Will the community O2O service supply channel benefit the elderly healthcare service supply chain?

This paper studies the coordination of the elderly healthcare service supply chain (EHSSC) within a dual-channel setting. A game-theoretic framework is introduced to analyse how best the elderly service integrator (ESI) and elderly service provider (ESP) would make decisions and interact amidst cooperation and competition. Three cases including the centralised case, the Bertrand game case and the Stackelberg game case are examined to obtain the optimal relationship structure suitable for the EHSSC coordination. The associated loss due to customer dissatisfaction and the value increment due to the ESI’s service enhancement effort are incorporated in the model. Also, by considering customer’s health status, optimal pricing strategies are investigated for both the ESI and ESP under two different service demand classes. The main results are summarised as follows. First, the value increment due to the ESI’s service enhancement effort may have different impacts on the ESP’s prices in different service demand classes. Second, the whole supply chain would achieve effective coordination when the ESP acts as the Stackelberg leader with an appropriate setting of the wholesale price. Third, a lower wholesale price set by the ESP could benefit both the ESI and ESP in achieving greater demand and profit.