Government and third-party payers announce reduction of compensation f

QUESTION

Government and third-party payers announce reduction of compensation for the delivery of patient services. Hospital STV has a flat organizational structure.

After the funding announcements, senior officials at the hospital meet and make decisions regarding cost containment of new revenue streams. This action is consistent with:

a. The practice of leaving financial decisions with senior officials who understand the total context of funding.
b. A tendency to concentrate decision making during economic downturns at the top administrative level.
c. A need to make expedient decisions that are likely to be poorly received by staff.
d. Ensuring that decisions with regard to cost are made equitably across all departments.

ANSWER:

ANS: B
During times of economic downturn, decisions tend to become very centralized to avoid risk. History demonstrates that increasing the breadth of input during these times is more effective than narrowing it.