Essays on Healthcare Payments and Operations

Abstract

A common objective of my dissertation is to use analytical and empirical models to understand the impact of current healthcare policies on outcomes for stakeholders, cost containment, quality of care, and efficiency of the providers. Consequently, this dissertation focuses on two areas: 1- payment models in healthcare (Chapters 1 and 2), and 2- healthcare behavioral operations (Chapter 3). Healthcare spending accounts for 17.5\% of the GDP in the United States and has been rising year after year, which makes this a significant concern for society. There have been many proposals specifically related to the reimbursement models from insurers to providers to curb the healthcare cost. However, many of these proposals are not studied or thoroughly evaluated before they are implemented. I believe this has created a special opportunity to bridge the gap between practice and academia by developing new models to study the decisions and models that have been proposed. To this extent, the first two chapters of my thesis focus on healthcare payments, where I use mathematical models to investigate the current policies in healthcare payments, propose new payments that can better align the incentives of the stakeholders to the system optimum outcomes, compare and contrast different payment systems, and support the derivations with empirical evidence. The current reimbursement system for hospitals is fee-for-service (FFS), under which the hospital is reimbursed for every procedure, test, etc. This payment model motivates the hospitals to treat patients more than is needed and to perform unnecessary tests that contribute to excessive healthcare expenditures. There have been many proposals for alternative payment models especially from the Center for Medicare and Medicaid services (CMS). One way of controlling healthcare expenditures is by modifying the reimbursement schemes to share some of the insurers' risk with providers. This possibility, results in the first chapter of this dissertation. The second chapter is related to impacting healthcare spending through cost-sharing mechanisms with patients, which affects the providers' market shares and, subsequently their pricing strategies. The questions that I am trying to address are: what is the impact of new payment schemes and are they achieving their premises or are there some unintended consequences? In the third chapter, I mainly focus on the emerging problems that can affect the behavior of providers in healthcare operations, such as changing the facility layout of the exam rooms so that providers will share some resources. This change can potentially impact provider's efficiency, scheduling, and assignments. I use an empirical approach to address the effect of the layout change benefiting from over a year of patient-level data from an outpatient Clinic. The clinic recently implemented a flexible suite layout for their outpatient department in which a physician can share the bed and some examination equipments with another provider. This is in contrast to the traditional exam rooms where each provider is assigned to a room with all the equipments. We investigate the impact of new intervention, multitasking, competition, and load on provider behavior and efficiency.