Equilibrium Models For Hospital Competition Based On Patient Choices And Government Subsidies

Abolishing all markups on pharmaceuticals and encouraging equal participation and moderate competition of all kinds of medical institutions at all levels are important contents of China’s public hospital reform.It helps to solve the problem of public hospitals who feed hospital with drug charges and guide the orderly development of the medical market,so as to control the medical expenses and improve the quality and service efficiency of medical care.However,with the reduction of compensation channels and the intensification of market competition,many hospitals are unable to cover their expenses and the debt ratio rises year by year.Meanwhile,they also result in the increasing profit-seeking of medical institutions.The main research purpose of this thesis is to introduce government’s supervision of commonweal nature and the mechanism of financial compensation to optimize hospital decision-making and benefits,and achieve orderly competition and benign management in the medical market under the background of compensation channels reduce and market competition intensify.Aiming at the single homogenous target medical market,this thesis establishes a nonconvex generalized Nash equilibrium model with upper bounds for demands of regional medical procedures based on patient choices and government subsidies.By introducing some auxiliary variables to deal with the fractional objective functions,this thesis makes use of the block coordinate descent method to decompose the nonconvex optimization problem into two convex subproblems and then use their Karush-KuhnTucker conditions to transform them into a mixed complementarity system.Furthermore,to test the effectiveness of the considered model,this thesis employs Python to give some numerical experiments and the sensitivity analysis.The numerical results indicate that,with the increase of government subsidies,the prices of medical procedures together with marginal utility decrease gradually,whereas the quality of medical procedures,the level of cost control,and the total benefits increase accordingly.This reveals that increasing total government subsidies modestly can alleviate the difficulties caused by patients’ seeking treatment and hospital operational management.In addition,when the altruism is introduced,the operational efficiency of hospitals increases to some extent,which means that establishing and improving regulatory system of hospital altruism helps to increase economic benefits and promote sustainable development in the medical markets.In order to be close to reality,based on the above research,the generalized Nash equilibrium model containing the uncertainty of medical procedure demand is constructed for the mixed heterogeneous medical market composed of non-profit and for-profit hospitals and this thesis uses the Monte Carlo method to transform it into an equivalent deterministic model.Further,to test the effectiveness of the considered model,this thesis also employs Python to give some numerical experiments and the sensitivity analysis.The results show that increasing government financial subsidy rate/tax rate will prompt for-profit hospitals to increase the level of cost control,but there is no obvious impact on non-profit hospitals,it is recommended to improve the cost control norms of hospitals,promote efficient competition in the heterogeneous medical market,and improve the welfare of patients;In addition,increasing the rate of medical insurance subsidies will reduce the price of medical procedures in for-profit hospitals and increase the level of cost control.A moderate increase of the medical insurance subsidy rate can also help to increase the medical welfare of patients and promote the orderly competition of the mixed heterogeneous medical market.