Business Model Innovation for Ambulance Systems in Developing Countries: "Coordination and Competition"

30 Pages Posted: 14 Mar 2022

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: March 4, 2022

Abstract

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

Suggested Citation

Gernert, Andreas and Calmon, Andre and Romero, Gonzalo and Van Wassenhove, Luk N., Business Model Innovation for Ambulance Systems in Developing Countries: "Coordination and Competition" (March 4, 2022). Rotman School of Management Working Paper No. 4049997, 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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