tailieunhanh - Cost Accounting Traditions And Innovations - Chapter 21

CHAPTER 21 Rewarding Performance After completing this chapter, you should be able to answer the following questions: How are employee compensation and maximization of stockholder wealth related? What are the alternative means of rewarding performance? | CHAPTER Rewarding Performance 1 LEARNING OBJECTIVES Ater completing this chapter you should be able to answer the following questions 0 How are employee compensation and maximization of stockholder wealth related 0 What are the alternative means of rewarding performance 0 Why is there a movement toward rewarding group as well as individual performance 0 What are the potential positive and negative consequences of incentive pay programs 0 Why do many financial incentive programs involve shares of or options for common stock 0 Of what importance are nonmonetary rewards in motivating managers 0 How do taxes affect the design of compensation plans 0 Why should ethics be considered in designing a compensation package 0 What concerns need to be addressed in developing compensation packages for expatriates INTRODUCING Meridia Health System Healthcare organizations that are trying to increase the productivity of their employed physicians often find that the physicians lack sufficient financial incentives and managerial skills to meet desired productivity levels. One health system in the Cleveland Ohio area however has rejuvenated the performance of its physician network by overhauling its physician compensation program and introducing effective incentives. Since its formation through the merger of four independent hospitals in the 1980s Meridia Health System has enjoyed a strong market position in Cleveland s eastern suburbs. Competition in the Cleveland healthcare market however has gradually intensified as a result of hospital consolidations the acquisition of independent hospitals by for-profit systems and the development of integrated delivery systems IDS that incorporate health plans physician practices and ancillary services into hospital-owned networks. In 1992 Meridia decided that to remain competitive it had to develop a primary care physician network to form the core of an IDS. By 1995 through practice acquisitions and expansions Meridia was operating four .