Motivatedby the exceptionally high mortality statistics of dialysis patients and the ongoing debate about the adequacy of the current reimbursement for dialysis in the United States, we pursue a detailed analysis of the dialysis delivery system. The analysis is based on a multiclass fluid model for the dialysis facility, which combines a pharmacokinetics model of dialysis and an empirically validated model of dialysis-specific mortality. Assuming that the facility operates under budget and capacity constraints, our analysis determines the main factors that affect the delivery of dialysis. Numerical results, which are representative of the dialysis environment in the US, demonstrate the accuracy of the model and provide concrete insights about the operations of the dialysis facility. A major finding is that an improvement in the technology of dialysis is likely to have a more substantial impact on the overall life expectancy of the dialysis population as compared to an increase in the dialysis reimbursement rate.

Tackling the steep increase in drug costs is an especially important issue among many health care providers and insurers. To entice the clinics to become more cost efficient, the U.S. federal government, as well as many HMOs, have developed various cost containment initiatives recently. However, the impact of these initiatives on the patients' well-being, the clinic's profitability, and the pharmaceutical firm's profitability has not been formally analyzed. In this paper we develop a mathematical model that is intended to examine the impact of a reimbursement policy for drug usage. Despite the simplistic structure of our model, the analysis enhances our understanding of the joint impact of the reimbursement policy on the patients, the clinic, and the pharmaceutical firm. Thus, our analysis can provide valuable information for evaluating the effectiveness of implementing such a reimbursement policy. In addition, we utilize the data gathered from a clinic to help support the assumptions and results of the underlying model.

We examine the relationship between life-cycle productivity and conformance quality in software products. The effects of product size, personnel capability, software process, usage of tools, and higher front-end investments on productivity and conformance quality were analyzed to derive managerial implications based on primary data collected on commercial software projects from a leading vendor. Our key findings are as follows. First, our results provide evidence for significant increases in life-cycle productivity from improved conformance quality in software products shipped to the customers. Given that the expenditure on computer software has been growing over the last few decades, empirical evidence for cost savings through quality improvement is a significant contribution to the literature. Second, our study identifies several quality drivers in software products. Our findings indicate that higher personnel capability, deployment of resources in initial stages of product development (especially design) and improvements in software development process factors are associated with higher quality products.

An innovative business practice attributed to the information technology (IT) industry is the aggressive use of employee stock options to compensate executives and other employees. In this study, we investigate whether the greater use of stock options in the IT industry can be explained on the basis of general economic relationships that apply to firms in all industries. To examine differences in compensating top executives, we estimate a system of simultaneous equations that is designed to accommodate interconnections between performance, the level of compensation, and the mix of compensation components. We document that the shares of both bonus and option pay increase with performance and that the pay level and the extent of incentive pay positively affect firm performance. We identify economic factors that may influence the use of options and show that there are significant differences in these factors between IT and other industries. We find that, while much of the greater use of options by IT firms is explained by the economic factors, significant residual differences remain. We also find that, when performance and other factors are considered, the level of executive pay in the IT industry is not higher than in other industries.

Many companies have embarked on initiatives that enable more demand information sharing between retailers and their upstream suppliers. While the literature on such initiatives in the business press is proliferating, it is not clear how one can quantify the benefits of these initiatives and how one can identify the drivers of the magnitudes of these benefits. Using analytical models, this paper aims at addressing these questions for a simple two-level supply chain with nonstationary end demands. Our analysis suggests that the value of demand information sharing can be quite high, especially when demands are significantly correlated over time.