Allocating Scarce Resources in a Patient Centered Medical Home (PCMH)

This paper considers the problem of allocating scarce resources, like the number of Primary Care Physician hours, to teams facing stochastic demand in a PCMH. This allocation is made in two stages. In the first stage, a preliminary assignment is made. After the demand is observed, in the second stage, the preliminary assignment is adjusted to meet this demand exactly. We use real options theory to quantify the resulting disruption to the teams, and discuss three mechanisms to price this disruption in a fair and consistent manner. After the pricing function is determined, for fairness, stage one assignments are made such that the price of disruption during the stage two adjustment is the same to each team. We present two simulated examples to illustrate the resulting allocation strategy, and observe that the pricing mechanism considered here can incorporate the management objective of decreasing the disruption to teams handling sicker patients, and thus achieve better quality of service.