Assignment Exercise 14–4: The Discovery The Chief Financial Officer at Sample Ge

Question

Assignment Exercise 14–4: The Discovery The Chief Financial Officer at Sample General Hospital has just discovered that the hospital’s Chief of the Medical Staff’s son Jason, a student at the local community college, is paid $100 per week year-round for grounds maintenance at the hospital’s Outpatient Center. The CFO, no fan of the Chief of Medical Staff, now wants you to prepare a report that compares the relative costs of lawn care at each of three locations: the hospital itself, the outpatient center, and the hospital-affiliated nursing home down the block. Required Review the available information for grounds maintenance at the three facilities. Decide how to convert this information into comparable data. Then prepare a report, based on your assumptions, that presents comparable costs of grounds care. Also provide your assessment of what the best future course of action should be.

Explanation / Answer

Introduction to the Three Facilities Sample General Hospital is an older 100-bed hospital. The new Outpatient Center, built last year, is across the street and the Golden Age Nursing Facility is down one block, on the corner. All three facilities are part of the Metropolis Health System. The hospital is located in the midwestern sunbelt; there is occasional frost in the winter but no snow. Grounds Maintenance Tasks That Should Be Performed at All Three Sites • Mowing and edging • Flower bed maintenance (where necessary) • Hedge trimming and minor tree pruning (major tree trimming is performed by a contractor on an as-needed basis and thus should be disregarded). The current grounds maintenance arrangements vary among the three facilities as follows:

1. Sample General Hospital uses its Maintenance department employees for grounds care. The hospital pays these employees $15 per hour plus 15% employee benefits; it is estimated they spend 1,000 hours per year on grounds maintenance work. Another estimated 120 hours per year are spent on maintaining the lawn care equipment. The employees use a riding lawn mower, edger, and blower, all owned by the hospital.The hospital just bought a new mower for $2,995 less a 10% discount. It is expected that the mower should last for five years.

2. The hospital’s Chief of the Medical Staff’s son Jason, a student at the local community college, is paid $100 per week year-round for grounds maintenance at the hospital’s Outpatient Center. A friend sometimes helps, but when that happens Jason pays him out of his weekly $100. It takes about 1.5 hours to mow, edge, and blow. Jason uses his dad’s riding mower and blower, but Jason recently bought his own edger. Jason also buys fertilizer for the grass twice a year.

3. The Nursing Facility contracts with a landscape service on a seasonally adjusted sliding scale. The landscape service is paid $600 per month from April to October (mowing season); $400 per month for February, March, and November; and $200 per month for November, December, and January.

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