Economic Models - Convex Optimization

Topic 3
Health Service Management Using
Goal Programming
Anna-Maria Mouza
Institute of Technology and Education, Greece
1. Introduction
Private production units usually operate on the basis of profit maximization.
However, to face competition from similar units and to be in line with some
major socio-economic factors, some decision makers are forced to relax this
basic objective. In order to present propositions for optimal management
decisions, one should combine the priorities of the decision maker with the
technical and socio-economic factors, which are involved in the operating
process in the best possible way. The production unit considered in this
paper is a relatively small (60 beds) private clinic in northern Greece, which
is similar to the orthopedic department of a hospital studied and described
elsewhere (Mouza, 1996).
However, in this particular case, there is no out-patient services. To
facilitate the presentation, I consider a five-year operational plan where
the personnel claims, the manpower working pattern, the various expenses,
together with the profit maximization target, and the expected number of
patients are described in detail. The necessary projections are based on
reliable techniques presented elsewhere (Mouza, 2002; 2006).
After setting the priorities of the various targets, I formulate a proper
“goal programming” problem using deviational variables (di
− and d
i + ) and
obtained the first-run solution. Then, I proceed to the goal attainment evaluation,
which dictated a re-adjustment of the priorities. The second-run
solution indicates that a slower acceleration of the profit maximization rate
is preferable, to avoid over-charging the patients, at the same time satisfying
most of the requirements for personnel management. Furthermore, if the
decision maker’s preference is relatively rigid, a lower rate of the increase
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