SciCombinator

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Concept: Profit

349

Most cropland in the United States is characterized by large monocultures, whose productivity is maintained through a strong reliance on costly tillage, external fertilizers, and pesticides (Schipanski et al., 2016). Despite this, farmers have developed a regenerative model of farm production that promotes soil health and biodiversity, while producing nutrient-dense farm products profitably. Little work has focused on the relative costs and benefits of novel regenerative farming operations, which necessitates studyingin situ, farmer-defined best management practices. Here, we evaluate the relative effects of regenerative and conventional corn production systems on pest management services, soil conservation, and farmer profitability and productivity throughout the Northern Plains of the United States. Regenerative farming systems provided greater ecosystem services and profitability for farmers than an input-intensive model of corn production. Pests were 10-fold more abundant in insecticide-treated corn fields than on insecticide-free regenerative farms, indicating that farmers who proactively design pest-resilient food systems outperform farmers that react to pests chemically. Regenerative fields had 29% lower grain production but 78% higher profits over traditional corn production systems. Profit was positively correlated with the particulate organic matter of the soil, not yield. These results provide the basis for dialogue on ecologically based farming systems that could be used to simultaneously produce food while conserving our natural resource base: two factors that are pitted against one another in simplified food production systems. To attain this requires a systems-level shift on the farm; simply applying individual regenerative practices within the current production model will not likely produce the documented results.

Concepts: Biodiversity, Agriculture, Ecology, Soil, Maize, Farm, Profit

36

To identify the characteristics of the most profitable US hospitals, we examined the profitability of acute care hospitals in fiscal year 2013, measured as net income from patient care services per adjusted discharge. Based on Medicare Cost Reports and Final Rule Data, the median hospital lost $82 for each such discharge. Forty-five percent of hospitals were profitable, with 2.5 percent earning more than $2,475 per adjusted discharge. The ten most profitable hospitals, seven of which were nonprofit, each earned more than $163 million in total profits from patient care services. Hospitals with for-profit status, higher markups, system affiliation, or regional power, as well as those located in states with price regulation, tended to be more profitable than other hospitals. Hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization (HMO) penetration had lower profitability than hospitals that did not have these characteristics. These findings can inform policy reforms, while providing a baseline against which to measure the impact of any subsequent reforms.

Concepts: Health insurance, Patient, Hospital, Physician, Health maintenance organization, Health insurance in the United States, Profit

18

Hospice care is designed to support patients and families through the final phase of illness and death. Yet for more than a decade, hospices have steadily increased the rate at which they discharge patients before death-a practice known as “live discharge.” Although certain live discharges are consistent with high-quality care, regulators have expressed concern that some hospices' desire to maximize profits drives them to inappropriately discharge patients. We used Medicare claims data for 2012-13 and cost reports for 2011-13 to explore relationships between hospice-level financial margins and live discharge rates among freestanding hospices. Adjusted analyses showed positive and significant associations between both operating and total margins and hospice-level rates of live discharge: One-unit increases in operating and total margin were associated with increases of 3 percent and 4 percent in expected hospice-level live discharge rates, respectively. These findings suggest that additional research is needed to explore links between profitability and patient-centeredness in the Medicare hospice program.

Concepts: Hospice, Profit

3

Forests managed for timber have an important role to play in conserving global biodiversity. We evaluated the most common timber production systems worldwide in terms of their impact on local species richness by conducting a categorical meta-analysis. We reviewed 287 published studies containing 1008 comparisons of species richness in managed and unmanaged forests and derived management, taxon, and continent specific effect sizes. We show that in terms of local species richness loss, forest management types can be ranked, from best to worse, as follows: selection and retention systems, reduced impact logging, conventional selective logging, clear-cutting, agroforestry, timber plantations, fuelwood plantations. Next, we calculated the economic profitability in terms of the net present value of timber harvesting from 10 hypothetical wood-producing Forest Management Units (FMU) from around the globe. The ranking of management types is altered when the species loss per unit profit generated from the FMU is considered. This is due to differences in yield, timber species prices, rotation cycle length and production costs. We thus conclude that it would be erroneous to dismiss or prioritize timber production regimes, based solely on their ranking of alpha diversity impacts.

