Case 1: Interwest Healthcare Corp.
Question a: Identify potential sources of the problem at Interwest Healthcare Corp.;
Interwest is a nonprofit organization to provide regional health care for patients in three western states. The management information system involves data about patient intake, treatment and release. The management reports compiled from the system concern costs allocation for different treatments etc. Mistakes in the entered data could maybe lead to miscalculations concerning different treatment cost, which could lead to serious financial problems for the corporation. For instance; when for a treatment structurally a smaller amount than the actual cost is charged to the insurance companies who have to pay for the treatment of their clients. Interwest misses a lot of income and a percentage of their actual cost is not covered for.
Also misallocation of cost, possibly may lead to mistakes in paying the providers of treatments, medicines etc. When suppliers or providers will not get payed in time or the correct amount of money, there is a risk that they will refuse to work for the hospitals again. This brings the continuity and quality of the healthcare provided by Interwest in discredit.
From the case we could infer that the employees (have to) make a choice in their performance on the job between putting more effort in correct data entry in the company’s management information system and between the quality of the patient service. It is a possibility that Interwest is understaffed and the employees do not have time to fulfill all of their acquired tasks and they have to make a choice in what task to put in their effort.
One other potential problems source is an incentive problem. There could be misalignment with the model of behavior which is applied by the management. The management seems to have chosen for a Good-Citizen model, and believes that when they ask the employees to do the right thing for the organization, the employees...