Turkey to Eurozone Countries

Linder's hypothesis expresses that non-homogenous manufacturing trade has been determined by the consumers’ tastes and preferences rather than production cost differences between countries. Also, it is claimed that the consumers’ tastes and preferences relate positively to the level of per capita income of the relevant country. Accordingly, the country pairs which have similar levels of per capita income trade each other more than other country pairs. This study analyses the validity of the Linder hypothesis in manufacturing exports from Turkey to 19 Eurozone countries for the period of 2002-2018. In compliance with the bilateral trade structure, an augmented gravity model is constructed with variables representing the Linder effect. Generally, convergence between country pairs in terms of per capita income is taken while testing the Linder hypothesis into account. Therefore, while testing the Linder hypothesis, the study considers per capita gross domestic product differences between Turkey and Eurozone countries. Besides, as a more salient and efficient tool, a similarity index representing the Linder effect is constructed. By doing so, whether the Linder hypothesis is valid or not can be demonstrated more robustly. Empirical results prove the existence of the Linder effect for Turkey's manufacturing exports to Eurozone countries. In other words, on the contrary of factor endowment differences, demand similarities between Turkey and Eurozone countries encourage this type of trade. In this regard, the exporters who target more manufacturing exports should monitor the course of consumer behaviors and adapt their product structure according to consumer's tastes and preferences in Eurozone countries.

Arthroplasty implants and materials: Cost awareness and value perception

Arthroplasty procedures are commonly performed and contribute to healthcare expenditures seen in the United States. Surgical team members may make selections among implants and materials without always knowing their relative cost. The current study reports on a survey aimed to investigate the perceptions of an academic group about the relative cost and value of commonly used operating room implants and materials related to joint arthroplasty cases using 10 matched pairs of items. Of the 124 persons eligible to take the survey, 102 responded (response rate of 82.3%) including attendings, fellows, residents, physician assistants (PAs), advanced practice registered nurses (APRNs) and registered nurses (RNs). On average for the ten pairs of items, the more expensive items were correctly selected by 90.2+/-13.9% (mean+/- standard deviation) of respondents with a range from 54.9% to 100%. Of note, the cost differences were significantly overestimated for 8/10 item pairs. The majority of respondents perceived the more expensive item as the item with the higher clinical value for 9/10 item pairs. Most arthroplasty attendings (91.3%) indicated willingness to use the less expensive item of two similar items. Nonetheless, 17.9% of fellows, residents, PAs, APRNs and RNs indicated that they would not feel comfortable suggesting using the less expensive item. Although attending arthroplasty surgeons stated a desire to consider costs, a knowledge deficit with regards to identifying the extent of cost differences was identified, and a significant portion of the surgical support team reported being hesitant to suggest less expensive options.