An activity analysis production function, linking the structure, process, and outcome of medical care, is introduced. The model, based on a semi-Markovian conception of the disease process, is designed to determine that allocation of inputs among programs which maximizes expected improvement in population health status. Reflected in such prescriptions are the expected efficacy of alternative treatments and population preferences among program outcomes. Based on the model, two system-oriented indexes of the quality of medical care are defined. This allocation methodology represents a particular application of a more general "social policy model," a potentially useful paradigm for the evaluation of public programs generally.