Code Blue

Instructors Edition-- Discussion Questions and Practice Problems with Answers

Third Edition

Discussion questions and practice problems are organized by chapter. Due to the textbook/novel nature of Code Blue, not all chapters have questions or problems.

Chapter One

Hap Castleton and Del Cluff have different management styles, and this has caused some friction in their relationship. As assistant controller, what might Del have done to improve his credibility with Castleton?

Del Cluff has an accounting education, Hap does not. If he is to be effective Del must present the information in a manner that Hap will understand. Accountants (like physicians) sometimes use terminology that is difficulty for lay people to understand.

The experience of being a CEO is different than the experience of being an accountant. Hap probably has many departments to monitor. By necessity he has to be a generalist. Del’s job is to stay on top of the details.

People’s perceptions are driven by their personality, education, experience, and in this situation responsibilities. Hap is obviously an extrovert, he is probably more interested in people than Del Cluff. Del is probably a detail person, but we might infer that his communication and people skills are not as good as Hap’s

What message is conveyed when employees refer to accountants as “bean counters”? Why do you think accountants have such an unfavorable image with some managers? What might they do to change this?

It is obviously not a favorable characterization. The general dislike some managers have for accountants probably stems from: (a) their own insecurity in working with numbers, (2) a lack of appreciation for the importance of accounting data, (c) a lack of understanding for the amount of detail required in the preparation of financial reports, (d) a perception that accountants are only interested in numbers (as opposed to being interested in people, corporate strategies etc.).

Some accountants can increase their effectiveness by (a) improving communications skills—accountants are in the business of disseminating information, (b) learning to think more like managers (learning to project what information is necessary for a particular decision and what is not).

There is a difference between financial accounting and managerial accounting. Financial accounting is very structured, is debit/credit oriented, and is designed for outside users. Management accounting focuses on internal decision making. Sometimes accountants provide financial information to managers that is not useful for internal decision making.

Chapter Two

What is the role of the Finance Committee in a hospital?

The Financial Committee typically supervises the Treasury and Accounting functions of the hospital. The committee is responsible for raising capital through bonds or fund raising efforts, and for monitoring the expenditure of funds.

What is the role of the president of the medical staff in a hospital?

The President of the Medical Staff is usually elected by the medical staff. He or she represents the medical staff to administration and the board.

Chapter Three—Including Supplement One

Wycoff firmly believes in the diversification of management teams. Do you agree with him? If so, what factors would you look for in diversification?

Any business decision benefits by considering different points of view. Since business decisions involve product development, marketing, production process, strategic planning, financial reporting, and human resource management, it is important to have a team of individuals who collectively can address each of these functions. Critical to the success of any team is unity of purpose and the ability to communicate and work together for the success of the business. No one has all the answers, managers must diversify their management teams as to experience, education, disposition, and individual strengths and weaknesses.

How is it possible that hospitals didn’t know the costs of their products? Without accurate procedure costs, how did they determine prices?

Since hospitals did not compete on the basis of price, it was not necessary to know the actual costs of the specific goods and services provided. It was, of course necessary, that total revenues equal or exceed total costs, but prior to the 1980s it was common for hospitals to subsidize some services with the revenues from others.