Specialized care facilities must be extended to the small hospital if equality of medical care is to be available to all. The sophisticated patient monitoring systems, essential to the efficient operation of these facilities, are not cost effective for this class of hospital. This paper presents an algorithm for the cost-effective design of computerized monitoring systems. The algorithm takes into account the requirements of the medical staff, as well as the patient loading statistics for the hospital. It thus provides a means of adjusting the monitoring system to the specific needs of a given hospital.