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Locating specialized service capacity in a multi-hospital network


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  • Mahar, Stephen
  • Bretthauer, Kurt M.
  • Salzarulo, Peter A.
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    Multi-hospital systems have become very common in today's healthcare environment. However, there has been limited published research examining the opportunities and challenges of pooling specialized services to a subset of hospitals in the network. Therefore, this paper considers how hospital networks with multiple locations can leverage pooling benefits when deciding where to position specialized services, such as magnetic resonance imaging (MRI), transplants, or neonatal intensive care. Specifically, we develop an optimization model to determine how many and which of a hospital network's hospitals should be set up to deliver a specialized service. Importantly, this model takes into account both financial considerations and patient service levels. Computational results illustrate the value of optimally pooling resources across a subset of hospitals in the network versus two alternate approaches: (1) delivering the service at all locations and requiring each site to handle its own demand, or (2) locating the service at one hospital that handles all network demand.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 212 (2011)
    Issue (Month): 3 (August)
    Pages: 596-605

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    Handle: RePEc:eee:ejores:v:212:y:2011:i:3:p:596-605

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    Keywords: OR in health services Supply chain management in healthcare Medical resource pooling;


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    1. R. Jean Ruth, 1981. "A Mixed Integer Programming Model for Regional Planning of a Hospital Inpatient Service," Management Science, INFORMS, vol. 27(5), pages 521-533, May.
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    7. Fournier, Gary M & Mitchell, Jean M, 1992. "Hospital Costs and Competition for Services: A Multiproduct Analysis," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 627-34, November.
    8. Alptekinoglu, Aydin & Tang, Christopher S., 2005. "A model for analyzing multi-channel distribution systems," European Journal of Operational Research, Elsevier, vol. 163(3), pages 802-824, June.
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    10. Bendoly, Elliot & Blocher, Doug & Bretthauer, Kurt M. & Venkataramanan, M.A., 2007. "Service and cost benefits through clicks-and-mortar integration: Implications for the centralization/decentralization debate," European Journal of Operational Research, Elsevier, vol. 180(1), pages 426-442, July.
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    Cited by:
    1. Cruz, Antonio Miguel & Haugan, Gregory L. & Rincon, Adriana Maria Rios, 2014. "The effects of asset specificity on maintenance financial performance: An empirical application of Transaction Cost Theory to the medical device maintenance field," European Journal of Operational Research, Elsevier, vol. 237(3), pages 1037-1053.


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