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Optimization of Financial Decision for Elder Care Services Using Markov Chain Modeling

Dai, Honghao
http://rave.ohiolink.edu/etdc/view?acc_num=ucin1491559313631188

Abstract Details

2017, MS, University of Cincinnati, Engineering and Applied Science: Mechanical Engineering.
This thesis presents a unified approach to integrate progressive care processes, multiple financial resources with the objective of satisfying elder’s demand for services. Under the proposed elder care framework, several modeling tasks, prediction of elder’s remaining life time, classification of elder’s preference for care services, estimation of elder’s care costs, and optimization of financial decisions are addressed systematically. An elder care financial plan is provided to maximize the elder’s care service level with optimal purchasing decisions on financial resources. Markov Chain model is developed for predicting remaining life time. Personal physical profile is introduced in the form of covariates which are age, gender, health indicator and health history. It influences the transition probabilities from a care stage to another, so elders have their unique transition probability matrix in Markov model. Service level and pricing model aims to quantify elder’s preference of care services through classification. Three financial resources are modeled: Medicare, long-term care insurance and reverse mortgage. The optimization model selects service fill rate as objective to maximize the depth of demand that is satisfied by the benefits from financial resources. The balance of total care costs, benefits and premiums of financial resources serve as main constraint. Furthermore, a heuristic algorithm is developed to enable these models work together to search for optimal solution. A case study is designed to show optimal decision sets. Purchasing decision set includes daily benefits, benefit period and purchasing age for long-term care insurance, purchasing age and contract rate for reverse mortgage. With the input of personal health profile, an optimal financial plan can be generated and track the wealth status (care cost, savings, benefits, and premium) of elder. Then, sensitivity analysis is carried out to investigate the uncertainty from personal health indicator. Optimal financial decisions are recommended in each scenario. One of the result shows a contradiction with separately traditional analysis on purchasing decisions. The results also indicate the necessary of distinguish healthy condition with unhealthy condition, as well as the unhealthy severity. With these information, an optimal financial decision set is recommended based on health information and service preference of elders.
Samuel Huang, Ph.D. (Committee Chair)
Jay Lee, Ph.D. (Committee Member)
Jing Shi, Ph.D. (Committee Member)
65 p.
Engineering
Markov Chain; Long-term care; Optimization; Medicare; Long-term care insurance; Reverse Mortgage

Recommended Citations

Citations

  • Dai, H. (2017). Optimization of Financial Decision for Elder Care Services Using Markov Chain Modeling [Master's thesis, University of Cincinnati]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=ucin1491559313631188

    APA Style (7th edition)

  • Dai, Honghao. Optimization of Financial Decision for Elder Care Services Using Markov Chain Modeling. 2017. University of Cincinnati, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=ucin1491559313631188.

    MLA Style (8th edition)

  • Dai, Honghao. "Optimization of Financial Decision for Elder Care Services Using Markov Chain Modeling." Master's thesis, University of Cincinnati, 2017. http://rave.ohiolink.edu/etdc/view?acc_num=ucin1491559313631188

    Chicago Manual of Style (17th edition)

ucin1491559313631188
465
© 2017, some rights reserved.Creative Commons License Optimization of Financial Decision for Elder Care Services Using Markov Chain Modeling by Honghao Dai is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Based on a work at etd.ohiolink.edu.
This open access ETD is published by University of Cincinnati and OhioLINK.