Financing Public Hospitals in Ontario: A Case Study in Rationing of Capital Budgets

A real system is described where the normal assumptions of capital rationing are violated. A goal programming model of this system is developed which allows a decision maker to choose the basis upon which an objective could be computed. The major part of this model is an integer programming algorithm leading to selection of the projects which optimize the system according to the basis chosen yet can be used on a relatively small computer. Finally, speculation on the possible use of this tool in other public sector decision making activities is presented.