Profit Centers: Hospitals Suburban General Hospital owns and operates several community hospitals in North Carolina. One of its hospitals, Cordona Community Hospital, is a not-for-profit institution that has not met its financial targets in the past several years because of decreasing volume. It has been losing market share largely because of the entrance of a new competitor, Jefferson Memorial Hospital. Jefferson has successfully promoted itself as the premier provider of quality care; its slogan is “Patients Come First.” To compete with Jefferson, Cordona has developed a new department, guest services, to improve patient relations and overall customer service. Guest services personnel will be positioned throughout the hospital and at major entrances to help patients and their families get where they are going. Guest services will also be visible in the waiting rooms of high-volume areas such as cardiovascular services and women’s services to help guide the patients throughout their visit. Cordona’s management is wrestling with how to charge guest services to the various profit centers in the hospital.
Required What are some different ways to allocate the guest service costs, and what would be the effect of each on the behavior of the managers of the different profit centers?
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