Coordination of elderly healthcare service supply chain with information asymmetry: Designs of option contracts under different demand distribution statuses

Abstract

This paper studies the issue of demand information asymmetry in an elderly healthcare service (EHS) system represented by a two-echelon elderly healthcare service supply chain (EHSSC) comprising an elderly service integrator (ESI) and a service provider (ESP). The goal of the ESI is to decide on how much service capacity is required for placing orders to the ESP, who directly serves the customers. Considering discrete and continuous demand distribution statuses, a centralised model with symmetric demand information and decentralised models with asymmetric demand information are developed to analyse the optimal ordering decisions and discuss the influence of information asymmetry. Furthermore, option contracts are applied to help coordinate the supply chain under asymmetric demand information based on different demand distribution statuses. Optimal option contract menus are designed for the ESP to promote the information sharing. Results show that the option contract can coordinate the EHSSC with asymmetric demand information under both discrete and continuous demand distribution statuses. The exercise price will be higher under lower demand information than that under higher demand information and the transfer payment will be less under lower demand information than that under higher demand information. Moreover, although the ESI has demand information superiority and can make use of opportunistic behaviour to maximise its own profit, the ESP as the leader can design the option contract to incentive the ESI to achieve true information sharing, and even obtain nearly all of the channel profit.

Systematic literature review of healthcare services for the elderly: trends, challenges, and application scenarios

“…Caliskan [23] aimed to identify young GPs' attitudes toward older people using the UCLA Geriatrics Attitude Scale (UCLA-GAS). An aged healthcare service system is composed of a two-echelon EHS supply chain (EHSSC) [24]. The problem of how the elderly service provider (ESP) and the elderly service integrator (ESI) make decisions and engage in cooperation and competitiveness has been addressed using a game-theoretic approach [25].…”

Joint coordination contract for capital‐constrained supply chains under asymmetric information

“…There has been an increase in studying supply chains with different asymmetric information issues in recent years, including demand information (Gan et al, 2010; Li et al, 2019; Zhao, 2020), cost information (Lai et al, 2018; Zhang & Zeephongsekul, 2016; Zissis et al, 2015), and fairness concern information (Liu et al, 2018; Qin & Shao, 2019). In addition, based on the principal–agent theory, Ma et al (2020) discussed the dynamic insurance contract model under asymmetric information of the policyholder's risk type.…”

“…However, the common ground of these studies is that they assumed the information in the supply chain is transparent, without considering the possible information asymmetry in reality. Some documents discussed the decision‐making behavior of the supply chain under information asymmetry, but they assumed that supply chain members have sufficient capital and do not need loans (Lai et al, 2018; Li et al, 2019; Qin & Shao, 2019; Zhao, 2020). It is worth mentioning that the information asymmetry considered in these studies mainly focuses on demand asymmetry, information asymmetry and so on, and there is almost no literature to consider the scenario of capital information asymmetry.…”

Key Drivers of the Emergency Capabilities of Integrated Elderly Services Supply Chains

“…They integrate various resources among suppliers, service providers (SPs), and consumers through service production and delivery to consumption; transforms them into core or supporting services; and finally transmits them to customers (Baltacioglu et al, 2007). The elderly care services supply chain is a multi-level network composed of an elderly care SI and an elderly care SP (Zhao, 2020). The sustainability of the elderly care services supply chain can be achieved through flexible contracts (Zhao, 2021), and a set of key performance indicators are needed to evaluate them (Mezouar & Afia, 2018).…”

“…The diversity and personalization of health care services for the elderly are of paramount importance. The requirements for elderly care service products are more complex than other types of services and products, leading to higher demand fluctuations (Zhao, 2020). The shortage of raw materials in the upstream and downstream supply chain, sudden changes in service demand, quality problems, and mismatches in demand may all cause supply chain risks and affect the stability of the supply chain (Raghunath & Devi, 2018;Sharma et al, 2017).…”