Healthcare Supply Chain Network Coordination Through Medical Insurance Strategies with Reference Price Effect

Abstract

China has established the universal medical insurance system and individual out of pocket costs have decreased, however, the average healthcare expenditure of the Chinese population and the expenses of the whole society have increased substantially. One major challenge which impedes the progress of attaining sustainable development of the social healthcare system in China is that the number of hospital admissions is disproportionate. Superior hospitals are overcrowded, whereas subordinate hospitals are experiencing low admissions. In this paper, we apply the game theory model to coordinate the healthcare supply chain network, which is composed of the government, medical insurance fund, superior hospitals, subordinate hospitals and patients. Especially by taking the reference price effect into account, this paper analyzes different medical insurance reimbursement strategies and their influence on patient choice and the healthcare supply chain network. The result shows that the reference price effect increases the leverage of medical insurance, guides patients’ choice, optimizes the allocation of medical resources and reduces the medical expends. In comparison to a decentralized decision- making strategy, a centralized decision- making strategy can stimulate both superior hospital and subordinate hospital’s cooperative intentions which benefits the social healthcare system.