Responsibility for Inefficiency; Ethics General Hospital leases its diagnostic equipment fromNormed Leasing, which is also responsible for maintaining the equipment. Recently, the hospital’sMRI machine needed repair and physicians were required to order expensive nonemergency laboratory tests for their patients to diagnose conditions that could have been diagnosed more easily (andless expensively) using the MRI machine. Rather than bill its patients for the entire cost of these tests,the hospital billed the patients for the cost of an MRI and billed the difference to Normed. Normeddisputes the charge, claiming that the physicians should have postponed diagnosis of the patients’conditions until the MRI machine could be repaired.Required What issues should be addressed to determine how the charge should be handled properly?How can this situation be prevented? If appropriate, include ethical issues in your response.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 3PA: A partial list of Foothills Medical Centers costs follows: a. Advertising hospital services on...
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Responsibility for Inefficiency; Ethics General Hospital leases its diagnostic equipment from
Normed Leasing, which is also responsible for maintaining the equipment. Recently, the hospital’s
MRI machine needed repair and physicians were required to order expensive nonemergency laboratory tests for their patients to diagnose conditions that could have been diagnosed more easily (and
less expensively) using the MRI machine. Rather than bill its patients for the entire cost of these tests,
the hospital billed the patients for the cost of an MRI and billed the difference to Normed. Normed
disputes the charge, claiming that the physicians should have postponed diagnosis of the patients’
conditions until the MRI machine could be repaired.
Required What issues should be addressed to determine how the charge should be handled properly?
How can this situation be prevented? If appropriate, include ethical issues in your response.

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