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Introducing competition in healthcare services: The role of private care and increased patient mobility

Author

Listed:
  • Dimitrios Andritsos

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Christopher S. Tang

    (Anderson Graduate School of Management, UCLA - UCLA - University of California [Los Angeles] - UC - University of California)

Abstract

We study the operational implications from competition in the provision of healthcare services, in the context of national public healthcare systems in Europe. Specifically, we study the potential impact of two alternative ways through which policy makers have introduced such competition: (i) via the introduction of private hospitals to operate alongside public hospitals and (ii) via the introduction of increased patient choice to grant European patients the freedom to choose the country they receive treatment at. We use a game-theoretic framework with a queueing component to capture the interactions among the patients, the hospitals and the healthcare funders. Specifically, we analyze two different sequential games and obtain closed form expressions for the patients' waiting time and the funders' reimbursement cost in equilibrium. We show that the presence of a private provider can be beneficial to the public system: the patients' waiting time will decrease and the funders' cost can decrease under certain conditions. Also, we show that the cross-border healthcare policy, which increases patient mobility, can also be beneficial to the public systems: when welfare requirements across countries are sufficiently close, all funders can reduce their costs without increasing the patients' waiting time. Our analysis implies that in border regions, where the cost of crossing the border is low, "outsourcing" the high-cost country's elective care services to the low-cost country is a viable strategy from which both countries' systems can benefit.

Suggested Citation

  • Dimitrios Andritsos & Christopher S. Tang, 2014. "Introducing competition in healthcare services: The role of private care and increased patient mobility," Post-Print hal-00977175, HAL.
  • Handle: RePEc:hal:journl:hal-00977175
    DOI: 10.1016/j.ejor.2013.11.022
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    Citations

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    Cited by:

    1. Zhou, Wenhui & Wan, Qiang & Zhang, Ren-Qian, 2017. "Choosing among hospitals in the subsidized health insurance system of China: A sequential game approach," European Journal of Operational Research, Elsevier, vol. 257(2), pages 568-585.
    2. Zhou, Cuihua & Hao, Yifei & Lan, Yanfei & Li, Weifeng, 2023. "To introduce or not? Strategic analysis of hospital operations with telemedicine," European Journal of Operational Research, Elsevier, vol. 304(1), pages 292-307.
    3. Li, Zhong-Ping & Chang, Aichih (Jasmine) & Zou, Zongbao, 2023. "Design mechanism to coordinate a hierarchical healthcare system: Patient subsidy vs. capacity investment," Omega, Elsevier, vol. 118(C).
    4. Resta, Emanuela & Resta, Onofrio & Costantiello, Alberto & Leogrande, Angelo, 2023. "The Hospital Emigration to Another Region in the Light of the Environmental, Social and Governance Model in Italy During the Period 2004-2021," MPRA Paper 119624, University Library of Munich, Germany.
    5. Denoyel, Victoire & Alfandari, Laurent & Thiele, Aurélie, 2017. "Optimizing healthcare network design under reference pricing and parameter uncertainty," European Journal of Operational Research, Elsevier, vol. 263(3), pages 996-1006.
    6. Wenhui Zhou & Weixiang Huang & Vernon N. Hsu & Pengfei Guo, 2023. "On the Benefit of Privatization in a Mixed Duopoly Service System," Management Science, INFORMS, vol. 69(3), pages 1486-1499, March.
    7. Brekke, Kurt R. & Levaggi, Rosella & Siciliani, Luigi & Straume, Odd Rune, 2016. "Patient mobility and health care quality when regions and patients differ in income," Journal of Health Economics, Elsevier, vol. 50(C), pages 372-387.
    8. Teymourifar, Aydin & Kaya, Onur & Ozturk, Gurkan, 2021. "Contracting models for pricing and capacity decisions in healthcare systems," Omega, Elsevier, vol. 100(C).
    9. Zhou, Cuihua & Lan, Yanfei & Li, Weifeng & Zhao, Ruiqing, 2022. "Medicare policies in a two-Tier healthcare system with overtreatment," Omega, Elsevier, vol. 109(C).
    10. Li, Zhong-Ping & Wang, Jian-Jun, 2021. "Effects of healthcare quality and reimbursement rate in a hospital association," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    11. Pengfei Guo & Christopher S. Tang & Yulan Wang & Ming Zhao, 2019. "The Impact of Reimbursement Policy on Social Welfare, Revisit Rate, and Waiting Time in a Public Healthcare System: Fee-for-Service Versus Bundled Payment," Service Science, INFORMS, vol. 21(1), pages 154-170, January.
    12. repec:nip:nipewp:09/2015 is not listed on IDEAS
    13. Jianpei Wen & Hanyu Jiang & Jie Song, 2019. "A Stochastic Queueing Model for Capacity Allocation in the Hierarchical Healthcare Delivery System," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(01), pages 1-24, February.
    14. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    15. Qian, Qu & Zhuang, Weifen, 2017. "Tax/subsidy and capacity decisions in a two-tier health system with welfare redistributive objective," European Journal of Operational Research, Elsevier, vol. 260(1), pages 140-151.
    16. Kaya, Onur & Teymourifar, Aydin & Ozturk, Gurkan, 2020. "Analysis of different public policies through simulation to increase total social utility in a healthcare system," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    17. Zhang, Zhe George & Yin, Xiaoling, 2021. "Information and pricing effects in two-tier public service systems," International Journal of Production Economics, Elsevier, vol. 231(C).
    18. Lee, Jong Youl & Rajan, Balaraman & (Avi) Seidmann, Abraham, 2024. "Optimal location of remote dental units," European Journal of Operational Research, Elsevier, vol. 312(3), pages 969-977.
    19. Zhong-Ping Li & Jian-Jun Wang & Ai-Chih Chang & Jim Shi, 2021. "Capacity reallocation via sinking high-quality resource in a hierarchical healthcare system," Annals of Operations Research, Springer, vol. 300(1), pages 97-135, May.
    20. Levaggi, Laura & Levaggi, Rosella, 2023. "Competition in the provision of hospital care: Are mixed markets a valid alternative?," Economic Modelling, Elsevier, vol. 127(C).

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