Application of Portfolio Theory to Healthcare Capacity Management

Carina Fagefors and Björn Lantz
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Carina Fagefors: Department of Pediatric Anesthesiology, Intensive Care and Neonatology, Sahlgrenska University Hospital, 413 45 Gothenburg, Sweden
Björn Lantz: Technology Management and Economics, Chalmers University of Technology, 412 96 Gothenburg, Sweden

IJERPH, 2021, vol. 18, issue 2, 1-9

Abstract: Healthcare systems worldwide are faced with continuously increasing demand for care, while simultaneously experiencing insufficient capacity and unacceptably long patient waiting times. To improve healthcare access and availability, it is thus necessary to improve capacity utilization and increase the efficiency of existing resource usage. For this, variations in healthcare systems must be managed judiciously, and one solution is to apply a capacity pooling approach. A capacity pool is a general, collaborative capacity that can be allocated to parts of the system where the existing workload and demand for capacity are unusually high. In this study, we investigate how basic mean-variance methodology from portfolio theory can be applied as a capacity pooling approach to healthcare systems. A numerical example based on fictitious data is used to illustrate the theoretical value of using a portfolio approach in a capacity pooling context. The example shows that there are opportunities to use capacity more efficiently and increase service levels, given the same capacity, and that a mean-variance analysis could be performed to theoretically dimension the most efficient pooling organization. The study concludes with a discussion regarding the practical usefulness of this methodology in the healthcare context.

Keywords: portfolio theory; capacity pooling; healthcare management; capacity planning (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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