European Business Schools Librarian's Group

Les Cahiers de Recherche,
HEC Paris

No 1047: Competition and the Operational Performance of Hospitals: The Role of Hospital Objectives

Dimitrios Andritsos () 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

30 pages, May 26, 2014

Full text files

papers.cfm?abstract_id=2446397 PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-02-22 16:53:03.