Professional Documents
Culture Documents
T
he Office of Health Policy of the Assistant Secretary for Planning and Evaluation in
the Department of Health and Human Services released a study in 20052 that ana-
lyzed the effects of cost increases in health care on the U.S. economy. This report
states that 2003 spending in the U.S. was $1.67 trillion, or $5,670 per person. These costs
have been increasing at a rate that is nearly triple the rate of increase in the U.S. Gross
Domestic Product since the late 1990s. By 2002, 46 percent of all health care spending
came from public funding, up from 25 percent in 1960. Health care is a significant portion
Gail Kaciuba is a Professor at St. Mary’s University, and Gary H. Siegel was an Associate
Professor at DePaul University (now deceased).
We are grateful to all users of the case who assisted in its evolution. Two anonymous reviewers and an associate
editor provided extremely helpful input. This case study is dedicated to my coauthor and true friend, Gary Siegel,
who is sorely missed.
1
This case contains numerous tables that are best distributed to students as Microsoft Excel䉸 files, and supple-
mentary materials in Microsoft Word䉸 format for instructor use. To obtain electronic copies of these files please
email Gail Kaciuba at gkaciuba@stmarytx.edu.
2
See: http: / / aspe.hhs.gov / health / costgrowth / index.htm.
553
554 Kaciuba and Siegel
of the U.S. economy and U.S. health care policies and funding have a major impact on all
Americans.
Most physicians and surgeons in the U.S. receive a substantial portion of their revenues
from third-party payors (insurance companies or government Medicare or Medicaid reim-
bursements). In many instances, the amount a surgeon receives for a particular service has
declined over the years because doctors have less bargaining power with the U.S. govern-
ment and insurance companies than they had when they received payments from their
patients. This has made cost control in a medical practice more important than ever.
CASE INTRODUCTION
Thoracic surgeons treat diseases involving organs of the chest. Cardiac surgery (a type
of thoracic surgery) is the surgical management of diseases of the blood supply to the heart,
heart valves and the arteries and veins in the chest. Cardiac surgeons replace and repair
valves in the heart, install pacemakers, perform coronary artery bypass graft (CABG) sur-
gery for disease, treat cancers of the lung and esophagus, treat tumors of the chest, and
perform heart and lung transplants. General thoracic surgery, on the other hand, focuses on
treatments for problems of the lungs and esophagus.
Dr. Don Fannon and Dr. Dan Martens are two renowned thoracic surgeons. They are
graduates of the Stanford University School of Medicine and have each worked in the fields
of cardiac and thoracic surgery for more than 30 years. Both are frequent speakers at
medical conferences. In 1981, they formed the Fannon and Martens Cardiac and Thoracic
Surgery Medical Group (FMMG) in the San Francisco Bay Area.
Drs. Mikos, Cord, Carson, and Smith (MCCS) are also thoracic surgeons. They have
been practicing together in San Francisco for more than 11 years, and they have all known
Drs. Fannon and Marten of FMMG for just as long.
All six surgeons (the four from MCCS and the two from FMMG) attended last year’s
annual meeting of the Society of Thoracic Surgeons (STS), and during a break between
sessions, began talking about the way they manage their respective practices. There are
numerous differences between the two practices. For example, FMMG maintains a central
location—a traditional medical office—for patient examinations. Although they have sur-
gical privileges at several hospitals, all patients are seen in the exam rooms at the FMMG
office. Drs. Fannon and Marten prefer this, as it saves them (and their junior partner) a
great deal of travel time.
MCCS, on the other hand, maintains only an administrative office. That is, no patients
are seen at the MCCS office. All patient office visits are handled at examination rooms
close to the hospital where the surgery was performed or will be performed. Some of the
rooms where patients are examined are in the hospital itself, or in office facilities located
close to the hospital. Of course, MCCS’ patients prefer this as they have a shorter drive
for pre-op and post-op office visits, but the MCCS surgeons spend much more time com-
muting to various hospitals than do the FMMG surgeons.
After hearing of this arrangement, Drs. Fannon and Marten expressed surprise that their
MCCS colleagues would be willing to spend so much time on the road. Additionally, they
question their friends about the heavy fees they must pay for the occasional use of such
examination rooms in hospitals and ambulatory surgical centers. They are convinced that
MCCS is headed for trouble with such a strategy. However, the MCCS surgeons believe
that it is FMMG that has over-burdened itself with avoidable overhead. The MCCS surgeons
say that the office space they use is essentially free. That is, in almost all cases, they pay
nothing for the use of the space to examine patients. There is only one hospital that charges
them for the use of the space.
