Contracting models for pricing and capacity decisions in healthcare systems

Aydin Teymourifar, Onur Kaya and Gurkan Ozturk

Omega, 2021, vol. 100, issue C

Abstract: Many healthcare systems contain public and private providers with different characteristics. Generally, private hospitals provide better service with shorter waiting times. However, high prices of private hospitals cause most patients to go to public ones and this leads to overcrowding and dissatisfaction of patients at public hospitals. We propose new pricing policies and contract mechanisms that can be applied between the government and private hospitals in order to balance this system and provide higher utility for society. A multi-objective problem between two decision makers is analyzed and analytical models are proposed. In these models, the government first suggests different contract mechanisms to the private hospitals and then these hospitals decide on their capacities if they accept the contracts. Best contract mechanism and optimal contract parameters are investigated in order to maximize the total social utility. Detailed numerical results are presented in order to compare different contract mechanisms. It is shown that the proposed mechanisms can improve the system performance significantly and can lead to better healthcare systems. The effects of the parameters on the system results are also analyzed through numerical experiments.

Keywords: Healthcare system; Contract mechanism; Bi-level optimization; Public policy; Pricing; Capacity (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048319304633
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:100:y:2021:i:c:s0305048319304633

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.omega.2020.102232

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().