Changes in hospital service mix and cost allocations in response to changes in Medicare reimbursement schemes

Article Abstract:

Changes in Medicare reimbursement have resulted in new hospital policies regarding patient classification and division of costs. In 1983, Medicare began using fixed rates to pay hospitals for inpatient care, but continued to reimburse outpatient care based on cost. A study of Washington State hospitals shows that subsequent outpatient services to Medicare patients, as compared to non-Medicare patients, greatly increased in an effort to improve the hospitals' financial earnings. Hospitals also increased overhead cost allocations to outpatient services departments after the Medicare changes, resulting in improved financial performance.

Hospitals, Administration of Public Health Programs, Health Care Services, Economic aspects, Finance, Accounting and auditing, Medical care, Medicare, Prospective payment systems (Medical care)

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Before-tax versus after-tax earnings as performance measures in compensation contracts

Article Abstract:

The relationship between the tax planning opportunities of a company and the choice between before-tax and after-tax performance measures in bonus plans was investigated. Results show that firms with wider tax planning opportunities prefer after-tax performance measures so that managers would consider the consequences of their planning and management decisions on their tax. After-tax performance measures are associated with multinational operations, firm size, the number of operating segments and capital intensity.

Tax Management, Bonus & Merit Payments, Tax accounting, Tax planning, Employee performance appraisals, Performance appraisals, Bonuses

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Accounting earnings and effort allocation

Article Abstract:

Inclusion of accounting earnings on incentive contract enhances the total effort being exerted by chief executive officers (CEO) in short-term and long-term activities. Accounting earnings motivate CEO to exert extra effort not only on short-run performance of a company but also on the firm's overall performance. CEOs tend to attend more on short-term activities than long-term activities of companies whenever accounting earnings are being taken into consideration in relation to growth in stock returns.

Management-Delegation, Income Accounting, Research, Productivity accounting, Delegation of authority

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