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Application of management theories in the development of criteria to assist in solving identified perceived problems online

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phasing in on a priority basis in order that the
institution comply with OSHA requirements.

The panel in reviewing this criterion offered the fol-
lowing opinions as to the theoretical feasibility.

Three of the panel members agreed with the criterion
as written. The fourth stated, "I don't think OSHA require-
ments should be gradually phased in."

The criterion because of agreement of three of the
panel members remained unchanged.

Summary

The criteria were reviewed by four panel members
knowledgeable in the area of business affairs in academic
medical centers. They were asked to review the criteria
commenting on their theoretical feasibility to be used as
a framework to assist in solving major issues faced by
chief business officers in academic medical centers. Their
agreements, ^recommended revisions and disagreements were
depicted as shown in the finally revised criteria.

There were only two criteria that evoked disagreement
from more than one of the panel members. They all agreed
with eleven of the twenty-seven criteria as they were
written. There were seven more criteria in which three
of the panel members agreed the criteria should remain as
written. This caused: eighteen criteria to remain unchanged
after review by the panel members.



100.

The remaining nine criteria had revisions which re-
flected the recommendations of the panel. Three of these
criteria had only minor revisions and did not in the judge-
ment of the writer substantively alter the criteria but
merely added clarity. One of the criterion wa;s deleted and
the remaining five had substantive revisions and were from
the following sections:

Financial Accounting
Criterion 1

Budget Preparation and Control
Criterion 5

Physical Plant
Criterion 2

Personnel Services
Criterion 1

Other Areas of Concern
Criterion 4

The general comments made regarding the criteria by the

panel members were that these criteria were theoretically

sound and could be' used as a framework to assist in solving

major issues faced by chief business officers in academic

medical centers.

Summary of Revised Criteria
Financial Accounting

1. The receipt of accounting information on a timely
basis must be balanced against additional accuracy
and comprehensiveness which would be gained with
more time.

2. In order to provide the most useful information
for decision making, financial reports should
articulate with each other primarily to make the



101



information more understandable and useful for
decision making at all levels of institutional
management.

3. College financial statements should be restructured
to depict the financial status of the college as

an entity rather than as a combination of a number
of independent funds.

4. Economic activity is carried on during specifiable
periods of time thus time frames as expressed on
vendor invoices should be adhered to by the dis-
bursing authority on campus in a consistent
manner and not some central authority hundreds

of miles from campus.

5. In order to meet the Medical Center's functions
in program budget terms an accounting system,
which provides cost information on a program
basis should be developed.

Budget Preparation and Control

1. The entire process of budget formulation through
adoption should be completed within a time frame
that does not subject the institution to keep
track of more than two different fiscal years

at a time excluding biennial budgets.

2. There should be enough review levels of the
budget, but no more than to insure the expectancy
of complying with it through superior-subordinate
motivation and ability.

3. In estimating revenue from state appropriations
each state level budgetary department which would,
among other things, correlate the needs of the
various state agencies with anticipated revenues
and prepare estimated legislative appropriations.

4. Budget guidelines should be developed by the
budget coordinator for the entire campus, the
guidelines should be explained to all concerned
by the coordinator and at least one year's
historical data given to each department as one
component of the data base to be used in
assembling the new budget.



102



Physical Plant

1. The determination of project priorities should be
based on a logical decision theory, employing the
use of decision tables where appropriate, with
conditions ranging from "life-threatening" to
routine items.

2. Cost of ordinary, recurring repairs to buildings
and equipment should be paid for out of a fund
centrally administered by the Physical Plant
Division. Extraordinary repairs and replacements
should also be paid for through a fund centrally
administered by the Physical Plant Division.
Elective renovations or alterations should be the
responsibility of the individual department.

3. Familiarity with estimating techniques is essential
for the ability to determine unit costs of both
minor and major projects and should be used in
conjunction with internally or externally managed
projects.

4. Programmed, decisions should be renewed periodical-
ly to determine if the habitual course of action

is still the best in light of any new developments.

Personnel Services

1. The central office of the state personnel classi-
fication office should have health professionals
or other, specialists on their staff to act as
liaison with the various state agencies employing
personnel in health related occupations and should
use published salary surveys from the Association
of American Medical Colleges to insure timely,
accurate, and fair classifications.

2. There should be an effective wage administration
at both the institutional and state level. A
viable and fair merit system should be established
with a floating top range not a fixed dollar
amount.

3. Frequent use should be made of authorative wage
surveys. These surveys should show local, state
and national figures and be used by the wage
administration when recommending wage rates.



Purchasing



Where state contracts are presently in force the
purchasing director should evaluate the possibil-



103



ity of systems contracting for greater savings
to all areas of the institution while at the
same time promoting place, time and possession
utility.

