Modelling Shared Efficiency between Diagnostic and Non-Diagnostic Revenue-Producing Hospital Cost Centers

Abstract

A game-theoretic model of hospital production is developed which allows for sequential and, if appropriate, simultaneous production across departments and/or cost centers within a hospital. Decisions made in two units: one whose work is primarily completed by physicians, and one whose work is completed by diagnostic technicians (which may be a laboratory or an imaging department), and whose efforts may fundamentally alter the types of output produced in the other department. This model predicts that inefficiency in the diagnostic unit impacts inefficiency in the physicians’ unit, but inefficiency within the physician’s unit does not impact inefficiency in the diagnostic unit.