EURO 2024 Copenhagen
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418. Contagion-aware patient choice: managing multichannel healthcare delivery during a pandemic

Invited abstract in session WB-15: COVID-19, stream OR in Health Services (ORAHS).

Wednesday, 10:30-12:00
Room: 18 (building: 116)

Authors (first author is the speaker)

1. Elif Karul
Operations Management & Information Systems, Koç University

Abstract

We consider the multichannel healthcare delivery problem during a pandemic and explore capacity allocation and pricing decisions for the in-person and telemedicine channels. We propose a model that explicitly considers patient choices between the channels, including the fear of contracting the disease in an in-person visit. The effect of contagion on the patient’s channel choice is endogenous. Choices drive in-person volume which in turn drives the contagion effect. We show that in equilibrium when the potential demand increases linearly, the in-person demand increases logarithmically due to the endogenous contagion effect. This explains the documented revenue losses of healthcare systems during the COVID-19 pandemic and underlines the tele-channel's importance as a leading revenue source. Under optimal pricing, we find a positive price gap between the channels that increases in contagion awareness of the patients, a behavioral parameter in the model. In comparison with a revenue-maximizing healthcare provider that prefers the higher-priced in-person channel, when physician infection is also considered, a social planner is shown to allocate more capacity to telemedicine thereby protecting physicians. Modulating channel choice by increasing patients' contagion awareness can be beneficial for both revenue and welfare. Even partial awareness can go a long way in compensating the revenue losses, despite the negative impact of contagion awareness on total demand in equilibrium.

Keywords

Status: accepted

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