Compensation linked with profitability, waiting time, and quality measures. Seashore...

Compensation linked with profitability, waiting time, and quality measures. Seashore Healthcare operates two medical groups, one in Philadelphia and one in Baltimore. The semiannual bonus plan for each medical group’s president has three components:

Compensation linked with profitability, waiting time, and quality measures. Seashore Healthcare operates two medical groups, one in Philadelphia and one in Baltimore. The semiannual bonus plan for each medical group’s president has three components:

Semiannual data for 2013 for the Philadelphia and Baltimore groups are as follows:

1. Compute the bonuses paid in each half year of 2013 to the Philadelphia and Baltimore medical group presidents.

2. Discuss the validity of the components of the bonus plan as measures of profitability, waiting time performance, and patient satisfaction. Suggest one shortcoming of each measure and how it might be overcome (by redesign of the plan or by another measure).

3. Why do you think Seashore Healthcare includes measures of both operating income and waiting time in its bonus plan for group presidents? Give one example of what might happen if waiting time was dropped as a performance measure.