Capacity allocation under hierarchical healthcare in China

As the problems of crowding and long waiting times in healthcare are intensified due to imbalance between demand and supply, the government puts forward hierarchical healthcare system, which is an effective policy to optimize allocation of medical resources. Motivated by this policy in healthcare management, we study the resource allocation problem in the whole society, and aim at providing managerial insights to the optimal allocation decision. In this paper, we consider there are two hospitals, one is primary hospital and the other is large hospital. We formulate the problem from the hospital's self-interest first, and then analyze the capacity allocation from the perspective of social welfare using queuing models. The result shows that centralized resource allocation is socially optimal, which is in line with the principle of hierarchical healthcare, and it is helpful to promote patient's shunt and help the government to make better decisions of capacity allocation. Finally, we further conduct numerical experiments to show the policy of centralized capacity allocation is the best decision.