TY - JOUR
T1 - The Impact of Reimbursement Policy on Social Welfare, Revisit Rate, and Waiting Time in a Public Healthcare System
T2 - Fee-for-Service Versus Bundled Payment
AU - Guo, Pengfei
AU - Tang, Christopher S.
AU - Wang, Yulan
AU - Zhao, Ming
PY - 2019
Y1 - 2019
N2 - This paper examines the impact of two reimbursement schemes, fee-for-service and bundled payment, on the social welfare, the patient revisit rate, and the patient waiting time in a public healthcare system. The two schemes differ on the payment mechanism: under the fee-for-service scheme, the healthcare provider receives the payment each time a patient visits (or revisits) whereas, under the bundled payment scheme, the healthcare provider receives a lump sum payment for the entire episode of care regardless of how many revisits a patient incurs. By considering the quality-speed trade-off (i.e., a higher service speed reduces service quality, resulting in a higher revisit rate), we examine a three-stage Stackelberg game to determine the patients’ initial visit rate, the service provider’s service rate (which affects the revisit rate), and the funder’s reimbursement rate. This analysis enables us to compare the equilibrium outcomes (social welfare, revisit rate, and waiting time) associated with the two payment schemes. We find that when the patient pool size is large, the bundled payment scheme dominates the fee-for-service scheme in terms of higher social welfare and a lower revisit rate, whereas the fee-for-service scheme prevails in terms of shorter waiting time. When the patient pool is small, the bundle payment scheme dominates the fee-for-service scheme in all three performance measures.
AB - This paper examines the impact of two reimbursement schemes, fee-for-service and bundled payment, on the social welfare, the patient revisit rate, and the patient waiting time in a public healthcare system. The two schemes differ on the payment mechanism: under the fee-for-service scheme, the healthcare provider receives the payment each time a patient visits (or revisits) whereas, under the bundled payment scheme, the healthcare provider receives a lump sum payment for the entire episode of care regardless of how many revisits a patient incurs. By considering the quality-speed trade-off (i.e., a higher service speed reduces service quality, resulting in a higher revisit rate), we examine a three-stage Stackelberg game to determine the patients’ initial visit rate, the service provider’s service rate (which affects the revisit rate), and the funder’s reimbursement rate. This analysis enables us to compare the equilibrium outcomes (social welfare, revisit rate, and waiting time) associated with the two payment schemes. We find that when the patient pool size is large, the bundled payment scheme dominates the fee-for-service scheme in terms of higher social welfare and a lower revisit rate, whereas the fee-for-service scheme prevails in terms of shorter waiting time. When the patient pool is small, the bundle payment scheme dominates the fee-for-service scheme in all three performance measures.
KW - Bundled payment
KW - Fee-for-service
KW - Healthcare operations
KW - Queueing
UR - http://www.scopus.com/inward/record.url?scp=85065647042&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-85065647042&origin=recordpage
U2 - 10.1287/msom.2017.0690
DO - 10.1287/msom.2017.0690
M3 - RGC 21 - Publication in refereed journal
SN - 1523-4614
VL - 21
SP - 154
EP - 170
JO - Manufacturing and Service Operations Management
JF - Manufacturing and Service Operations Management
IS - 1
ER -