The two groups of surgeons agree to compare financial information about their practices
in order to determine who is right.
TABLE 1
Medical and Business Activities (Processes) in the STS Cost Study
TABLE 2
Process Costs and Practice Information from the STS Cost Study
Database Process
Total Cost of Processes MCCS FMMG Average Abbvn
Service Patients in the Office $39,970 $347,045 $212,046 SPO
Service Patients in the Hospital $94,018 $186,764 $173,192 SPH
Obtain Insurance Authorization (a) $94,743 $45,930 $28,991 Auth
Billing (a) $20,487 $64,950 $45,352 Bill
Collect Payments (a) $17,979 $54,199 $26,234 Collect
Resolve Collection Disputes (a) $13,799 $58,333 $32,792 Disputes
Maintain Medical Records $43,342 $69,705 $57,133 MMR
Schedule & Coordinate Surgeries $121,783 $30,915 $36,415 Sched
Provide Information to 3rd Parties $23,805 $16,989 $17,230 3rd pties
Teaching & Research $0 $0 $297 T&R
Maintain Professional Education $51,411 $31,118 $37,163 MPE
Total $521,337 $905,948 $666,845
FIGURE 1
Flow of Process Costs to Cost Objects in the STS Cost Study
Billing
Collect Payments
Charge Office Visits
Maintain Facility
The lines show how process costs were assigned to the cost objects in the STS Cost Study, using various cost
drivers. For example, Service Patients in the Office Process costs were assigned to No-Charge Office Visits and
Charge Office Visits. Maintain Medical Records and Billing process costs were assigned to all four cost objects.
bundled as a separate cost object from the CPT codes for no-charge office visits because
they consume process costs differently.
All chargeable office visits, regardless of length or physician services provided, were
considered as a single cost object because these office visits consume practice expense at
about the same rate. A chargeable hospital visit does not usually require insurance author-
ization as this authorization is linked to the surgery, and it does not consume any office-
related processes.
All surgeries and procedures, regardless of complexity, consumed about the same
amount of practice expense. Therefore, all surgical CPT codes were bundled together as a
single cost object.
3
CPT codes are used in billing Medicare and other third-party payors. There is a code (designated as either
a CPT code or a HCPCS code) for each type of service offered by a medical practice.
4
The codes that are used for in-patient and outpatient consultations with the surgeon are called Evaluation and
Management (E&M) codes.
TABLE 3
MCCS’ Direct Costs and Direct Cost Drivers
Direct Costs:
Malpractice insurance $329,976
Doctors’ compensation $2,020,775
Total direct costs $2,350,751
Avg MD Total MD
Information about Cost Objects: Minutes Count Minutes
No-Charge office visit 20 1424 28,480
Surgeries / procedures:
Coronary Artery Bypass Graft (CABG) 320 421 134,720
Renal Access 243 18 4,374
Vascular 163 68 11,084
Bronch / Mediastinoscopy 125 82 10,250
Thoracotomy 132 223 29,436
Trach 75 60 4,500
Pacemaker / AICD 128 53 6,784
Debridement 54 20 1,080
Other cardiac surgery 220 151 33,220
Valve repair/ replacement 248 134 33,232
Other surgery 200 82 16,400
1312 285,080
and its specialty are fixed, the MCCS surgeons feel that they can decrease malpractice
premiums only by reducing the limits of coverage, reducing patient volume, or attempting
to reduce malpractice claims. The first two alternatives are not seen as viable by the MCCS
surgeons, and they feel they already use all their expertise and resources to minimize
malpractice claims. The surgeons therefore feel that the cost of malpractice insurance is
not within their control. Most malpractice claims come from patients that have had a surgery
or procedure, and to date MCCS has never been found to be liable for any claim (although
the insurance company has sometimes settled with the plaintiff). MCCS has not noticed a
pattern where these claims are associated with a specific type of surgery or procedure.
562
TABLE 4
MCCS’ Case Mix Billing and Collection Information
563
564 Kaciuba and Siegel
work at the practice’s office, which contains office space for the doctors, examination rooms,
waiting rooms, and administrative offices.
MCCS maintains only administrative office space for their 3.0 FTE administrative staff.
The four surgeons have their own individual offices in their homes. These home offices are
used mostly for the maintenance of their professional education, as the practice manager
in the firm’s administrative office handles all administrative work. (MCCS does not com-
pensate the doctors for the cost of maintaining their home offices.) MCCS has relationships
with several hospitals and ambulatory surgical centers. Under most of these arrangements,
the facility that contains the operating room bills the patient or the patient’s health care
provider for the use of the operating room, and this charge includes patient pre-operative
and post-operative office visits in examination rooms either in or adjacent to the facility.
