Mahmud Hassan

Loss volatility, bankruptcy, and the demand for reinsurance

Insurers in our model reinsure to lower the risk of bankruptcy. In the conceptual part of the study, we show that given bankruptcy cost, reinsurance may be demanded even if the insurer is risk-neutral. The model allows us to assess how the insurers surplus, size, and volatility of losses affect the amount of reinsurance the insurer purchases. As predicted by our comparative statics analysis, we find empirically that property/casualty and medical malpractice insurers with higher prereinsurance loss volatility, lower surplus-to-premium ratios, and smaller sizes demand more reinsurance.

Hospital Investment Decisions and the Cost of Capital

This study addresses two issues conceptually and empirically. How does hospital ownership type affect hospital investment choices? How do differences in the way hospitals are paid--cost- versus charge-based reimbursement--affect hospital investment? The authors compute cost-of-capital measures for both for-profit and not-for-profit hospitals. Whether or not hospital dependence on cost-based payment stimulates investment depends on the generosity of such payment relative to the economic cost of capital. Empirically, they find that for-profit hospital exit/entry decisions are guided by the generosity of payment to a greater extent than the not-for-profits. Copyright 1989 by the University of Chicago.

Cost of Hospital-Acquired Infection

Abstract The authors assessed the costs of hospital-acquired infections using rigorous econometric methods on publicly available data, controlling for the interdependency of length of stay and the incidence of hospital acquired infection, and estimated the cost shares of different payers. They developed a system of equations involving length of stay, incidence of infection, and the total hospital care cost to be estimated using simultaneous equations system. The main data came from the State of New Jersey UB 92 for 2004, complimented with data from the Annual Survey of Hospitals by the American Hospital Association and the Medicare Cost Report of 2004. The authors estimated that an incidence of hospital acquired infection increases the hospital care cost of a patient by

Do mergers and acquisitions create shareholder wealth in the pharmaceutical industry

10,375 and it increases the length of stay by 3.30 days, and that a disproportionately higher portion of the cost is attributable to Medicare. They conclude that reliable cost estimates of hospital-acquired infections can be made using publicly available data. Their estimate shows a much larger aggregate cost of

Cost of capital to the hospital sector

16.6 billion as opposed to

Hospital length of stay and probability of acquiring infection

5 billion reported by the Centers for Disease Control and Prevention but much less than

Charity Care by Non-profit Hospitals: The Price of Tax-exempt Debt

29 billion as reported elsewhere in the literature.

Skill-specific staffing intensity and the cost of hospital care.

Purpose – The purpose of this paper is to analyze mergers and acquisitions (M&A) focusing on the US pharmaceutical industry in the period 1981‐2004. This industry is chosen because it is global, it engages intensively in M&A which it uses to both complement and substitute for early stage research, and because the potential abnormal returns to blockbuster drugs are substantial. It is assumed that if abnormal returns to M&A exist in the short and long run, this is the industry to find them.Design/methodology/approach – The study examines short‐term abnormal returns separating mergers from acquisitions and US‐based from foreign‐based M&A targets. It examined 405 mergers and acquisitions during 1981‐2004 to address the issues of our research.Findings – Evidence of short and long‐term abnormal returns, as well as accounting and efficiency effects are found for acquisitions but not for mergers. However, the tests do suggest that mergers with US‐based targets are not value destroying. It is also found that there...

Equity and accuracy in medical malpractice insurance pricing

This paper provides estimates of the cost of equity and debt capital to for-profit and non-profit hospitals in the U.S. for the years 1972-83. The cost of equity is estimated using, alternatively, the Capital Asset Pricing Model and Arbitrage Pricing Theory. We find that the cost of equity capital, using either model, substantially exceeded anticipated inflation. The cost of debt capital was much lower. Accounting for the corporate tax shield on debt and capital paybacks by cost-based insurers lowered the net cost of capital to hospitals.

Cost Differences between Academic and Nonacademic Hospitals: A Case Study of Surgical Procedures

Purpose – Hospital‐acquired infection (HAI) poses important health and financial problems for society. Understanding the causes of infection in hospital care is strategically important for hospital administration for formulating effective infection control programs. The purpose of this paper is to show that hospital length of stay (LOS) and the probability of developing an infection are interdependent.Design/methodology/approach – A two‐equation model was specified for hospital LOS and the incidence of infection. Using the patient‐level data of hospital discharge in the State of New Jersey merged with other data, the parameters of the two equations were estimated using a simultaneous estimation method.Findings – It was found that extending the LOS by one day increases the probability of catching an infection by 1.37 percent and the onset of infection increases average LOS by 9.32 days. The estimation indicates that HAI elongates LOS increasing the cost of a hospital stay.Research limitations/implications ...