Healthcare Warranty Policies Optimization for Chronic Diseases Based on Delay Time Concept

Warranties for healthcare can be greatly beneficial for cost reductions and improvements in patient satisfaction. Under healthcare warranties, healthcare providers receive a lump sum payment for the entire care episode, which covers a bundle of healthcare services, including treatment decisions during initial hospitalization and subsequent readmissions, as well as disease-monitoring plans composed of periodic follow-ups. Higher treatment intensities and more radical monitoring strategies result in higher medical costs, but high treatment intensities reduce the baseline readmission rates. This study intends to provide a systematic optimization framework for healthcare warranty policies. In this paper, the proposed model allows healthcare providers to determine the optimal combination of treatment decisions and disease-monitoring policies to minimize the total expected healthcare warranty cost over the prespecified period. Given the nature of the disease progression, we introduced a delay time model to simulate the progression of chronic diseases. Based on this, we formulated an accumulated age model to measure the effect of follow-up on the patient’s readmission risk. By means of the proposed model, the optimal treatment intensity and the monitoring policy can be derived. A case study of pediatric type 1 diabetes mellitus is presented to illustrate the applicability of the proposed model. The findings could form the basis of developing effective healthcare warranty policies for patients with chronic diseases.