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Archive for October, 2011

As documented by the Caesar Rodney Institute using U.S. Department of Justice data on convictions of state and local public officials, corruption is a growing problem in Delaware. The historical and research evidence is clear that corruption undermines economic growth. The Governor through an executive order and the legislature through a recent bill have taken a huge step forward to reducing government corruption in the First State.

The simplest and most effective way to reduce public corruption is to provide ready access to government documents and records to citizens. Sunshine is a wonderful disinfectant.

The actions by the Governor and the legislature are straightforward. From this point forward, requests made by citizens under the 1977 Freedom of Information Act (FOIA) will be significantly streamlined. In addition to a standard FOIA form being adopted, a FOIA coordinator is designated for each executive branch, FOIA requests can now be made in person or by mail, fax or email, and copying fees on FOIA requests are capped at $0.10 per page.

Citizens with concerns over salary abuse, vendor favoritism or excessive travel expenditures can now be readily addressed. This sends a huge message to citizens, businesses, investors, and the many honest public employees that Delaware government is serious about battling favoritism, cronyism and back room deals.

And, it will save the Caesar Rodney Institute money. Since it was launched, CRI’s government transparency website, Delaware Spends, has drawn far more traffic than any other part of the overall website. Maintaining the site has cost CRI about $15,000 a year. CRI has also had to retain legal counsel to fight FOIA requests through the government maze. Most recently, CRI spent over $6,000 to force the City of Dover to make its solar park contract public.

Thanks to the Governor and the legislature, those days are over!

This will, over the long-term, be a significant factor in returning robust economic growth to Delaware.

Dr. John E. Stapleford, Director
Center for Economic Policy and Analysis

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From Adam Smith forward, the one major insight on which all economists can agree is “competition is good!” More effectively than government regulations or price ceilings or user permits, competition results in, as if by an “invisible hand”, lower prices and lower costs (more efficient production).

Is there sufficient competition in Delaware’s healthcare industry? Or are consumers being over charged and undersupplied?

Following is a simple analysis of Delaware’s major healthcare sectors. It uses healthcare industry data from the 2007 Economic Census of the U.S. Department of Commerce. The establishments, revenue, and employment per 100,000 residents are compared between Delaware, the U.S., and surround states, for the available detailed healthcare sectors. Average wages by sector are also examined.

TOO LITTLE COMPETITION, MORE ENTRY WOULD HELP CONSUMERS

General Medical and Surgical Hospitals – the big enchilada, accounting for 41% of the revenue and 31% of the jobs in Delaware healthcare. Undersupplied relative to the nation and Pennsylvania, resulting in higher revenue and average wages.

Dentist Offices – significant indicators of barriers to entry. Undersupplied relative to the nation and surrounding states, leading to higher revenue and wages. (Anecdote: years ago a friend graduated from Temple dental school. After taking the Delaware dental board he was told that he would “officially” pass when a Delaware dentist retired or was willing to take him as a partner.)

Community Care Facilities for the Elderly – while the market for Delaware Nursing Care Facilities is in balance with the nation, Community Care is significantly undersupplied relative to the nation and to Pennsylvania and Maryland. This has not had a notable upward impact on revenue and wages.

Home Health Care Services – a growing industry that will grow even faster over the coming decade as the population of elderly soars. Undersupplied relative to the nation and less so to surrounding states. No evidence that the undersupply is driving up prices and revenue.
OVERSUPPLIED RESULTING IN REDUCED PRICES AND REVENUE

Medical Laboratories
Outpatient Care Centers

OVERSUPPLIED BUT LITTLE APPARENT IMPACT ON PRICES AND REVENUE

Offices of Physicians – account for more than one-fifth of Delaware’s healthcare revenue. Oversupplied relative to the nation, but revenue is unexpectedly high. Could be a result of more specialty care. Employment less than expected, which may be due to greater use of electronic records or associations with hospitals.

Diagnostic Imaging Centers – well oversupplied relative to the nation with almost three times the expected revenue. This could be a function of the type and technology of the imaging being conducted. Also may be due to higher income and education, especially among females, as both Maryland and New Jersey are oversupplied.

Physical and Occupational Therapists – oversupplied relative to the nation, but only modestly relative to the region. Revenue and prices appear to be held in check by regional competition.

Finally, with respect to the proposed HealthSouth rehabilitation facility in Middletown, the number of specialty hospitals per 100,000 residents (excluding psychiatric and substance abuse) in 2007 was 0.28 for the nation and only 0.12 for Delaware. Unfortunately, data on revenue, employment, and payroll were not available, nor was data specifically on independent rehabilitation facilities or rehabilitation services conducted through general hospitals.

Dr. John E. Stapleford, Director
Center for Economic Policy and Analysis

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