Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 27

Responsibility for Inefficiency; Ethics General Hospital leases its diagnostic equipment from Normed Leasing, which is also responsible for maintaining the equipment. Recently the hospital’s MRI machine needed repair and physicians were required to order expensive nonemergency laboratory tests for their patients to diagnose conditions that could have been diagnosed more easily (and less expensively) using the MRI machine. Rather than bill its patients for the entire costs of these tests, the hospital billed the patients for the cost of an MRI and billed the difference to Normed. Normed disputes the charge, claiming that the physicians should have postponed diagnosis of the patients’ conditions until the MRI machine could be repaired.

Required What issues should be addressed to determine how the charge should be handled properly? How can this situation be prevented? If appropriate, include ethical issues in your response.