The impact of wearable devices and performance payments on health outcomes

Hakan Tarakci, Shailesh Kulkarni and Zafer D. Ozdemir

International Journal of Production Economics, 2018, vol. 200, issue C, 291-301

Abstract: In this paper, we study a healthcare system consisting of a healthcare provider and a patient. We first look at a patient with a chronic condition, such as asthma or diabetes, where the patient needs to go through a restorative treatment when she falls sick and through an occasional full treatment. We assume that the health condition of the patient deteriorates faster over time; hence, the need for the full treatment. Borrowing from maintenance/reliability techniques to describe a system prone to failure, we model the health condition of the patient as a reliability problem and find the optimal frequency of full treatment visits to the hospital. We then assume that the patient can use a wearable device that can reduce the health deterioration rate due to more accurate and real-time information; it can also be used to partially administer restorative treatments. The healthcare provider chooses the optimal technology level of the wearable devices, and depending on the cost, we find that they might not always go for the most advanced technology available. We also show that the use of wearable devices increases the overall health condition of the patient. We then apply the same procedure to a patient with a critical condition where each bout of sickness needs to be treated fully instead of a corrective/restorative treatment of the chronic patient. We then quantify the benefits of wearables (especially in terms of patient wellness) in a numerical study.

Keywords: Reliability; Healthcare; Wearables; Health IT; Healthcare provider (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:200:y:2018:i:c:p:291-301

DOI: 10.1016/j.ijpe.2018.04.003

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