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U.S. hospitals saw plummeting “margins” following the introduction of Prospective Payment and again in 1997 following the programmatic reductions in hospital payments from the Balanced Budget Act. Because U.S. hospitals are (in general) not-for-profit organizations, what do you think the primary response will be to deal with the reduced funding stream from Medicare patients? Discuss in your answer the possibilities of changing the scope of services offered by the hospital, changing the general quality of care, and changing the efficiency of the hospital’s operation. Why do you expect that any (or all) of these might be areas of change?

Operation Management, Management Studies

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