• Selected
• Entire List

Abstract:
This study explores the relation between activity-based costing (ABC) information use and four measures of hospital performance - profitability, revenue enhancement, cost containment, and societal commitment. Specifically, we address the issue of whether, relative to non-adopters, hospitals enhance revenues, reduce costs, increase profitability, and display a greater commitment to the community after the implementation of activity-based costing strategies. We further explore whether the adoption of ABC affects performance and utilization differently depending on ownership type (for profit, non-profit, or government). The empirical evidence suggests that activity-based costing procedures produced mixed results in the two ownership groups. The presence of an advanced cost management strategy in the for-profit sector was associated with increased profitability (return on beds). In contrast, activity-based costing procedures in the government/non-profit sector were associated with enhanced revenue-producing activities, such as increased inpatient admissions and outpatient visits. While no evidence of improved cost controls was uncovered, government/non-profit adopters maintained pre-adoption levels of direct medical care, while non-adopters reduced costs by eliminating value-adding medical personnel. Society does not appear to benefit, however, from the adoption of ABC in the government/non-profit sector through the purchase of larger amounts of productive assets or the provision of added amounts of charity care. Indeed, adopters and non-adopters, alike, displayed positive changes in their community involvement in the post-adoption period. To sum, healthcare providers in both sectors utilized advanced cost management strategies in different ways to adapt to adverse changes in their unique environments.

Activity-based Costing, Hospitals

Abstract:
We test the effects of measurement alternatives on the forward-looking properties of customer satisfaction measures using data from a company in the homebuilding industry for the period 2001-2004. We find that: (1) Customer satisfaction measures provided by a boutique customer research firm that specializes in the homebuilding industry are leading indicators of future performance, as measured by higher referrals, revenues, and profits, and lower warranty costs, but the customer satisfaction measure provided by a national multi-industry customer research firm is not, for reasons that seem to relate both to content and timing of measurement; (2) despite long (i.e., multi-year) gaps between consumers' purchases in the homebuilding industry, the lags between improvements in customer satisfaction and those in financial performance are relatively short; (3) improvements in customer satisfaction provide diminishing returns to financial performance; and (4) the Net Promoter score (Reichheld, 2006), a heavily promoted performance metric derived from customer satisfaction measures, does not appear to be a useful predictor of future performance.

business model, nonfinancial performance measures, customer satisfaciton, employee satisfaction

Abstract:
In order to provide a richer understanding of the incentive-performance relationship, this study examines the efficacy of multiple simultaneous incentive systems when the inclusion of social preferences is considered. Using a sample of over 750 medical professionals, I test how multiple performance based incentive systems function in the presence of inequity aversion, a specific social preference. The results show that when employees exhibit high levels of inequity aversion performance suffers under a pay-for-performance scheme. Additionally, I examine how incentive systems will function with the addition of subjectivity in the presence of social preferences. The results show that when high levels of inequity aversion interact with subjectivity in the incentive scheme the negative performance effects are exacerbated.

Social preferences, inequity aversion, incentive compensation, subjectivity