Case Study: Restview Hospital

QUESTION

Case Study: Restview Hospital

Mary Carter was the accounting manager at Restview Hospital, a large residential health care facility. The facility administrator, Jack Morelli, explained that he wanted to modernize Restviews system of accounts billing. He asked Mary to investigate available software packages that would be compatible with their computer system. Jack explained that he and the Restview board of directors would like to make a decision about this matter at the board meeting next month.

A week later, Jack asked Mary about her progress, and she reported that she had identified two vendors with appropriate software packages. Jack asked why her list of potential vendors did not include Standard Software Systems, the vendor from which they purchased the software currently used to process Restviews payroll. Standard had just recently developed a software package for accounts billing as a new addition to their product line, but few hospitals were using it. The preliminary information gathered by Mary suggested that Standards software package was less appropriate for Restview than the packages offered by the other vendors. However, Mary knew that the president of Standard Software was a personal-friend of Jack, and she agreed to include Standard among the vendors selected for further consideration.

During the next two weeks, sales representatives from each vendor were invited to make a presentation at Restview to demonstrate and explain their product. Mary had planned to invite the board members to these presentations, but Jack said they were too busy to attend. When the presentations were held, Mary and her office staff asked many questions, but Jack looked bored and said very little. Mary also visited some other hospitals that were already using each type of software package to get firsthand opinions about how well they worked and the difficulties experienced in installing them. During the course of her investigation, she learned that Standards new software package was less flexible and less user-friendly than the others. All three software packages were about the same price, but the software package from Reliable Computer was clearly the best one for Restviews needs. She prepared a short report to Jack detailing the advantages and disadvantages of each product and making her recommendation.

The next day Mary met with Jack to give him the written report and summarize her findings in person. She explained the reasons for her recommendation to purchase the software package from Reliable Computers, and she reviewed the evidence supporting it. Mary also offered to present her findings to the board of directors at their next meeting, but Jack said he could handle it himself. The board meeting was held the following week, and afterward Jack informed Mary that they decided to go with the software package from Standard. He explained that the board wanted to reward Standard for excellent customer service last year when installing their payroll software at Restview. Two years later, after thousands of dollars of unnecessary expense, the accounts billing software was still not operating smoothly for Restview.

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