Abstract
Medical tourism has become one of the fastest-growing emerging industries in the world. For some countries where public hospitals are dominant, as serving foreign customers may increase hospital congestion, whether public hospitals are allowed to develop medical tourism has become a significant issue. Thus, based on queueing and game theories, this paper explores the control strategies for the development of medical tourism in public hospitals in terms of social welfare. In a market that includes government, public hospitals, domestic and foreign patients, short-term and long-term cases where the public system (i.e. public hospitals) will invest the incomes from foreign patients into the capacity expansion or not are investigated respectively. The results show that if government’s total budget, profitability of the tourism industry, or tourism attraction (or patients’ delay sensitivity) is high enough (or low enough), the social planner should allow the public hospitals to participate in medical tourism projects and not otherwise. Furthermore, we find that under certain conditions, public hospitals engaging in medical tourism projects may compromise the welfare of domestic patients or increase the government’s budget expenditure on the public hospital system.
Published Version
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