Combining DEA with location analysis for the effective consolidation of services in the health sector

One of the most important activities of strategic planning in a health‐care system is the effective allocation of scarce resources. Most of such strategies are attempting to create more efficient systems based on better organizational and management structures. Therefore, it is necessary to develop systematic models and evaluation methods that will support a strategic planning process that addresses issues such as the location of services and the effective use of resources such as equipment, funds or workforce. Such modeling approaches need to quantify the effect of changes in the location of providers, the opening or closure of providers, and the dynamic transformations of the services offered at each provider. In this paper we propose a methodology that takes into account health service provider efficiencies based on multiple measures. These efficiencies are then employed to determine health providers' locations and service allocations, which include new services distribution as well as existing services redistribution. This approach employs data envelopment analysis (DEA) and integer programming (IP) location allocation models and can be used as both an immediate evaluation tool and a long‐term planning aid.