Capital Budgeting in Hospitals – A Goal Programming Approach

In order to fully develop the rationale for prescribing the goal programming approach for hospital capital expenditure analysis, we first present the institutional characteristics that prevent the successful application of most efficiencyoriented models to the nonprofit hospital case. We then review several specific and generic economic models that others have considered appropriate for capital expenditure analysis in hospitals. The purpose of this discussion is to point out the weaknesses of these models and to establish a theoretical basis for employing the goal programming approach instead. The goal programming model for capital analysis is then developed and applied to an actual hospital capital budgeting situation