Lateral Coordination of Hospital Medical Services under Uncertain Demand during Pandemic

To address uncertain demand during the pandemic, hospitals have utilized supply chain strategies by coordinating their available medical service capacity laterally. In this coordination, hospitals either request medical service capacity from external sources or mobilize part of their own capacity to support other hospitals, which influences the latter’s capacity decisions. Optimizing these lateral coordination strategies and addressing challenges such as oversupply and inequity are critical issues in collaborative hospital responses. This paper examines how hospitals adjust their medical service capacity and transshipped capacity through proactive and reactive policies under the leveraging scheme of the Integrated County Healthcare Consortium (ICHC). We find that ICHC strategy decisions are influenced not only by demand size and the gap between hospitals but also by demand fluctuations. Additionally, even if hospitals engage in lateral coordination, their roles—either as a receiver or a source—are affected by both demand uncertainty and the ICHC’s leveraging scheme. Regarding equity, we identify a hump-shaped relationship between the leveraging scheme of the ICHC, the quantity of service capacity transshipped, and equity. We propose a more balanced solution where the ICHC sets a scheme that allows the receiving hospital to dominate coordination decisions, thus benefiting both economic outcomes and equity.