Les Cahiers de Recherche - HEC Paris
Competition and the Operational Performance of Hospitals: The Role of Hospital Objectives
() and Sam Aflaki
Abstract: The authors examine the effect of a hospital's objective
(i.e., non-profit versus for-profit) in hospital markets for elective care.
Using game-theoretic analysis and queueing models to capture the
operational performance of hospitals, they compare the equilibrium behavior
of three market settings in terms of such criteria as waiting times and the
total patient cost from waiting and hospital care payments. In the first
setting, patients are served exclusively by a single non-profit hospital;
in the second, patients are served by two competing non-profit hospitals.
In the third setting, the market is served by one non-profit hospital and
one for-profit hospital. A non-profit hospital provides free care to
patients, although they may have to wait; for-profit hospitals charge a fee
to provide care with minimal waiting. A comparison of the first two
settings reveals that competition can hamper a hospital's ability to attain
economies of scale and can also increase waiting times. A comparison
between the second and third settings indicates that, when the public
funder is not financially constrained, the presence of a for-profit sector
may allow the funder to lower both the financial costs of providing
coverage and the total costs to patients. The authors' analysis suggests
that the public funder should exercise caution when using policy tools that
support the for-profit sector -- for example, patient subsidies -- because
such tools may increase patient costs in the long run; it might be
preferable to raise the level of reimbursement to the non-profit sector.
Keywords: hospitals; for-profit healthcare; non-profit healthcare; queueing models; service provider competition; (follow links to similar papers)
30 pages, May 26, 2014
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