Interwest Healthcare Corp.
Interwest Healthcare is a nonprofit organization that owns 10 hospitals located in three western states. Cynthia Manzoni is Interwests CEO. Vijay Singh, Interwests CFO, and the administrators of the 10 hospitals report to Manzoni. Singh is deeply concerned because the hospital staffs are not being careful when entering data into the firms management information system. This data involves information on patient intake, treatment, and release. The information system is used to compile management reports such as those relating to the costs of various treatments. Also, the system is used to compile reports that are required by the federal government under various grant programs. Singh reasons that without good information, the management and government reports are less useful and potentially misleading. Moreover, the federal government periodically audits Interwest and might discontinue aid if the reports are deemed inaccurate. Thus, Singh is worried about the managerial implications and the potential loss of federal funds. Singh has convinced Manzoni that a problem exists. She also realizes the importance of an accurate system for both management planning and
maintaining federal aid. Six months ago, she invited the hospital administrators and staff members from the corporate financial office to a retreat at a resort. The purpose was to communicate to the hospital administrators the problems with the data entry and to stress the importance of doing a better job. The meeting was acrimonious. The hospital people accused Singh of being a bureaucrat who did not care about patient services. Singh accused the hospital staffs of not understanding the importance of accurate reporting. By the end of the meeting, Manzoni thought that she had a commitment by the hospital administrators to increase the accuracy of data entry at their hospitals. However, six months later, Singh claims that the problem is as bad as ever. Manzoni has hired you as a consultant to analyze the problem and to make recommendations that might improve the situation.
1. What are the potential sources of the problem?
2. What information would you want to analyze?
3. What actions might you recommend to increase the accuracy of the data entry?
4. How does your view of behavior affect how you might aIDress this consulting assignment?
Economic concepts from Chapter 1 that you could integrate into your response: Organizational Architecture and Incentives. Economic concepts from
Chapter 2 that you could integrate into your response: (a) Marginal Analysis, (b) Opportunity Cost, (c) Alternative Models of Behavior, (c) The Economic Model, and (d) Utility.
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