A Regional Supply and Demand Model for Inpatient Hospital Care

Abstract

In this paper a regional supply and demand model for hospital admissions is developed which can be used for policymaking and planning purposes. It incorporates spatial factors such as travel-time costs into a model of market equilibrium in which waiting time acts implicitly as the equilibrating device. By distinguishing travel-time costs or distances it is shown that both supply and demand within local markets strongly influence admissions in a way which cannot be observed on aggregated levels: the tension between supply and demand is cushioned by a strong redistribution of patients. The model encompasses several well-known models for patient flows and hospital utilization originating in regional economics.