2. In accepting a bid the purchasing department
should consider not only the lowest responsible
bidder but also the bidder who offers the lowest
ultimate cost.

3. The purchasing department should be cognizant of
time utility in the bid procedure and where
appropriate use such devices as the telephone and
telegram.

Auxiliary Services

1. A working knowledge of price theory is desirable
when setting a pricing structure for auxiliary
enterprises.

2. Price strategy when used by the auxiliary director
should be goal oriented in terms of the entire
institution.

Other Areas of Concern

1. Capital equipment should be assigned property
identification control numbers for accountability
purposes with ultimate responsibility for the
individual pieces of equipment residing with
departmental heads.

2 . A priority system should be developed between
the medical center and campus attorneys in order
to meet the time utility of legal inquiries.

3. There should be established a systems and pro-
cedures department within the medical center to
review continuously major information systems and
to keep them updated.

4. Promulgation of policies and procedures should be
in written format and fall under the responsibility
of the systems and procedures department where such
a department has been created. Otherwise the
responsibility should be that of the department
head.

5. Budgetary allocations should be made for a gradual
phasing in on a priority basis in order that the
institution comply with OSHA requirements.



CHAPTER V
SUMMARY AND GENERAL OBSERVATIONS



Sununary

The purpose of this study was to develop a set of
criteria to be used as a framework to assist in solving the
major issues faced by chief business officers in university
medical centers. The resulting criteria were assessed as
theoretically feasible by a four member panel, knowleidge^
able in the business operations of academic medical centers.

Eighteen. academic medical centers in the United States
of America participated in this study and are listed in
Appendix B. An open ended survey questionnaire was used to
identify the perceived problems by the eighteen academic
medical centers as depicted in Appendix A. The survey re-
vealed a total of .twenty one perceived problems as indicated
in Chapter II.

The review of related literature in Business Adminis-
tration, Hospital Administration and Educational Adminis-
tration as contained in Chapter III provided the basis for
the establishment of the criteria. Specific answers to the
identified problems as stated in Chapter II were not sought
because of the diversity among the one hundred and fourteen
academic medical centers in the United States. Rather a
theoretical base was used in the development of the criteria.



104



105

Various theories were researched including accounting theory,
budgetary theory, personnel management theory, price theory,
decision theory, information and communication theory and
general systems theory. A total of twenty seven criteria
were developed from a review of the literature and are
summarized at the end of Chapter III. Both the identified
problems and resulting criteria were confined to the fol-
lowing areas:

Financial Accounting

Budget Preparation and Control

Physical Plant

Personnel Services

Purchasing

Auxiliary Services

Other Areas of Concern
The criteria as developed in Chapter III were then sub-
mitted to a panel of four members knowledgeable in the area
of business affairs in academic medical centers. The panel
consisted of two practitioners, one academician and one
chief executive officer of academic medical center. Appen-
dix C depicts the format used for the revision of the
criteria. The results of the review by the panel are
depicted in Chapter IV and produced a revised set of
criteria to be used as a framework to assist in solving the
identified problems of chief business officers in academic
medical centers. The revised set of criteria is found at
the end of Chapter IV.



106



General Observations

The writer observed that the areas of Financial Ac-
counting and Budget Preparation and Control yielded the
greatest number of perceived problems. The general trend of
the problems in these two areas were of a more detailed
nature as compared to the identified problems in the other
areas of concern. It is the writer's feeling that the areas
of Financial Accounting and Budget Preparation and Control
are a more direct day to day responsibility of the chief
business officer in academic medical centers, whereas the
areas of Purchasing, Physical Plant Operation, Personnel
Services and Auxiliary Services are more the direct respon-
sibility of the main campus chief business officer. This
is not to indicate that the chief business officers in
academic medical centers do not have problems in these
areas or responsibility for them. They do but as revealed
from the survey of identified problems the problems in
these areas are of a more general nature.

The review and revision of the criteria by the panel
revealed the greatest number of revisions and individual
disagreement within the areas of Financial Accounting and
Budget Preparation and Control. This finding is consistent
with the results of the survey questionnaire in which the
participating institutions also identified the greatest
number of problems in both Financial Accounting and Budget
Preparation and Control. Specifically, one criterion
(criterion 3) was deleted from Budget Preparation and



107

Control as evidenced in Chapter IV for the lack of any agree-
ment on the part of the panel. This criterion specifically
dealt with treating each department as an individual busi-
ness in which the department wins its budget in relation to
its own output compared to other departments. The panel, as
interpreted by the writer, felt this to be anti academic
and counter productive. This led the writer to observe
that the greatest concerns and needed improvements for the
overall business management of academic medical centers is
in the areas of Financial Accounting and Budget Preparation
and Control.

