This paper analyzes the United States Medicare hospice reimbursement policy. The existing policy consists of a daily payment for each patient under care with a global cap of revenues accrued during the Medicare year, which increases with each newly admitted patient. We investigate the hospice’s expected profit and provide reasons for a spate of recent provider bankruptcies related to the reimbursement policy; recommendations to alleviate these problems are given. We also analyze a hospice’s incentives for patient management, finding several unintended consequences of the Medicare reimbursement policy. Specifically, a hospice may seek short-lived patients (such as cancer patients) over patients with longer expected length-of-stay and the effort with which they seek-out, or recruit, such patients will vary during the year. Further, the effort they apply to actively discharge patients whose condition has stabilized may also depend on the time of year. These phenomena are unintended and undesirable but are a direct consequence of the Medicare reimbursement policy. We propose an alternative reimbursement policy which ameliorates these shortcomings.
The development of the information society will require the introduction of high-capacity transport networks with high performance and low cost. There are currently two ACTS (Advanced Communications Technologies and Services program launched by the European Commission) projects addressing specifically the problem of trans-European optical transport networks using WDM (wavelength division multiplexing). Important issues addressed are the high capacity transmission on existing fiber infrastructure and the introduction of flexibility in the network through the use of optical cross-connects. If these networks become a reality, they could drastically change the evolution of both telecommunication and computer networking because of their transparency and the abundance of inexpensive bandwidth.
Expediting is defined as using overtime or subcontracting to supplement regular production. This is usually done when the number of backorders has grown to be unacceptably large. In this paper, we consider analytic models for deciding when and how to expedite in a single-product make-to-order environment. We derive the structure of the optimal expediting policy in both continuous- and discrete-time cases. The continuous-time model corresponds best to subcontracting and the discrete-time model corresponds to either overtime or subcontracting. Models for performance analysis of the continuous-time case are also given.
We consider polling systems with mixtures of exhaustive and gated service in which the server visits the queues periodically according to a general polling table. We derive exact expressions for the steady-state delay incurred at each of the queues under standard heavy-traffic scalings. The expressions require the solution of a set of only M—N linear equations, where M is the length of the polling table and N is the number of queues, but are otherwise explicit. The equations can even be expressed in closed form for several routeing schemes commonly used in practice, such as the star and elevator visit order, in a general parameter setting. The results reveal a number of asymptotic properties of the behavior of polling systems. In addition, the results lead to simple and fast approximations for the distributions and the moments of the delay in stable polling systems with periodic server routeing. Numerical results demonstrate that the approximations are highly accurate for medium and heavily loaded systems.
Problem definition: We explore the coordination of operational and financial decisions of proportional investment agricultural marketing cooperatives, where members’ (farmers’) equity is required to be in proportion to their patronage (i.e., produce supplied). Academic/practical relevance: In a cooperative (co-op), operational and financial decisions are inseparable because the co-op’s investment capital is linked to its economic transactions with members. We include unique features of co-ops into an analytical model and derive some key results that are different from those for investor-owned corporations. Methodology: In the presence of yield and market uncertainty, we model this situation using a Markov decision process wherein the decisions of processing quantity interact with the financial decisions of retained earnings and short-term loans. The objective is to maximize the expected present value of the aggregated farmers’ payments over a finite horizon. Results: (1) Characterization of the properties of the value function and the optimal policy; (2) explicit expressions for the deterministic yield dynamic program, wherein a myopic policy is optimal; and (3) identification of financial risks associated with uncertain market and yield. Managerial implications: The results provide insight into a co-op’s decision making, cash position, and risk management.
We consider a production/inventory system consisting of M machines and K (K≤M) repair crews in which machines are subject to time dependent failures. The repair operations on each machine require one repair crew during the whole operation. In this production/inventory system, each machine is assigned to produce a different item according to a make-to-stock routine. Inventories of each item service a Poisson demand process, and the unsatisfied demands are lost. The objective is to minimize the sum of the average holding and lost-sales penalty costs. We formulate the joint problem of (1) allocating the limited number of repairmen to failed machines and (2) deciding how much finished goods inventory to keep as a Markov decision process. We show that the optimal policy has a very complicated structure. We introduce two models to compute optimal base-stock policies in systems with identical machines, where first break first repair (FBFR) or preemptive priority (PPRI) repair policies are used. Then we present two heuristics to perform the same optimization analysis in systems with different machines. Finally, we compare the combination of the optimal base-stock policy (as the production policy) and the FBFR and PPRI policies (as the repair policies) to the optimal dynamic policy, and through numerical examples we show that this integration creates a solution that is close to the optimal dynamic policy. The results indicate that simple policies for determining finished goods inventory levels and repair crew assignment to failed machines can work well as long as the two problems are addressed in a coordinated manner.
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