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ACCA Strategic Professional · Advanced Performance Management · Performance optimisation in specific contexts

Metro Care, a private hospital group, assesses a ward using the 3Es. Last year the ward treated 4,800 patients at a cost of $2.4m. This year it treated 5,400 patients at a cost of $2.43m, though patient outcomes were unchanged and the target recovery rate was missed. Which conclusion is correct?

Efficiency improved because cost per patient fell from $500 to $450, yet effectiveness was not achieved because the recovery target was missed. Total cost rising slightly does not imply worse efficiency, and treating more patients is an output rather than proof of meeting objectives.

  1. AEfficiency improved, because cost per patient fell from $500 to $450, but effectiveness was not achievedCorrect
  2. BEconomy worsened, because total cost rose
  3. CEffectiveness improved, because more patients were treated
  4. DEfficiency worsened, because total cost rose

Explanation

Cost per patient was 2,400,000/4,800 = $500 last year and 2,430,000/5,400 = $450 this year, so efficiency improved by 10%. The recovery target was missed, so the ward was not effective in achieving its objective. Total cost rising is not the test for efficiency, and treating more patients is an output, not effectiveness.

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