Online Healthcare Platform Evolution: The Interplay of Bargaining and Network Effects

50 Pages Posted: 18 Nov 2021

See all articles by Xu Zhang

Xu Zhang

London Business School

Junhong Chu

NUS Business School

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business

Date Written: November 16, 2021

Abstract

Healthcare needs have been growing rapidly in many countries as populations age. Recently, ecosystems with online platforms at their center have emerged to address this need. This is because these platforms can scale rapidly, increasing healthcare access and equity. The speed of scaling depends on the network effects across healthcare providers and consumers on the platform. The network effects also impact the bargained prices for healthcare providers, which in turn impact the platform's profits and growth rate. We develop a novel framework that combines theories of network effects and bargaining to examine the evolution of online healthcare platforms as they balance the conflicting objectives of growth and profitability. We apply our framework to data from a major Chinese online healthcare platform that links hospitals and consumers for preventive health exams. Our results show that hospitals that provide a stronger (weaker) inducement to consumers to join the platform, i.e., exhibit higher (lower) cross-network effects, extract more (less) economic value from the platform. Using a series of simulations, we provide insights for the platform in terms of resource allocation to balance growth and profitability. Consumers participating in this ecosystem also see a monetary benefit equivalent to two hours of minimum wages.

Keywords: Healthcare Ecosystems, Online Platforms, Bargaining, Network Effects

Suggested Citation

Zhang, Xu and Chu, Junhong and Manchanda, Puneet, Online Healthcare Platform Evolution: The Interplay of Bargaining and Network Effects (November 16, 2021). Available at SSRN: https://ssrn.com/abstract=3965007 or http://dx.doi.org/10.2139/ssrn.3965007

Xu Zhang (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

HOME PAGE: http://www.london.edu/faculty-and-research/faculty/profiles/x/xu-zhang

Junhong Chu

NUS Business School ( email )

15 Kent Ridge Drive
Singapore, 119245
Singapore
65-65166938 (Phone)

HOME PAGE: http://bizfaculty.nus.edu/faculty-profiles/157-junhong

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
96
Abstract Views
441
rank
363,162
PlumX Metrics