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ANALYZING MANAGERIAL DECISIONS: Interwest Healthcare Corp.
Interwest Healthcare is a nonprofit organization that owns 10 hospitals located in three western states. Cynthia Manzoni is Interwest’s CEO. Vijay Singh, Interwest’s 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 firm’s 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 address this consulting assignment?
Smith Jr., Clifford W.; Jerold Zimmerman; James Brickley. Managerial Economics & Organizational Architecture (Irwin Economics) (Page 37). McGraw-Hill Higher Education. Kindle Edition.
SAMPLE SOLUTION
Interwest Healthcare Corp
Source of Problem
Poor handling of data is the main cause of the problem at Interwest. Incorrect data hinder auditing process and is reflected in poor financial planning such as budgeting and purchases of facilities and treatments based on data entries. A good citizen-model inculcates strong personnel desires where employees perform to their level best (Brickley et al., 2009, p.36). Some of the factors responsible are; inappropriate managerial model and decision making, ill-trained staffs, lack of incentives, miscommunication, and lack of enough staffs to carry out quality work in data entry.
Information to Analyze
I will carry out a survey on the employees who are tasked with the duties and responsibilities of data entry. Carry out an interview among the managers in an attempt to identify the cause of erroneous data entry process and examine previous problems and solution to examine if the problem is solved or not.
Recommended Action Conduct a bi-weekly audit every month to identify problem at its early stages. This will help to keep data entry in checks and have a more consistent reporting system that will unveil fraudulent acts early. Additionally, inculcate change in employee behavior to improve management, communication, staffing, incentive packaging…
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