Assignment: Trinity Clinic

Trinity Clinic has identified three activities for daily maternity care: occupancy and feeding, nursing, and nursing supervision. The nursing supervisor oversees 150 nurses, 25 of whom are maternity nurses (the other nurses are located in other care areas such as the emergency room and intensive care). The nursing supervisor has three assistants, a secretary, several offices, computers, phones, and furniture. The three assistants spend 75 percent of their time on the supervising activity and 25 percent of their time as surgical nurses. They each receive a salary of $48,000. The nursing supervisor has a salary of $70,000. She spends 100 percent of her time supervising. The secretary receives a salary of $22,000 per year. Other costs directly traceable to the supervisory activity (depreciation, utilities, phone, etc.) average

$100,000 per year.

Daily care output is measured as “patient days.” The clinic has traditionally assigned the cost of daily care by using a daily rate (a rate per patient day). There are actually different kinds of daily care, and rates are structured to reflect these differ- ences. For example, a higher daily rate is charged for an intensive care unit than for a maternity care unit. Within units, however, the daily rates are the same for all patients. Under the traditional, functional approach, the daily rate is computed by dividing the annual costs of occupancy and feeding, nursing, and a share of supervi- sion by the unit’s capacity expressed in patient days. The cost of supervision is

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