Incentives for Quality through Endogenous Routing

We study how rework routing together with wage and piece rate compensation can strengthen incentives for quality. Traditionally, rework is assigned back to the agent who generates the defect (in a self routing scheme) or to another agent dedicated to rework (in a dedicated routing scheme). In contrast, a novel cross routing scheme allocates rework to a parallel agent performing both new jobs and rework. The agent who passes quality inspection or completes rework receives the piece rate paid per job. We compare the incentives of these rework allocation schemes in a principal-agent model with embedded quality control and routing in a multi-class queueing network. We show that conventional self routing of rework can never induce first-best effort. Dedicated routing and cross routing, however, strengthen incentives for quality by imposing an implicit punishment for quality failure. In addition, cross routing leads to workload allocation externalities and a prisoner’s dilemma, thereby creating highest incentives for quality. Firm profitability depends on capacity levels, revenues, and quality costs. With ample capacity, dedicated routing and cross routing both achieve first-best profit rate, while self routing does not. With limited capacity, cross routing generates the highest profit rate when appraisal, internal failure, or external failure costs are high, while self routing performs best when gross margins are high. When the number of agents increases, the incentive power of cross routing reduces monotonically and approaches that of dedicated routing.queueing networks; routing; Nash equilibrium; quality control; piece rate; epsilon equilibrium.

Incentives for quality through endogenous routing / Lauren Xiaoyuan Lu; Jan A. Van

We study how rework routing together with wage and piece rate compensation can strengthen incentives for quality. Traditionally, rework is assigned back to the agent who generates the defect (in a self routing scheme) or to another agent dedicated to rework (in a dedicated routing scheme). In contrast, a novel cross routing scheme allocates rework to a parallel agent performing both new jobs and rework. The agent who passes quality inspection or completes rework receives the piece rate paid per job. We compare the incentives of these rework allocation schemes in a principal-agent model with embedded quality control and routing in a multi-class queueing network. We show that conventional self routing of rework can never induce first-best effort. Dedicated routing and cross routing, however, strengthen incentives for quality by imposing an implicit punishment for quality failure. In addition, cross routing leads to workload allocation externalities and a prisoner’s dilemma, thereby creating highest incentives for quality. Firm profitability depends on capacity levels, revenues, and quality costs. With ample capacity, dedicated routing and cross routing both achieve first-best profit rate, while self routing does not. With limited capacity, cross routing generates the highest profit rate when appraisal, internal failure, or external failure costs are high, while self routing performs best when gross margins are high. When the number of agents increases, the incentive power of cross routing reduces monotonically and approaches that of dedicated routing

Optimal robust inventory management with volume flexibility: matching capacity and demand with the lookahead peak-shaving policy

We study inventory control with volume flexibility: A firm can replenish using period-dependent base capacity at regular sourcing costs and access additional supply at a premium. The optimal replenishment policy is characterized by two period-dependent base-stock levels but determining their values is not trivial, especially for nonstationary and correlated demand. We propose the Lookahead Peak-Shaving policy that anticipates and peak shaves orders from future peak-demand periods to the current period, thereby matching capacity and demand. Peak shaving anticipates future order peaks and partially shifts them forward. This contrasts with conventional smoothing, which recovers the inventory deficit resulting from demand peaks by increasing later orders. Our contribution is threefold. First, we use a novel iterative approach to prove the robust optimality of the Lookahead Peak-Shaving policy. Second, we provide explicit expressions of the period-dependent base-stock levels and analyze the amount of peak shaving. Finally, we demonstrate how our policy outperforms other heuristics in stochastic systems. Most cost savings occur when demand is nonstationary and negatively correlated, and base capacities fluctuate around the mean demand. Our insights apply to several practical settings, including production systems with overtime, sourcing from multiple capacitated suppliers, or transportation planning with a spot market. Applying our model to data from a manufacturer reduces inventory and sourcing costs by 6.7%, compared to the manufacturer's policy without peak shaving.info:eu-repo/semantics/publishedVersio

Hospital Readmissions Reduction Program: An Economic and Operational Analysis

The Hospital Readmissions Reduction Program (HRRP), a part of the U.S. Patient Protection and Affordable Care Act, requires the Centers for Medicare and Medicaid Services to penalize hospitals with excess readmissions. We take an economic and operational (patient flow) perspective to analyze the effectiveness of this policy in encouraging hospitals to reduce readmissions. We develop a game-theoretic model that captures the competition among hospitals inherent in HRRP’s benchmarking mechanism. We show that this competition can be counterproductive: it increases the number of nonincentivized hospitals, which prefer paying penalties over reducing readmissions in any equilibrium. We calibrate our model with a data set of more than 3,000 hospitals in the United States and show that under the current policy, and for a large set of parameters, 4%–13% of the hospitals remain nonincentivized to reduce readmissions. We also validate our model against the actual performance of hospitals in the three years since the introduction of the policy. We draw several policy recommendations to improve this policy’s outcome. For example, localizing the benchmarking process—comparing hospitals against similar peers—improves the performance of the policy

