Resource and Revenue Management in Nonprofit Operations

Chen

Production and Operations Management

2016

As a result of government budgetary limits and rapid market growth, many public service systems—such as health care—are characterized by extensive customer wait times that have become a serious problem. This problem might be solved by allowing private firms to enter these markets, which would provide customers with a choice between a free (governmental) public service provider (SP) and a fee‐charging (or “toll”) private SP. In such a two‐tier service system, the two SPs are differentiated by service quality and cost efficiency. This study focuses on the competition and coordination issues for two‐tier service systems with customers who are sensitive to both service quality and delay. The free system attempts to maximize its expected total customer utility with limited capacity, whereas the toll system attempts to maximize its profit. Neither goal is aligned with the social welfare goal of the public service. To achieve the social welfare goal, the government plays a crucial role in coordinating the two‐tier service system via the budget, the tradeoff of social members' goals, and tax‐subsidy policies. Using a mixed duopoly game, we establish Nash equilibrium strategies and identify the conditions for the existence of the two‐tier service system. We employ several interesting and counter‐intuitive managerial insights generated by the model to show that the public service can be delivered more efficiently via customer choice and SP competition. In addition, we show that a relatively low tax‐subsidy rate can almost perfectly coordinate the two SPs to achieve most of the maximum possible benefit of the two‐tier service system.

Section: Introductionmentioning

confidence: 99%

Competition and Coordination in Two‐Tier Public Service Systems under Government Fiscal Policy

Chen

Production and Operations Management

2016

Production and Operations Management

“…This may be partly due to the multiobjective nature of healthcare systems where many strategies or goals are difficult to measure and compare with traditional financial ones. However, revenue management models have demonstrated value in these settings where revenue‐generating activities are managed to support mission‐focused activities (de Vericourt & Lobo, 2009). Gupta and Wang (2008) offer an application of revenue management to PAM.…”

Section: Literature Reviewmentioning

confidence: 99%

Partially partitioned templating strategies for outpatient specialty practices

Bai

Berg

Sir

et al. 2023

Templating strategies specify policies on capacity allocation and appointment booking, which are central to patient access management in outpatient specialty practices (SPs). In the widely implemented partitioned templating strategy, appointment capacity is allocated exclusively to each patient group defined by a combination of patient attributes and medical conditions, which often results in utilization challenges for SPs. Motivated by problems faced by an SP within a large academic medical center, we propose partially partitioned templating strategies that cluster patient groups into access classes and allocate appointment slots to these classes. We formulate a twostage stochastic optimization model to simultaneously optimize decisions on patient group clustering and capacity allocation in the templating strategy design. We develop an efficient solution algorithm for the problem, which otherwise poses a combinatorial challenge, based on Benders' cuts and an anticipatory approximation. Numerical experiments using real-world data show that the partially partitioned strategies outperform benchmark strategies used by SPs through maintaining a balance of high capacity utilization and providing timely access for priority patients. In addition, we study a wide range of SP setups for transferable insights on templating strategies based on practice specifics.

Appl Stoch Models Bus & Ind

“…This work is first related to the recent literature on the two‐tier health care system. Using a newsvendor model, De Vericourt and Lobo 12 research the multi‐period stochastic dynamic capacity and pricing decisions for a non‐profit firm that operates both free and pay hospitals to treat blindness. Guo et al 2 investigate a two‐tier queuing system that consists of a fixed capacity free system and a self‐financing toll system.…”

Section: The Literature Reviewmentioning

confidence: 99%

Uniform pricing and subsidy coordination mechanism in a two‐tier healthcare system under a co‐payment policy

Chen

2023

Recently, the lengthy waiting time in public hospitals (called the public system) under the free healthcare policy has become a serious problem. To address this issue, motivated by the Japanese healthcare system, this paper investigates a two‐tier co‐payment healthcare system under a uniform pricing and subsidy coordination mechanism. In such a setting, the public system and the private system (i.e., the private hospitals) compete for market share with different objectives, whereas the government uniformly sets the service price and the subsidy rate to maximize social welfare under a total budget constraint. Compared with two free healthcare policy cases implemented in the Canadian and Australian healthcare systems respectively in terms of social welfare, the results show that when the market demand (or the patient service quality sensitivity) is sufficiently high (sufficiently low), the uniform pricing and subsidy coordination mechanism is better and worse otherwise; and when the patient's waiting sensitivity (or the total government budget) is in an appropriate middle range (sufficiently low or high), the mechanism can outperform than the free policy cases.