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Advances in Operations Research
Volume 2016, Article ID 3090758, 16 pages
Research Article

A Stochastic Location-Allocation Model for Specialized Services in a Multihospital System

1Department of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran
2Research Faculty for ICT Policy Making and Strategic Management, Iran Telecommunication Research Center, Tehran 1594667711, Iran

Received 24 September 2015; Accepted 23 December 2015

Academic Editor: Konstantina Skouri

Copyright © 2016 Khadijeh Naboureh and Ehram Safari. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Rising costs, increasing demand, wasteful spending, and limited resources in the healthcare industry lead to an increasing pressure on hospital administrators to become as efficient as possible in all aspects of their operations including location-allocation. Some promising strategies for tackling these challenges are joining some hospitals to form multihospital systems (MHSs), specialization, and using the benefits of pooling resources. We develop a stochastic optimization model to determine the number, capacity, and location of hospitals in a MHS offering specialized services while they leverage benefits of pooling resources. The model minimizes the total cost borne by the MHS and its patients and incorporates patient service level, patient retention rates, and type of demand. Some computational analyses are carried out to gauge the benefits of optimally sharing resources for delivering specialized services across a subset of hospitals in the MHS against complete decentralization (CD) and full centralization (FC) policies.