Pricing, Quality and Competition at On-Demand Healthcare Service Platforms
32 Pages Posted: 28 Sep 2018
Date Written: September 23, 2018
We consider on-demand healthcare platforms that allow patients to seek care online from distributed doctors. Healthcare costs have been steadily increasing, while patient experience continues to sour with costly (many times unnecessary) commute and waiting. To alleviate the costs, various on-demand healthcare platforms have emerged but have been little investigated in academic research. We develop a strategic queueing model where the platform decides the commission rate upon which potential doctors make their participation, service quality and pricing decisions and potential patients make their service acquisition decisions independently. We find that in equilibrium a higher commission rate always lowers doctor participation as well as service quality, but it may increase the service price if it significantly softens the competition. Moreover, as patient intensity increases, the service quality improves, accompanied largely with a higher price. We further investigate the effect of platform price control. We find that allowing the platform to control the service price in addition to the commission rate may result in more doctor participation, higher service quality and price, higher platform profit, and surprisingly even higher profit for the doctors. This generally occurs when the patient intensity is either low or high, the waiting cost is low, or the doctor heterogeneity is low. Our results are useful to understand the performance of on-demand healthcare platforms.
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