Platforms could significantly improve emergency response systems in Kenya and India
In Kenya and India, people often have to wait 40 minutes or more for an ambulance. Even worse, in 25 percent of the emergency cases, no ambulance arrives at all. Comprehensive platforms could make ambulance responses far more reliable. This is the result of a joint study by researchers from Kühne Logistics University (KLU), together with colleagues from the USA, Canada, and France. The researchers conducted the study in collaboration with ambulance service providers in Kenya and India. "According to model calculations, the situation could be significantly improved if the rescue system were operated using a platform business model," says Andreas Gernert, Assistant Professor for Sustainable Operations. Almost all emergencies could then be dealt with.
In both countries – and in many other low- and medium-income countries – the emergency response systems are poorly organized. State-run emergency hotlines barely work at all. As a result, citizens have no faith in them and call private ambulance services instead. There are countless such services, each of which often has only one or two ambulances, and there is no coordination between services. Now, new players are shaking up the market: several companies introduced platforms to improve the lack of coordination and available ambulances. Individual providers are free to join the platforms. In turn for a small commission and with the aid of skillfully employed technology, the platform then attends to the coordination: like a central dispatch office, it answers emergency calls and uses GPS tracking to coordinate responses. Some platforms will also have ambulances of their own.
Good coordination as a recipe for success
What approach works best? The researchers compared three business models: multiple independent ambulance services with no coordinating platform; a platform with no ambulances of its own; and a “platform plus” with its own ambulances. In addition, they assessed a state-run platform that charges no commission. “Our findings clearly show that platform-based models significantly outperform the system used to date and can be used to close the service gaps,” says Andreas Gernert. Further, the more coordinated a platform is, the better it performs. In other words: if a platform can tailor the distribution of ambulances, both temporally and spatially, to actual demand, nearly 100 percent of all calls can be effectively responded to.
Moreover, they found that offering incentives for purchasing additional ambulances and paying a “dead-time” rate to providers who operate in low-demand areas are sensible options. The business is especially lucrative for “platform plus” providers, since they retain all profits from the calls they respond to with their own ambulances. “However, this can also intensify competition – which can lead to unrest among individual providers, as the protests against a platform plus provider in India have shown,” Andreas Gernert reports. “But ultimately, the profits for individual providers always decline when a platform is brought to market – unless it’s operated as a nonprofit, like state-run platforms can be.”
On methodology: using games theory to analyze market dynamics
To find some answers, the researchers drew on games theory. It works like this: just like in a game of strategy, there are different players, all of which are simultaneously considering different strategies and actions. In this case, with emergency response systems, we can imagine the start of the game as a blank sheet of paper – like the city of Nairobi without a single ambulance. The players then have to think it over: should I enter the market? If so, with how many vehicles and using which business model? If I choose this strategy, how will the other players react, and then what should I do next? Will I then need a different strategy, and if so, what should it be?
Consequently, the players constantly have to make decisions and try out different strategies. In the same way, the researchers tried out various business models to see how they fit with the market dynamics. On this basis, they determined what could greatly benefit the emergency response systems – and with them, the people – in many countries like Kenya and India: a platform that offers effective coordination.
More information:
- Full publication: Gernert, A. K., Calmon, A. P., Romero, G., & Van Wassenhove, L. N. (2024). Business Model Innovation for Ambulance Systems in Low- and Middle-Income Countries: “Coordination and Competition”. Production and Operations Management, 0(0). https://doi.org/10.1177/10591478231224973