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

Dimitrios Andritsos and Christopher S. Tang
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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

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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.

Keywords: OR in government; Health policy; Game theory (search for similar items in EconPapers)
Date: 2014-05-01
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Citations: View citations in EconPapers (21)

Published in European Journal of Operational Research, 2014, 234 (3), pp.898-909. ⟨10.1016/j.ejor.2013.11.022⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00977175

DOI: 10.1016/j.ejor.2013.11.022

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