A novel approach to optimize an integrated network design and pricing of a healthcare supply chain

Abstract

Adopting various pricing policies has been highly regarded in recent years for setting prices and increasing firms' profits. One of the most common steps in pricing is to identify costs. Since a significant part of costs is related to the corresponding supply chain, many researchers in different fields have used decision-making for simultaneous pricing and network design. However, there is no such approach in the field of healthcare. This paper tries to fill this gap by formulating a mixed-integer nonlinear bi-level programming model examining the interaction of hospitals and their medicines suppliers. At the upper level, there is a competitive market where a new firm (entrant) intends to enter the market and faces the challenge of pricing medicines and making network design decisions. At the lower level, there is a private hospital competing with a public hospital, and it also struggles with healthcare services pricing and supplier selection. A comprehensive utility function that considers healthcare services prices, quality, waiting time, health insurance, readmission rate, and referral rate is extended at this level. Three novel meta-heuristic algorithms are recommended, including bi-level, improved fruit fly, jellyfish optimization, and forensic-based investigation optimization algorithms to solve the presented complex mathematical problem.