Sustainability Planning for Healthcare Information Exchanges with Supplier Rebate Program

Tharanga Rajapakshe (), Subodha Kumar (), Arun Sen () and Chelliah Sriskandarajah ()
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Tharanga Rajapakshe: Warrington College of Business, University of Florida, Gainesville, Florida 32611
Subodha Kumar: Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122
Arun Sen: Mays Business School, Texas A&M University, College Station, Texas 77843
Chelliah Sriskandarajah: Mays Business School, Texas A&M University, College Station, Texas 77843

Operations Research, 2020, vol. 68, issue 3, 793-817

Abstract: Healthcare information exchanges (HIEs) facilitate the electronic transfer of healthcare information among healthcare organizations. Several studies have shown that HIEs have the potential of saving billions of dollars per year and significantly improving healthcare delivery. Despite this economic benefit, financial sustainability is still a key challenge for many HIEs. Even though the issue of HIE sustainability is very important, it has not been analyzed rigorously. Hence the focus of our work is to understand the operational decisions of an HIE and provide insights into making rational decisions to ensure its long-term financial sustainability. Some recent studies argue that HIEs need to provide additional services in order to improve financial sustainability. In this context, some HIEs have started partnering with external suppliers for a supplier rebate program in which each member purchases services/supplies from specific suppliers via the network and receives a fixed percentage rebate. Our model is developed for one such HIE based in Austin, Texas (Critical Connection). Although we present our model in the context of Critical Connection, we ensure that our model is generic enough to apply in other HIE settings as well. We investigate a multiperiod two-service model in which an HIE offers (1) a healthcare information-sharing service and (2) a supplier rebate program. Our proposed model is based primarily on our interactions with a number of HIE providers in Texas. First, we present structural properties and an equilibrium solution for our model. Then, based on extensive computational experiments, we present several useful managerial insights for the HIE provider (for effectively managing its network) as well as policymakers (for improving the financial sustainability of HIEs and increasing the participation of healthcare organizations in HIE networks). We also analyze a variation of our model that allows healthcare providers to self-select the types of services.

Keywords: healthcare information exchange; sustainability; supplier rebate; pricing; membership (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:68:y:2020:i:3:p:793-817

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