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We study a service setting where the provider has information about some customers' future service needs and may initiate service for such customers proactively, if they agree to be flexible with respect to the timing of service delivery. Academic / Practical Relevance: Information about future customer service needs is becoming increasingly available through remote monitoring systems and data analytics. However, the literature has not systematically examined proactive service as a tool that can be used to better match demand to service supply when customers are strategic. Methodology: We combine i) queueing theory, and in particular a diffusion approximation developed specifically for this problem that allows us to derive analytic approximations for customer waiting times, with ii) game theory, which captures customer incentives to adopt proactive service. Results: We show that proactive service can reduce customer waiting times, even if only a relatively small proportion of customers agree to be flexible, the information lead time is limited, and the system makes occasional errors in providing proactive service-in fact we show that the system's ability to tolerate errors increases with (nominal) utilization. Nevertheless, we show that these benefits may fail to materialize in equilibrium because of economic frictions: customers will under-adopt proactive service (due to free-riding) and over-join the system (due to negative congestion-based externalities). We also show that the service provider can incentivize optimal customer behavior through appropriate pricing. Managerial Implications: Our results suggest that proactive service may offer substantial operational benefits, but caution that it may fail to fulfill its potential due to customer self-interested behavior.

Telemedicine is increasingly used across the developing world to expand access to healthcare, to improve outcomes, and to reduce costs. One common model is that of telemedicine centers, which are small primary care facilities run by midlevel (nonphysician) providers who conduct a preliminary examination and then facilitate a telemedicine visit with a remote physician in real time. However, the impact of this channel of care delivery—particularly on existing physical healthcare-delivery channels—has not been thoroughly examined. We use data from one of the largest tele-ophthalmology implementations in the world to examine this issue. Using a quasi-experimental difference-in-differences approach, we find that opening a nearby telemedicine center generates a 31% increase in the overall network visit rate from the population within 10 km of the new center, 62% of which is driven by new patients, suggesting a substantial increase in access. The rate of eyeglasses prescriptions to correct for simple refractive errors increases by 18.5%, whereas the rate of cataract surgery to replace the natural lens in a patient’s eye with an artificial lens remains unchanged. The increase in access and treatment rates does not significantly impact the direct costs incurred by patients, but reduces their indirect costs (measured as travel distance) by 30% (12 km). Finally, we find significant spatial heterogeneity in these effects, which vary with the distance of patients to facilities. These results have important implications for the design of telemedicine networks and the portfolio of healthcare services provided through them. This paper was accepted by Stefan Scholtes, healthcare management.

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