1. Optimization-driven framework to understand health care network costs and resource allocation
- Author
-
Bravo, Fernanda, Braun, Marcus, Farias, Vivek, Levi, Retsef, Lynch, Christine, Tumolo, John, and Whyte, Richard
- Subjects
Health Services and Systems ,Health Sciences ,Commerce ,Management ,Tourism and Services ,Strategy ,Management and Organisational Behaviour ,Generic health relevance ,Diagnosis-Related Groups ,Health Care Costs ,Humans ,Resource Allocation ,Health care delivery networks ,Resource allocation ,Cost allocation ,Optimization ,Operations research ,Public Health and Health Services ,Health Policy & Services ,Strategy ,management and organisational behaviour ,Health services and systems - Abstract
In the last several decades, the U.S. Health care industry has undergone a massive consolidation process that has resulted in the formation of large delivery networks. However, the integration of these networks into a unified operational system faces several challenges. Strategic problems, such as ensuring access, allocating resources and capacity efficiently, and defining case-mix in a multi-site network, require the correct modeling of network costs, network trade-offs, and operational constraints. Unfortunately, traditional practices related to cost accounting, specifically the allocation of overhead and labor cost to activities as a way to account for the consumption of resources, are not suitable for addressing these challenges; they confound resource allocation and network building capacity decisions. We develop a general methodological optimization-driven framework based on linear programming that allows us to better understand network costs and provide strategic solutions to the aforementioned problems. We work in collaboration with a network of hospitals to demonstrate our framework applicability and important insights derived from it.
- Published
- 2021