Business Model Innovation for Ambulance Systems in Developing Economies: 'Coordination and Competition'

Several low- and middle-income countries (LMICs)' emergency transportation systems (ETSs) do not have a centralized emergency number. Instead, they have many independent ambulance providers, each with a small number of ambulances. As a result, ETSs in these contexts lack coordination and ambulances. Using a free-entry equilibrium model, we show that in such decentralized systems the probability that any given call falls within the range of at least one ambulance is at most 71.54%, regardless of the ETS's profitability. We examine three business models that address the ETS's lack of coordination and ambulances: (i) a competitor-only business model, where an entrepreneur enters the ETS and acquires ambulances to compete with existing providers; (ii) a platform business model, where an entrepreneur coordinates existing providers; and (iii) an innovative platform-plus business model, where an entrepreneur combines (i) and (ii): setting-up a platform and acquiring platform-owned ambulances. Further, we examine a government-run platform that does not take any commissions from providers. Using a game-theoretic approach, we find that it is optimal for all platform models to incentivize all providers to join. However, only the government-run platform may incentivize providers to acquire additional ambulances. Further, a government-run platform offers a higher service probability than a platform-plus only when the platform's power to coordinate ambulance providers is moderate. Our results can help entrepreneurs and policymakers in LMICs navigate various tradeoffs involved in improving their countries' ETS.

Andreas Gernert is Assistant Professor for Sustainable Operations at KLU. Prior to joining KLU, Andreas was a post-doctoral researcher in the Technology and Operations Management Area at INSEAD. He obtained his Ph.D. at the EBS University in the Institute for Supply Chain Management and his M.Sc. in Mathematics at Ulm University. Andreas' current research examines policies, business models and strategies pertaining to the three dimensions of sustainability - environmental, social and economic. In this realm, he utilizes Game Theory and Optimization (i) to characterize policies that reduce modern slavery in the agricultural sector, (ii) to identify profitable and impactful business models for entrepreneurs in developing countries' emergency management systems, and (iii) to study different supportive strategies to mitigate financial distress in supply chains. His research has been published in the Decision Sciences. Andreas teaches Operations Management and Sustainable Supply Chain Management. To facilitate the students' learning experience, Andreas utilizes interactive and student-centered teaching methods such as case study discussion and Socratic questioning.