Business Model Innovation for Ambulance Systems in Developing Economies: 'Coordination and Competition'

84 Pages Posted: 14 Mar 2022 Last revised: 11 Mar 2024

See all articles by Andreas Gernert

Andreas Gernert

Department of Logistics, Kühne Logistics University

Andre Calmon

Georgia Institute of Technology - Operations Management Area; INSEAD - Technology and Operations Management

Gonzalo Romero

University of Toronto - Rotman School of Management

Luk N. Van Wassenhove

INSEAD

Date Written: June 22, 2023

Abstract

Several low- and middle-income countries' (LMICs) emergency transportation systems (ETSs) do not have a centralized emergency number. Instead, they have many independent ambulance providers, each with a small number of ambulances. As a result, ETSs in these contexts lack coordination and ambulances. Using a free-entry equilibrium model, we show that in such decentralized systems, the probability that any given call can be served by at least one ambulance, i.e. its coverage, is at most 71.54%, regardless of the ETS's profitability. We examine three business models that can address the ETS's lack of coordination and ambulances: (i) a competitor-only business model, where an entrepreneur enters the ETS and acquires ambulances to compete with existing providers; (ii) a platform business model, where an entrepreneur coordinates existing providers; and (iii) an innovative platform-plus business model, where an entrepreneur combines (i) and (ii): setting-up a platform and acquiring platform-owned ambulances. We also examine a government-run platform that takes no commissions from providers. Using a game-theoretic approach, we find that it is optimal for all platform models to incentivize all providers to join. However, only the government-run platform may incentivize providers to acquire additional ambulances. Furthermore, a government-run platform offers higher coverage than a platform-plus only when the platform's power to coordinate ambulance providers is moderate. Our results can help entrepreneurs and policymakers in LMICs navigate various trade-offs in improving their countries' ETS.

Keywords: Platforms, Development Operations, Healthcare, Innovative Business Models, Emergency Transportation Systems, Game Theory

Suggested Citation

Gernert, Andreas and Calmon, Andre and Romero, Gonzalo and Van Wassenhove, Luk N., Business Model Innovation for Ambulance Systems in Developing Economies: 'Coordination and Competition' (June 22, 2023). Forthcoming in Production and Operations Management, Rotman School of Management Working Paper No. 4049997, INSEAD Working Paper No. 2023/29/TOM, Available at SSRN: https://ssrn.com/abstract=4049997 or http://dx.doi.org/10.2139/ssrn.4049997

Andreas Gernert (Contact Author)

Department of Logistics, Kühne Logistics University ( email )

Großer Grasbrook 17
Hamburg, 20457
Germany

Andre Calmon

Georgia Institute of Technology - Operations Management Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

Gonzalo Romero

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Luk N. Van Wassenhove

INSEAD ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France
(33) (0)1 60 72 42 66 (Phone)
(33) (0)1 60 72 40 49 (Fax)

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