OCT assessment of the long-term vascular healing response 5 years after everolimus-eluting bioresorbable vascular scaffold

AbstractBackgroundAlthough recent observations suggest a favorable initial healing process of the everolimus-eluting bioresorbable vascular scaffold (BVS), little is known regarding long-term healing response.ObjectivesThis study assessed the in vivo vascular healing response using optical coherence tomography (OCT) 5 years after elective first-in-man BVS implantation.MethodsOf the 14 living patients enrolled in the Thoraxcenter Rotterdam cohort of the ABSORB A study, 8 patients underwent invasive follow-up, including OCT, 5 years after implantation. Advanced OCT image analysis included luminal morphometry, assessment of the adluminal signal-rich layer separating the lumen from other plaque components, visual and quantitative tissue characterization, and assessment of side-branch ostia “jailed” at baseline.ResultsIn all patients, BVS struts were integrated in the vessel and were not discernible. Both minimum and mean luminal area increased from 2 to 5 years, whereas lumen eccentricity decreased over time. In most patients, plaques were covered by a signal-rich, low-attenuating layer. Minimum cap thickness over necrotic core was 155 ± 90 μm. One patient showed plaque progression and discontinuity of this layer. Side-branch ostia were preserved with tissue bridge thinning that had developed in the place of side-branch struts, creating a neo-carina.ConclusionsAt long-term BVS follow-up, we observed a favorable tissue response, with late luminal enlargement, side-branch patency, and development of a signal-rich, low-attenuating tissue layer that covered thrombogenic plaque components. The small size of the study and the observation of a different tissue response in 1 patient warrant judicious interpretation of our results and confirmation in larger studies

Are BVS suitable for ACS patients? Support from a large single center real live registry

Objectives To investigate one-year outcomes after implantation of a bioresorbable vascular scaffold (BVS) in patients presenting with acute coronary syndrome (ACS) compared to stable angina patients. Background Robust data on the outcome of BVS in the setting of ACS is still scarce. Methods Two investigator initiated, single-center, single-arm BVS registries have been pooled for the purpose of this study, namely the BVS Expand and BVS STEMI registries. Results From September 2012-Octob

Angiographic and Optical Coherence Tomography Insights into Bioresorbable Scaffold Thrombosis: Single-Center Experience

Background - As bioresorbable vascular scaffolds (BVSs) are being increasingly used in complex real-world lesions and populations, BVS thrombosis cases have been repo

Initial experience with everolimus-eluting bioresorbable vascular scaffolds for treatment of patients presenting with acute myocardial infarction

Aims: Limited data are currently available on midterm outcomes after implantation of everolimus-eluting bioresorbable vascular scaffolds (BVS) for treatment of acute ST-elevation myocardial infarction (STEMI). Methods and results: Patients presenting with STEMI and undergoing primary percutaneous coronary intervention in the initial experience with BVS were evaluated and compared with patients treated with everolimus-eluting metal stents (EES) by applying propensity matching. Quantitative coronary angiography analysis, and 18-month clinical follow-up were reported. A total of 302 patients were analysed, 151 with BVS and 151 with EES. Baseline clinical characteristics were similar between groups. Final TIMI 3 flow was 87.4% vs. 86.1%, p=0.296. At 18-month follow-up, all-cause mortality was 2.8% vs. 3.0% in the BVS and EES groups respectively, p=0.99; the MACE rate was higher in the BVS group (9.8% vs. 3.6%, p=0.02); target lesion revascularisation was 5.7% vs. 1.3%, p=0.05. The 30-day MACE rate in BVS patients without post-dilatation was 6.8%, while in patients with post-dilatation it was 3.6%. Scaffold thrombosis (ST) occurred primarily in the acute phase (acute ST 2.1% vs. 0.7%, p=0.29; subacute 0.7% vs. 0.7%, p=0.99; late 0.0% vs. 0.0%; very late 1.5% vs. 0.0%, p=0.18). All three BVS cases with acute ST had no post-dilatation at the index procedure. Conclusions: STEMI patients treated during the early experience with BVS had similar acute angiographic results as compared with the EES group. Clinical midterm follow-up data showed a higher clinical events rate compared with metal stents. The majority of clinical events occurred in the early phase after implantation and mainly in cases without post-dilatation. Optimisation of the implantation technique in the acute clinical setting is of paramount importance for optimal short and mid-term outcomes