On Withholding Capacity from Strategic Patients

81 Pages Posted: 9 Jun 2020

See all articles by Yunchao Xu

Yunchao Xu

New York University (NYU) - Leonard N. Stern School of Business

Mor Armony

New York University (NYU) - Department of Information, Operations, and Management Sciences

Nan Liu

Boston College - Carroll School of Management

Date Written: May 6, 2020

Abstract

Common wisdom suggests that, everything else being equal, seeing patients sooner rather than later is preferable. In particular, health outcomes improve with reduced delay and so does patient satisfaction. Meanwhile, if the delay in access to care is reduced, rescheduling becomes easier and thus patients may be more inclined not to show up for their current appointments and to reschedule. We investigate how an outpatient care provider should manage capacity in the presence of such patient strategic behavior. We find that under some circumstances, it is optimal for the service provider to withhold capacity from patients to elicit them to show up for their scheduled appointments. Yet, withholding capacity alone cannot fully eliminate strategic no-shows in all circumstances. Thus, we consider two supplementary policies which may be used to further prevent patient strategic no-show and rescheduling: assigning a lower priority to rescheduling patients or charging rescheduling fees. While both policies may further reduce or even eradicate patient strategic no-shows, they are not without drawbacks. Giving rescheduling patients a low priority to get appointments may lead to more patient reneging and thus may hurt the provider’s throughput and total patient utilities. Allowing service providers to freely charge rescheduling fees may induce an even higher rate of no-shows and rescheduling among patients, as an revenue maximizing provider has an incentive to encourage rescheduling so as to collect more rescheduling fees. This may, again, result in lower patient utilities. Our study generates valuable insights on how and when to use these policies to address patient strategic no-show and rescheduling behaviors.

Keywords: service operations management, healthcare management, appointment scheduling, queueing theory, strategic customers

JEL Classification: C44, C61, M10, I10

Suggested Citation

Xu, Yunchao and Armony, Mor and Liu, Nan, On Withholding Capacity from Strategic Patients (May 6, 2020). NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3601113 or http://dx.doi.org/10.2139/ssrn.3601113

Yunchao Xu

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Mor Armony

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States
(212) 998-0291 (Phone)
(212) 995-4227 (Fax)

Nan Liu (Contact Author)

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

HOME PAGE: http://sites.google.com/site/nanliuacademic/

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