The writer felt that there was general agreement by
the panel with the finally revised set of criteria; that
the criteria were theoretically sound and could be used as
a framework to assist in solving major issues faced by
chief business officers in academic medical centers.
Recommendations for Further Research

The scope of this study involved eighteen of the 114
academic medical centers in the United States to determine
perceived business problems. There are two recommendations
for further research.

The first recommendation for further research is that
the criteria as revised by the panel be evaluated as to
their actual implementation in assisting to solve the iden-
tified problems. This kind of evaluation demonstrates the
working practicality of the criteria.



108



The second recommendation is that further and more in
depth research be conducted in what appears to be the two
primary areas of concern of chief business officers in
academic medical centers. These two identified areas are
Financial Accounting and Budget Preparation and Control.



APPENDIX A

Survey of the perceived problems
of the chief business officer in
selected university medical centers



NAME : TITLE :

INSTITUTION:



THE CHIEF BUSINESS OFFICER
MAJOR AREAS OF RESPONSIBILITY



FINANCIAL ACCOUNTING

Includes such areas as the basic bookkeeping function
of the institution; preparation of periodic reports;
design and jnaintenance of the accounting system;
payments for services and supplies

PERCEIVED PROBLEMS:



110



Ill



BUDGET PREPARATION AND CONTROL

Includes such things as the dissemination of yearly-
budget worksheets to unit heads, projected annual
income; periodic status reports to unit heads

PERCEIVED PROBLEMS:



3. PHYSICAL PLANT

Includes such things as routine maintenance and
operation; participation with other officers in
planning, design, and construction decisions

PERCEIVED PROBLEMS:



112



113



PERSONNEL SERVICES

Includes such things as employment of non-academic
personnel; information and service relating to
staff benefits, training programs, salary plans,
fringe benefit packages, and related matters; union
contracts and negotiations

PERCEIVED PROBLEMS:



114



PURCHASING

Includes such things as the routine of requisitions
and purchase orders; bid policies; supervision of
stores

PERCEIVED PROBLEMS:



115



AUXILIARY SERVICES

Includes such things as financial control and or
management of auxiliary enterprises and service
units

PERCEIVED PROBLEMS:



116



OTHER AREAS OF CONCERN

Includes such areas as internal control; grants
management; investment programs; systems and
procedures; legal service; property control;
and autonomy of medical center from parent
university

PERCEIVED PROBLEMS:



APPENDIX B

Participating institutions
in survey



1. Case Western Reserve University

2. Columbia University - College of Physicians &
Surgeons

3. College of Medicine and Dentistry of New Jersey

4. Dartmouth Medical School

5. Medical University of South Carolina

6. Northwestern University Medical School

7. Pennsylvania State University - Milton S. Hershey
Medical Center

8. University of Alabama System

9. University of Arizona

10. University of Arkansas

11. University of Florida

12. University of Maryland

13. University of Massachusetts Medical School

14. University of New Mexico

15. University of North Carolina

16. University of Pennsylvania Medical Center

17. University of Southern California

18. University of Vermont



118



APPENDIX C

Revised Criteria to Assist in Solving Problems

Identified by the Chief Business Officer

in Selected University Medical Centers



REVISED CRITERIA TO ASSIST IN SOLVING

PROBLEMS IDENTIFIED BY THE CHIEF BUSINESS OFFICER

IN SELECTED UNIVERSITY MEDICAL CENTERS

Financial Accounting

1. A trade off may be necessary in the receiving of

accounting information on a timely basis between the
sacrificing of some accuracy and the increase o
timeliness.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



2. In order to provide the most useful information for
decision making, financial reports should articulate
with each other primarily to make the information
more understandable and useful for decision making.



Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



120



121



College financial statements should be restructured
to depict the financial status of the college as an
entity rather than as a combination of a number of
independent funds.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows:



Economic activity is carried on during specifiable
periods of time thus time frames as expressed on
vendor invoices should be adheared to by the dis-
bursing authority on campus and not some central
authority hundreds of miles from campus.



Agree as written

Agree if revised as follows;



Disagree totally; Rationale as follows:



5. In order to meet the Medical Center's functions in
program budget terms an accounting system which
provides cost information on a program basis should
be developed.



Agree as written

Agree if revised as follows;



122



Disagree totally; Rationale as follows;



Budget Preparation and Control

1. The entire process of budget formulation through
adoption should be completed within a time frame
that does not subject the institution to keep track
of more than two different fiscal years at a time
excluding biennial budgets.

' Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



There should be enough review levels of the budget
to insure the expectancy of complying with it
through superior-subordinate motivation and ability.



Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows:



123



Under the adoption of internal price theory at the
departmental level and college level, the necessity
of multi-level budgeting review is negated due to
treating each academic department as a small
business, each department wins its budget according
to the value of its output in relation to other
departments.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



4. In estimating revenue from state appropriations each
state should establish a state level budgetary
department which would, among other things, correlate
the needs of the various state agencies with
anticipated revenues and prepare estimated legis-
lative appropriations.



Agree as written

Agree if revised as follows



Disagree totally; Rationale as follows:



124



Budget guidelines should be developed by the budget
coordinator for the entire campus, the guidelines
should be explained to each department head by the
coordinator and at least one years historical data
given to each department to be used as a starting
point in assembling the new budget.

Agree as written

Agree if revised as follows: .



Disagree totally; Rationale as follows:



Physical Plant



The determination of project priorities should be
based on a logical decision theory, employing the
use of decision tables where appropriate, with
conditions ranging from "life-threatening" to routine
items.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows:



125



Costs of ordinary, recurring repairs to buildings
and equipment should be paid by the individual
departments affected. Extraordinary repairs and
replacements should be paid for by the physical
plant.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows:



Familiarity with estimating techniques is essential
for the ability to determine unit costs of both
minor and major projects and should be used in con-
junction with internally or externally managed
projects.



Agree as written

Agree if revised as follows;



Disagree totally; Rationale as follows:



126



4. Progranuned decisions should be renewed periodically
to determine if the habitual course of action is
still the best in light of any new developments.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



Personnel Services



The central office of the state personnel classifi-
cation office should have health professionals on
their staff to act as liaison with the various state
agencies employing personnel in health related
occupations to insure timely, accurate, and fair
classifications.

Agree as written

Agree if revised as follows :_



Disagree totally; Rationale as follows;



There should be an effective wage administration at
both the institutional and state level. A viable'
and fair merit system should be established with a
floating top range not a fixed dollar amount.



Agree as written



127



Agree if revised as follows;



Disagree totally; Rationale as follows;



3. Frequent use should be made of authoritative wage

surveys. These surveys should show local, state and
national figures and be used by the wage adminis-
tration when recommending wage rates.



Agree as written

Agree if revised as follows;



Disagree totally; Rationale as follows;



Purchasing



Where state contracts are presently in force the
purchasing director should evaluate the possibility
of systems contracting for greater savings to all
areas of the institution while at the same time
promoting place, time, and possession utility.

Agree as written

Agree if revised as follows:



128



Disagree totally; Rationale as follows:



2. In accepting a bid the purchasing department should
consider not only the lowest responsible bidder but
also the bidder who offers the lowest ultimate cost,

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows:



3. The purchasing department should be cognizant of time
utility in the bid procedure and where appropriate
use such devices as the telephone and telegram.



Agree as written

Agree if revised as follows;



Disagree totally; Rationale as follows:



129



Auxiliary Services

1. A working knowledge of price theory is desirable
when setting a pricing structure for auxiliary
enterprises.

Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



2. Price strategy when used by the auxiliary director
should be goal oriented in terms of the entire
institution.



Agree as written

Agree if revised as follows;



Disagree totally; Rationale as follows;



Other Areas of Concern



Capital equipment should be assigned property iden-
tification control numbers for accountability
purposes with ultimate responsibility for the
individual pieces of equipment residing with
departmental heads.

Agree as written



130



Agree if revised as follows;



Disagree totally; Rationale as follows:



2. A priority system should be developed between the
medical center and campus attorneys in order to
meet the time utility of legal inquiries.



Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



3. There should be established a systems and procedures
department within the medical center to review con-
tinuously major information systems and to keep them
updated.



Agree as written

Agree if revised as follows



Disagree totally; Rationale as follows:



131



Promulgation of policies and procedures should be
in written format and fall under the responsibility
of the systems and procedures department.

Agree as written

Agree if revised as follows: вЦ†



Disagree totally; Rationale as follows;



5. Budgetary allocations should be made for a gradual
phasing in on a priority basis in order that the
institution comply with OSHA requirements.



Agree as written

Agree if revised as follows:



Disagree totally; Rationale as follows;



REFERENCES

Allen, C.L. The framework of price theory . Belmont,
California: Wadsworth Publishing Co., 1967.

Andrew, G.M. , & Moir, R.E. Information-decision systems in
education . Itasca, Illinois: Peacock, 1970 .

Association of American Medical Colleges. University


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Online LibraryIan Storrier EastonApplication of management theories in the development of criteria to assist in solving identified perceived problems → online text (page 8 of 9)