Win-Win Pricing of Follow-Up Policies Under Healthcare Warranties for Chronic Diseases: A Mathematical Modeling Approach.

Implementing follow-up policies under healthcare warranties for chronic disease patients plays a crucial role in reducing the risk of adverse outcomes (AOs) and controlling long-term medical costs. However, the additional cost associated with these services often discourages hospitals from providing them. Background/

Objectives

To incentivize participation from both hospitals and patients in follow-up programs, this paper introduces a patient copayment mechanism. We propose a theoretical mathematical modeling framework to investigate the optimal pricing of follow-up policies from both patients' and hospitals' perspectives to achieve win-win outcomes.

Methods

Using the Cox frailty model, we stratify patients by risk level and model hazard rate functions for three follow-up policies featuring periodic checkups, incorporating the virtual age method. Building on this framework, we employ the Non-Homogeneous Poisson Process to analyze the total expected costs incurred by hospitals and patients across different policies and risk strata. This analysis derives the minimum price acceptable to hospitals for providing follow-up services and the maximum additional cost patients are willing to bear for them. The feasibility and applicability of the proposed model are demonstrated through a case study of pediatric type 1 diabetes mellitus (T1DM).

Results

Win-win price intervals for T1DM patients are more achievable for higher-risk individuals. These intervals narrow or widen with the age reduction factor, checkup cost, and AO treatment cost. Hospitals should prioritize higher-risk patients, improve checkup effectiveness, and balance costs of checkups and treatments when optimizing pricing decisions.

Conclusions

These insights provide valuable guidance for hospitals in strategically designing follow-up policies tailored to diverse risk cohorts and determining optimal price intervals.