Optimal investment and pricing strategies of online-offline model for mobile health provider

Due to the lack of medical examinations, in online health platforms (called online channels), a portion of users are unable to be diagnosed. Recently, many mobile health providers have started investing in offline clinics or hospitals (called offline channels) to offer further health services to these customers (i.e., the online-offline model). Providers need to determine the optimal investment and pricing strategies of online and offline channels to maximize profits. In this paper, we first analyze the optimal strategies of the provider in a monopoly case, and find that the properties of optimal online and offline decisions tend to be opposite due to the competitive nature of the two channels. Furthermore, we compare this with the case where the provider invests only in the online channel (i.e., the online-only model) in terms of profitability and show that if the value of the online health (or the offline health) is not high (high enough), then the provider should choose the online-offline model, otherwise she should adopt the online-only model. Finally, we investigate a case of an m-health platform competing with local clinics and find certain interesting insights. In particular, unlike the monopoly case, in the competition case, the platform should operate the offline channel when the sensitivity of patients to the online service quality is at a moderate level, and not otherwise.