Two‐tier healthcare service systems and cost of waiting for patients

Guangyu Wan and Qinan Wang

Applied Stochastic Models in Business and Industry, 2017, vol. 33, issue 2, 167-183

Abstract: Waiting has been a significant concern for healthcare services. We address this issue in the context of a two‐tier service system in this study. A two‐tier healthcare service system consists of two different service providers, typically one public service provider and one private service provider. In a baseline model, the two service providers are modeled by two queue servers, which charge each patient a common fixed fee for the service. Then, we study a queue model in which one service provider offers a subsidy or charges a premium while the other maintains the fixed service fee. This system provides a mechanism to segment patients along their waiting time cost through price discrimination. We analyze the problem from both the perspective of minimizing total waiting cost for all patients and the perspective of maximizing social gain for the public service provider or profit for the private service provider. We show that this model can significantly alleviate the burden of waiting for patients. The study addresses the design, the efficiency, and the implementation of two‐tier healthcare service systems. Copyright © 2017 John Wiley & Sons, Ltd.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:33:y:2017:i:2:p:167-183

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