Comparison of Gatekeeping and Non-gatekeeping Designs in a Service System with Delay-sensitive Customers

Abstract

This paper is motivated by a concern in China’s current medical practice in which patients can bypass the primary care and seek secondary care directly. We employ a queueing approach to examine two settings, i.e. the gatekeeping and non-gatekeeping settings, in a service system consisting of two types of service provider — one with basic skills (C-H), e.g. community hospital, and the other with advanced skills (AAA-H), e.g. specialist hospital. Customers are heterogeneous with respect to service requirement. The C-H can only serve customers with a complexity level of service requirement lower than the cure threshold, while the AAA-H can serve all customers. We aim to analyze the social planner’s capacity decision for the C-H in both settings and assess the relative merit of each setting with respect to total social welfare, i.e. the sum of customer benefits net of customer delay costs and service providers’ operating costs. Our findings show that when the C-H’s capacity is exogenous, the gatekeeper setting is preferable if the capacity of the C-H is in the intermediate range because customers’ self-selection behavior gives rise to negative externality. When the C-H’s capacity is optimized by the social planner, the non-gatekeeping setting is preferable if the capacity of the AAA-H is large or the cure threshold is high, because customers’ self-selection behavior as well as the investment in the C-H’s capacity can result in a better distribution of demand among the two service providers. The gatekeeping setting is preferable if the cure threshold is low because it is economical for the social planner to invest in a large capacity in the C-H to serve all customers. We also show numerically the conditions under which the two settings can achieve the first-best solution.