Decisions, Operations, and Technology Management

Health care delivery in the United States is undergoing a paradigm shift from fee-for service to managed care. The defining characteristic of managed care is the capitated budget; consequently, the provision of health care will increasingly be subject to budget constraints. In this paper we consider the formulation of managerial policy, for single chronic disease, under constrained budgets. The policy we formulate has two objectives. The first objective is the maximization of the health of the population. The second objective is to quantify the effect of increased access on the health care system in terms of the health of the population.

For the policy objective defined in the paper, our purpose is to optimally allocate available resources such that the constituent measures of the policy are maximized. The method is to formulate a one disease product from multi-class queueing network model of the health care system. The model, along with defined measures for population health forming the objective functions, enables the development of optimization models to allocate resources. The results of this paper demonstrate the necessary resource allocations, explore the dynamics of capitated health care systems as a function of access, and provide managerial implications.