Business Model Innovation for Ambulance Systems in Developing Countries: "Coordination and Competition"
30 Pages Posted: 14 Mar 2022
Date Written: March 4, 2022
Several developing countries' emergency transportation systems (ETS) do not have a centralized emergency number. Instead, they have many independent ambulance providers, each with a small number of ambulances. As a result, ETS in these contexts lack coordination and ambulances. We examine three business models that address this lack of coordination and ambulances: (i) a provider-only business model where a new entrant to the ETS market acquires ambulances to compete with existing providers; (ii) a platform business model, where a new entrant sets up a platform to coordinate existing providers; and (iii) an innovative platform-plus business model, where a new entrant combines (i) and (ii), setting up a platform and acquiring platform-owned ambulances. Using a game-theoretic approach, we characterize the benefits and trade-offs of each business model and find conditions where each business model is most profitable. We find that, in equilibrium, a provider-only might make patients worse-off. Furthermore, a platform business model always improves patients' service probability but might be unprofitable depending on platform set-up costs. Finally, a platform-plus business model can improve both patient service probability and the firm's profit. We also find that a platform-plus business model is more profitable than the other business models in settings where there is significant market fragmentation and a lack of ambulances, which is the case in several developing countries. These findings help to explain why a platform-plus business model emerged as a successful business model innovation to improve ETS in countries like India.
Keywords: platforms, healthcare, innovative business models, new technology, emergency transportation systems, game theory
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