The Promise of mHealth for Chronic Disease Management Under Different Payment Systems

Manufacturing and Service Operations management, Forthcoming

Nanyang Business School Research Paper No. 22-23

63 Pages Posted: 11 Oct 2022 Last revised: 30 Nov 2022

See all articles by Balaraman Rajan

Balaraman Rajan

California State University, East Bay; University of Rochester - Simon School of Business

Arvind Sainathan

Nanyang Technological University (NTU) - Nanyang Business School

Saligrama Agnihothri

Binghamton University, SUNY

Leon Cui

Binghamton University

Date Written: September 7, 2020

Abstract

Problem definition: Rapid innovations in technology have created opportunities for different modes of healthcare delivery including digital services provided via mobile applications (mHealth). mHealth technology has the potential to provide efficient, effective, and patient-centered healthcare to manage chronic conditions. However, the economics associated with the adoption and integration of mHealth into the care delivery process is not well understood. In a chronic care clinical practice setting, we investigate fee-for-service (FFS) and capitation payment systems and explore their performance in a traditional office-visit mode and in a mHealth-adopted mode. We identify conditions under which it is preferable to switch to an mHealth-based practice from an office visit-based practice.

Methodology/Results: We use an analytical model to track the progression of a chronic disease and formulate an optimization problem in which the clinic decides the time between scheduled visits and patient panel size. We consider many patient-doctor interaction factors including the risk-index of patients, the cost of being sick, and the effectiveness of treatment. We measure the performance based on four different criteria: physician net revenue, physician panel size, total patient utility, and payor net revenue. While patients may find mHealth mode to be very beneficial, physicians under an FFS system may only adopt mHealth for moderately risky patients but for neither low-risk nor high-risk patients. Capitation clinics are likely to adopt mHealth (higher net revenue) even if the technology is moderately effective. Importantly, mHealth is preferred by patients (higher total utility) and policy makers (greater coverage) when the clinic serves moderate-risk or high-risk patients.

Managerial Implications: Chronic conditions need continuous care management and use of mHealth has been very promising. However, adoption of mHealth by healthcare providers has been very slow. Our research explores payment systems, physician incentives, and optimal conditions for mHealth to achieve its full potential.

Note:
Funding Information: None. Did not receive any funding.

Conflict of Interests: There are no competing interests.

Suggested Citation

Rajan, Balaraman and Sainathan, Arvind and Agnihothri, Saligrama and Cui, Leon, The Promise of mHealth for Chronic Disease Management Under Different Payment Systems (September 7, 2020). Manufacturing and Service Operations management, Forthcoming , Nanyang Business School Research Paper No. 22-23, Available at SSRN: https://ssrn.com/abstract=4221362

Balaraman Rajan

California State University, East Bay ( email )

25800 Carlos Bee Boulevard
Hayward, CA California 94542
United States

University of Rochester - Simon School of Business ( email )

Rochester, NY 14627
United States

Arvind Sainathan

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore, 639798
Singapore

Saligrama Agnihothri (Contact Author)

Binghamton University, SUNY ( email )

School of Management
Binghamton, NY New York 13902-6000
United States
6077772125 (Phone)
6077774422 (Fax)

HOME PAGE: http://https://www.binghamton.edu/som/research/profile.html?id=agni

Leon Cui

Binghamton University ( email )

PO Box 6001
Binghamton, NY 13902-6000
United States

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