Concepts: Biodiversity, Forestry, World Forestry Congress, Effect size, Profit, Sawmill, Logging

3

Scattered trees support high levels of farmland biodiversity and ecosystem services in agricultural landscapes, but they are threatened by agricultural intensification, urbanization, and land abandonment. This study aimed to map and quantify the decline of orchard meadows (scattered fruit trees of high nature conservation value) for a region in Southwestern Germany for the 1968 2009 period and to identify the driving forces of this decline. We derived orchard meadow loss from 1968 and 2009 aerial images and used a boosted regression trees modelling framework to assess the relative importance of 18 environmental, demographic, and socio-economic variables to test five alternative hypothesis explaining orchard meadow loss. We found that orchard meadow loss occurred in flatter areas, in areas where smaller plot sizes and fragmented orchard meadows prevailed, and in areas near settlements and infrastructure. The analysis did not confirm that orchard meadow loss was higher in areas where agricultural intensification was stronger and in areas of lower implementation levels of conservation policies. Our results demonstrated that the influential drivers of orchard meadow loss were those that reduce economic profitability and increase opportunity costs for orchards, providing incentives for converting orchard meadows to other, more profitable land uses. These insights could be taken up by local- and regional-level conservation policies to identify the sites of persistent orchard meadows in agricultural landscapes that would be prioritized in conservation efforts.

Concepts: Biodiversity, Agriculture, Tree, Natural resource, Fruit, Profit, Orchard

2

The 340B Drug Pricing Program was intended to stretch federal resources by providing significant discounts to covered entities providing care to underserved populations. Program implementation and evidence of expanding services to higher income patients has brought more scrutiny and calls for elimination of the program. While additional review and reform may be warranted, profitability from 340B discounts enables covered entities to provide additional services that may not be feasible in absence of the program. This case report demonstrates one institution’s use of 340B discounts to financially justify providing bedside medication delivery services for patients at the time of discharge from an inpatient admission. A simple financial model was developed using hospital data and inputs from available literature to estimate gross profit and earnings before interest, taxes, depreciation, and amortization (EBITDA) with and without 340B discounts. Without the 340B drug price discounts, the service would operate at a financial loss, and further investigation must be done to determine whether other clinical or economic benefits would warrant discharge medication delivery at the institution.

Concepts: Pharmacology, Pharmaceutical drug, Income, Federal Bureau of Investigation, Profit, Depreciation, Generally Accepted Accounting Principles, Earnings before interest and taxes

2

Profit-seeking firms are stereotypically depicted as immoral and harmful to society. At the same time, profit-driven enterprise has contributed immensely to human prosperity. Though scholars agree that profit can incentivize societally beneficial behaviors, people may neglect this possibility. In 7 studies, we show that people see business profit as necessarily in conflict with social good, a view we call anti-profit beliefs. Studies 1 and 2 demonstrate that U.S. participants hold anti-profit views of real U.S. firms and industries. Study 3 shows that hypothetical organizations are seen as doing more harm when they are labeled “for-profit” rather than “non-profit,” while Study 4 shows that increasing harm to society is viewed as a strategy for increasing a hypothetical firm’s long-run profitability. Studies 5-7 demonstrate that carefully prompting subjects to consider the long run incentives of profit can attenuate anti-profit beliefs, while prompting short run thinking does nothing relative to a control. Together, these results suggest that the default view of profits is zero-sum. While people readily grasp how profit can incentivize firms to engage in practices that harm others, they neglect how it can incentivize firms to engage in practices that benefit others. Accordingly, people’s stereotypes of profit-seeking firms are excessively negative. Even in one of the most market-oriented societies in history, people doubt the contributions of profit-seeking industry to societal progress. (PsycINFO Database Record

Concepts: Economics, Religion, Society, Profit, Short-run, Long-run, The Long Run

