The Effect of Bundled Payment Schemes on Cost–Speed Tradeoff for Outpatient Service: A Queueing-Game Analysis

In recent years, payment schemes in healthcare have garnered attention for their potential impact on service delivery and cost management. This paper explores the impact of the bundled payment scheme (BP) on hospital outpatient services, focusing on the cost–speed tradeoff. Specifically, a higher service rate increases patient demand but also raises medical costs. We consider a queueing-game theoretical model to analyze servers’ service rate behaviors under different payment schemes (fee-for-service and BP) and the payer’s optimal payment scheme setting. Our study shows that achieving the first-best outcome under centralized decision making using the BP requires specific conditions. When the medical budget is sufficiently high, the payer can guide hospitals toward the first-best decision by setting an optimal price under the BP. However, when the budget is at an intermediate level, hospitals may set slower equilibrium service rates to control costs. To address this issue, the payer can implement service level regulation based on the BP scheme to achieve the first-best outcome. This scheme encourages hospitals to choose higher service rates by limiting expected waiting times. When the budget is too low, hospitals may be unwilling to provide service due to unprofitability. Moreover, as competition between hospitals intensifies, it becomes easier to maximize social welfare under the BP scheme.