This paper illustrates a method of planning the geographic distribution of
health facilities in order to maximize the social benefits achievable from
the investment. Data from Bangladesh have been used to determine the optima
l distribution of emergency obstetric care (EOC) facilities in the country
using the estimates of average social cost per woman. Costs incurred by hou
seholds, including the costs associated with maternal mortality, tend to in
crease with increasing radius of a facility's catchment area. The average f
acility-based costs tend to decline with increasing radius due to lower per
capita capital expenditures. The summation of these two average cost funct
ions generates a U-shaped curve. In this research, the minimum point of the
aggregated average cost curve defines the 'optimal' radius of a health fac
ility. The catchment area defined by the optimal radius minimizes the avera
ge social cost of providing EOC services in a region. The empirical analysi
s suggests that the optimal radius for the 20 regions of Bangladesh varies
from about 6 to 12 km. If the optimal radius of the catchment area is used
in planning health centre locations, Bangladesh will need to set up 450 EOC
facilities; currently there are only 90 such facilities.