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Taken from HARD CR's in 800 score - Hospital Z has a high [#permalink]
26 Sep 2006, 05:01
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Taken from HARD CR's in 800 score -
Hospital Z has a high percentage of followup surgeries. Those are surgeries that have to be done after the first surgery is not successful. In most cases this happens when patients are willing to be treated in this hospital, which is considerably cheaper compared to others in the region. Followup surgeries are done at the expense of hospital Z and reduce its income drastically.
Which of the following is the best solution to reduce the number of the followup surgeries?
a. Hospital Z has to ensure that all its patients know the risks compared to the more expensive options available
b. Hospital Z needs to hire more professional staff without increasing its prices.
c. Hospital Z needs to decrease the number of patients it serves.
d. Hospital Z needs to increase its prices significantly in order to decrease the number of patients.
e. Hospital Z needs to charge patients for followup surgeries, even if the patients would cover 30% of the cost of these surgeries.
Should be E..
This will reduce the number of patients marginally and increase income. At the same time this will ensure that the costs are not significantly increased so as to drastically reduce the number of patients and decreasing revenues
B or E could have been the other alternatives but all we KNOW is that a) they wanted to reduce its income drastically and b) Currently they are considerably cheaper and therefore have more patients. D is the best answer from what we know.
a. This ignores the fact that low prices may be a factor in drawing patients to Hospital Z.
b. Hiring more professional staff would be expensive and lead to a further decrease in profits, as the prices would not go up. Not a feasible solution.
c. Decreasing the number of patients would decrease profits, the same logic as in B.
d. Increase in price will reduce the number of patients and will proportionally reduce the number of follow up surgeries.
e. This statement does not provide enough information. We do not know whether the number of patients would decrease and how it will influence the profits.
For major surgeries, Hospital Z should raise the cost of it's medical fees so as to deter doctors from mistreating a patient in the beginning. If the fee is higher, doctors are under greater pressure to get the surgery done correct the first time so as to avoid follow-up procedures.
The question is : which is the best solution to reduce the number of followup surgeries. It does not say that the income must not be reduced. In fact it does not say anything about costs just that the number of surgeries should be reduced. Hence A, B and E are irrelevant.
Between C and D, D is more convincing because it addresses the main reason that hospital Z has more patients - its cheaper. Hence option D which says that the number of patients can be reduced by increasing the costs is a winner. _________________
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Check out this awesome article about Anderson on Poets Quants, http://poetsandquants.com/2015/01/02/uclas-anderson-school-morphs-into-a-friendly-tech-hub/ . Anderson is a great place! Sorry for the lack of updates recently. I...