Sunset Medical

Abstract

Sunset Medical is based on a real situation occurring at an Orthopedic Medical practice in Colorado. While attending a trade show Dr. Jones, the managing partner at Sunset Medical, was approached by a medical consulting firm, Physicians Medical Inc. (PMI), to provide the practice billing and administrative services. Dr. Jones decided to hire PMI and signed a contract with February of 2006. Based on the interim financial statements that were released in June of 2006, Dr. Jones gave PMI control of the overall day to day operations of the practice. PMI immediately relieved the office manager of her duties and took over all operations of the practice. In early 2007, the 2006 financial statements were released and were not as impressive as the mid-year results. Dr. Jones is now worried that the increased power given to PMI may have been a mistake and has asked you to give a full assessment of the situation.

The case is suitable for an introductory Financial or Managerial Accounting class at the M.B.A. level once the students have a working knowledge of the financial statements. The students must critically evaluate contract language and financial statements to examine ethical dilemmas that face businesses.

Keywords: Case, Ethics, Contract Language, Forensic Accounting, Comparative Financial Statements, Critical Thinking, Statement of Cash Flows, Financial Accounting, Managerial Accounting

JEL Classification: M41