Optimal management of government subsidy in the healthcare system

Abstract

We study a healthcare system of colon assessment, where the government launches a public-private partnership program. The government makes an offer to the patients, who are waiting at the public hospital, to receive colonoscopy surgery at the private hospital with the subsidy. By modeling the healthcare system as a Markov decision process, the Offer Distribution Model is obtained. We show the optimal policy for the government to give subsidy offer is a threshold one. When the queue length is greater than the threshold, the government will provide, while when the queue length is less than the threshold, the government will not. The threshold is related to the number of subsidy offers available and the remaining time. As the extension of the primary Offer Distribution Model, we analyze the cases where the government has a budget constraint, and compare the one by one policy with the all at once policy by numeral experiments. We also formulate a Subsidy Determination Model using queueing theory, to determine the optimal amount of grant per offer and the total budget. The Subsidy Determination Model incorporates the strategic behavior of patients. The patients make decisions on whether to join the queue or not, by comparing the cost at the public and private hospital.

Date of Award	2017
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology