Scale Economies in the Delivery of Medical Care: A Mixed Integer Programming Analysis of Efficient Manpower Utilization

This paper presents an activity analysis model of primary medical care which, through the use of integer constraints, captures both the technology of ambulatory care and the institutional restriction that labor inputs must be employed in discrete units. The result is that staffing patterns and optimal choice of techniques depend on the scale of practice. Empirical experiments demonstrate this relationship and, furthermore, reveal that introduction of physician extenders into the medical care system increases the scale at which economies of staffing are obtained and raises the diseconomies of suboptimal practice.