Service variety strategies for healthcare systems under capacity limitations

Some hospitals provide paid medical services in addition to basic medical services. Although paid medical services can provide a better experience for patients who are highly sensitive to delays, they cause a capacity reduction in basic medical services. We develop a model incorporating product line design and queuing models to determine the service capacity allocation for a healthcare system. Patients are categorised into two segments according to their sensitivities to waiting time. We derive the optimal capacity allocations under two strategies (providing both paid and basic medical services and providing only the basic one) and compare them. Results show that the hospital should provide only the basic medical service even if high-sensitive patients are extremely sensitive to waiting time. Under certain conditions, a hospital providing differentiated medical services should decrease capacity allocation to the paid service even if high-sensitive patients are extremely sensitive to waiting time. [Received: 13 April 2022; Accepted: 22 September 2022]