Using Utility Functions for Aggregate Scheduling in Health Maintenance Organizations (HMO'S)

The multiple attributes and characteristics of the services provided by a health maintenance organization (HMO) are reduced to a common unit of measurement by means of utility functions. This reduction allows the development of a micro-economic aggregate planning model that can be used both for the short and the long term to make optimizing decisions on system inputs and resource allocations. The model is designed to deal with the common revenue- and budget-constrained situations and is directed to maximize the level of service provided by the HMO, according to the management's perceptions of the system characteristics. An empirical short term application of the model is presented and compared against actual management decisions. Data needs and implementation requirements are discussed, along with the managerial implications of this approach.