A Dynamic Model of Supply of elective surgery in the Presence of Waiting Times and Waiting Lists

This paper analyses hospitals’ decisions regarding the supply of elective surgery in a dynamic model in the presence of waiting times and waiting lists. We show that periods of increasing (decreasing) supply and increasing (decreasing) waiting list may be optimal paths towards the steady state. We also analyse the hospitals’ response to exogenous shocks on the demand and the supply. For example, an increase in the marginal tariff for the provider generates overshooting in the supply: supply jumps upwards when the shock is introduced and then slowly reduces towards the steady-state value.