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ACCA Applied Skills · Performance Management · Specific performance analysis issues in not-for-profit organisations and the public sector

A public hospital trust is assessed on the number of patients treated per month. Managers begin to discharge patients early and prioritise simple cases to raise the count, while the quality of care falls. Which problem of performance measurement in not-for-profit organisations does this best illustrate?

The scenario shows dysfunctional behaviour. Managers focus on a single measure, patients treated, and game it by discharging patients early and choosing easy cases, so the target is met while quality of care deteriorates. This is a measurement-induced distortion rather than a lack of profit measure.

  1. AMeasurement that encourages dysfunctional behaviour by managersCorrect
  2. BDifficulty in quantifying the organisation's outputs in money terms
  3. CAbsence of a profit figure as a common yardstick
  4. DMultiple stakeholders with conflicting objectives

Explanation

Managers change behaviour to hit a single target at the expense of quality, which is dysfunctional behaviour (target fixation). Difficulty of monetary quantification and conflicting stakeholder objectives are real NFP problems, but they do not describe the early-discharge response to a target.

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