Question

You are the newly appointed manager of Alpine Ambulatory Surgery Center. Congratulations! One of the first tasks you have is to decide how costs should be allocated from support departments to patient care departments in your organization. You have three support departments: administration, housekeeping, and building maintenance. Administration includes human resources, billing and collection, purchasing and of course, your executive office. Housekeeping includes janitorial services for the entire building and laundry/linen cleaning. Building maintenance includes utilities, repairs/maintenance services. You have four patient care departments: surgery, recovery, laboratory and radiology. Your task for this discussion is the following: Describe which allocation method you would use (direct or step down) and why you would recommend that method. Describe how you would allocate costs from support departments to your patient care departments. Be specific as to the cost drivers you will use for each. Describe at least one potential problem you may have in terms of the perceived fairness of your allocation decisions. What would you do to address that limitation?

Answer 1

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