Designing Healthcare Systems under Strategic Behavior

Abstract:

This seminar examines healthcare systems engineering as a problem of policy design under strategic behavior. In many healthcare settings, system performance depends not only on operational structure, but also on how decentralized actors respond to incentives, mandates, and market conditions. The seminar develops this perspective through three studies at different levels of the healthcare system.

The first study analyzes ambulance diversion in emergency medical services and shows how self-interested hospitals can generate socially inefficient outcomes under decentralized decision making. It then demonstrates how reward design can align local incentives with system-level objectives and make the socially optimal policy implementable as an equilibrium. The second study examines social distancing under partial compliance and shows that the effectiveness of public health interventions depends critically on endogenous behavioral response. In particular, stricter mandates are not always more effective when individuals adjust their activity strategically, and penalties may be needed to sustain compliance. The third study focuses on healthcare payment design in spatially asymmetric markets and highlights how alternative reimbursement schemes create different trade-offs between efficiency and regional equity.

Taken together, these studies suggest a common lesson: healthcare systems engineering should not focus only on optimizing flows, capacities, or rules in isolation. It should also account for the equilibrium behavior induced by policy. The seminar therefore argues that effective healthcare system design requires an integrated view of operations, incentives, compliance, and equity.

Bio: 

Prof. Taesik Lee is a Professor in the Department of Industrial & Systems Engineering at KAIST. His research combines mathematical modeling, system simulation, and data analysis to address real-world challenges in healthcare system design and operations. Beyond his scholarly contributions to healthcare systems engineering, Dr. Lee has also played an important role in advancing Korea’s healthcare delivery system, earning recognition through prestigious awards, including the INFORMS Pierskalla Award.