Capital budgeting in hospital management using the analytic hierarchy process

In recent years, the health care industry has been experiencing change to a degree unprecedented since the inception of the Medicare program. With traditional in-hospital care on the decline, hospitals are being forced to compete for business. They must identify within their own systems feasible alternatives for dealing with these changes and then determine which ones will best accomplish the goals of the organization. This paper offers a procedure that utilizes the analytic hierarchy process--a multicriteria decision-making tool that helps arrange the possible alternatives in hierarchical order given the priorities of relevant decision makers. An application of the method to a mid-sized hospital is presented. Although the procedure is structured, it is flexible enough to be updated for the realities of any health care institution.