2

To better understand the financial viability of hospital emergency departments (EDs), we created national estimates of the cost to hospitals of providing ED care and the associated hospital revenue using hospital financial reports and patient claims data from 2009. We then estimated the effect the Affordable Care Act (ACA) will have on the future profitability of providing ED care. We estimated that hospital revenue from ED care exceeded costs for that care by $6.1 billion in 2009, representing a profit margin of 7.8 percent (net revenue expressed as a percentage of total revenue). However, this is primarily because hospitals make enough profit on the privately insured ($17 billion) to cover underpayment from all other payer groups, such as Medicare, Medicaid, and unreimbursed care. Assuming current payer reimbursement rates, ACA reforms could result in an additional 4.4-percentage-point increase in profit margins for hospital-based EDs compared to what could be the case without the reforms.

Concepts: Hospital, Emergency department, Profit

2

BACKGROUND:: Hospitals facing financial uncertainty have sought to reduce nurse staffing as a way to increase profitability. However, nurse staffing has been found to be important in terms of quality of patient care and nursing-related outcomes. Nurse staffing can provide a competitive advantage to hospitals and as a result of better financial performance, particularly in more competitive markets. PURPOSE:: In this study, we build on the Resource-Based View of the Firm to determine the effect of nurse staffing on total profit margin in more competitive and less competitive hospital markets in Florida. METHODOLOGY/APPROACH:: By combining a Florida statewide nursing survey with the American Hospital Association Annual Survey and the Area Resource File, three separate multivariate linear regression models were conducted to determine the effect of nurse staffing on financial performance while accounting for market competitiveness. The analysis was limited to acute care hospitals. FINDINGS:: Nurse staffing levels had a positive association with financial performance (β = 3.3, p = .02) in competitive hospital markets, but no significant association was found in less competitive hospital markets. PRACTICE IMPLICATIONS:: Hospitals in more competitive hospital markets should reconsider reducing nursing staff, as these cost-cutting measures may be inefficient and negatively affect financial performance.

Concepts: Regression analysis, Linear regression, Patient, Hospital, Nursing, Nurse, Competitiveness, Profit

2

BACKGROUND: The price of antiretroviral drugs (ARVs) in low income countries declined steadily in recent years. This raises concerns about the commercial viability of the market of ARVs in low income countries. METHODS: Using 2 costing scenarios, we modeled the production cost of the most commonly used ARVs in low income countries in 2010 and 2012, and assessed whether, at the median price paid by low income countries, their manufacturers would still make profits.By interviews we consulted 11 generic manufacturers on the current state of the ARV market, and on what would be required to ensure their continued commitment to supply ARVs to low income countries. RESULTS: Using the lowest prices for active pharmaceutical ingredients (API) quoted to WHO, and applying published assumptions about the production cost of ARVs, our baseline estimate was that Indian generic manufacturers would have made profits on only 1 out of 13 formulations of ARVs in both 2010 and 2012, and publicly owned manufacturers would have made profits on 5 and 3 out of 13 formulations in 2010 and 2012, respectively. We needed to assume a 20% and a 40% lower API cost for our model to predict that publicly owned and Indian manufacturers, respectively, would make profits on the sale of the majority of their ARVs. Between 2010 and 2012, we estimate that - across the ARV portfolio - the gross profit on sales of ARVs to low income countries decreased with between 6% and 7% of their sales price.Generic manufacturers consider that current prices are unsustainable. They suggested amendments to the tender procedures, simplified regulatory procedures, improved forecasting, and simplification of the ARV guidelines as critical improvements to maintain a viable ARV market. CONCLUSIONS: While recent price decreases indicate that there is still space for price reduction, our estimate that gross profit margin on sales decreased by 6 to 7% between 2010 and 2012 lends credibility to assertions by generic manufacturers that the ARV market in low income countries is under considerable price pressure. This might create problems for the quality and/or the continued supply of ARVs to low income countries.

Concepts: Antiretroviral drug, HIV, Economics, Cost, Price, Profit, Generally Accepted Accounting Principles, Gross profit margin