Appropriate Level of Care and Optimization of Wing Formation

Abstract

Healthcare providers try to achieve an appropriate level of care, while administrators pursue maximization of hospital utilities. The appropriate level of care may make it hard to maximize the hospital’s utility. This study solves this problem by discovering a wing formation that maximizes the utility when the level of care is appropriate. Consequently, this study demonstrates that the appropriate level of care is different from the level which maximizes the hospital's utility. Specifically, as the wings are segmented, the overtreatment occurs in most care types. The value of maximum total utility is lower when the levels of all types of care are appropriate, compared to when the wings are formed to simply maximize the hospital’s utility. In addition, when the appropriate level of services is provided, the deviation of the hospital’s utility is high depending on the wing formations. Thus, when the appropriate level of care is provided, the hospital managers should identify an optimal wing formation while maximizing the utility. This study can provide a clue for solving such decision-making problems of hospital managers.