In only one instance is MCCS billed for the use of these examination rooms, and MCCS
rents this space only on Tuesday mornings. This rental fee is $24,000 per year.
CASE REQUIREMENTS
When responding to the questions below, include tables and graphs or charts that will
help the reader better understand your discussion. The References section provides a list
of texts and articles on Activity-Based Costing, if you would like to refresh your under-
standing of this topic. Many of these questions are designed to help you increase your
strengths in the AICPA’s Core Competencies. It would be helpful to your progress in
your education if you familiarize yourself with the AICPA Core Competency Framework,
which describes the skills and abilities the profession feels are necessary for persons en-
tering the accounting profession. The Framework is located at http://www.aicpa.org/edu/
corecomp.htm.
1. The results of the ABC model that assigned indirect costs (practice expense) to the bus-
iness processes is shown for MCCS, FMMG, and the database average (from the STS
study) in Table 2. Compare the process costs shown and comment on the differences.
Pay particular attention to the reimbursement processes, comparing both the bundled
(all four sub-processes included) and the unbundled costs of the reimbursement process.
Make sure you consider size effects in this comparison. Also compare the MCCS,
FMMG, and the Database Average patient encounters per surgeon. How do the different
business models used by the two practices show up in these comparisons?
2. Based on your answer to Question 1 and the information in Table 2 and elsewhere in
this case, what can you say about the advantages and disadvantages of a merger of
MCCS and FMMG? What additional information would FMMG and MCCS need in
order to evaluate the pros and cons of such a potential merger? In your response, try
to consider issues such as patient mix, case mix, the surgeons’ specialty areas, the
different business models used by the two practices, and the effects on the employees,
patients, surgeons, and the community.
3. Use the information presented in Table 3 to expand the ABC model for MCCS to
include the direct costs. Determine the doctors’ compensation and the malpractice costs
per unit for each cost object. Compute the total unit cost for each cost object before
doctors’ compensation is included by adding the malpractice unit costs and the indirect
unit costs from Table 2. In order to do that, you will need to determine a methodology
for assigning doctors’ compensation cost to the cost objects, and a methodology for
assigning malpractice insurance cost to the cost objects. Make sure your response fully
describes each of these methodologies and support your reasons for choosing them.
For example, should malpractice costs be assigned to each and every cost object? Why
or why not? Should malpractice costs be assigned equally to each relevant cost object
or should they be assigned in proportion to some cost driver? Why? Which cost driver
did you use to assign doctors’ compensation to the cost objects and why? Also compute
a total unit cost for each cost object that includes doctors’ compensation. Discuss these
results in your write-up, and include comments as to why the cost objects are different
for this question than they were in the model that only assigned indirect costs to four
cost objects.
4. Use the information in Table 4 to compute the average collected revenue per unit for
each of the surgery/procedure cost objects, and compare it to the unit costs (direct plus
indirect) assigned to that cost object. Compute the profit per unit both before MD
compensation is included and after MD compensation is included. What is the most
profitable ‘‘product line’’ for MCCS? What are the reasons it is more profitable? For
example, is the collection rate higher? Are the costs lower? How does this break down
by payor class? Given that the surgeons are the business owners and can take business
profits in the form of compensation or partnership distributions, do you think MD
compensation should be included as a cost in the profitability analysis? Prepare the
most useful profitability analysis that you can and interpret it for Linda and the MCCS
surgeons. Do you have any advice for MCCS?
5. Given that a surgeon can only work a certain number of hours per year, what can you
say about the profitability of the cost objects when this constraint is taken into consid-
eration? Compute the profit per MD minute for each cost object. Think about the
allocation of scarce resources when making product mix decisions. What is the scarce
resource in a medical practice? Is it always scarce? What role does capacity play in a
medical practice? Do you have any advice for MCCS?
6. Prepare an analysis of the profitability by payor for the CABG and pacemaker services.
Which payor (like a ‘‘customer’’) is more profitable with respect to CABG services?
With respect to pacemaker services? Explain. Do you have any advice for MCCS?
7. Linda stated that the number of no-charge office visits in the post-surgery global period
varies widely for different types of patients. Patients over age 65 who have a CABG
surgery come in for an average of five such visits after surgery. Most of these patients
are covered by Medicare. On the other hand, patients under 65 who have this surgery
often only come back for two such visits. She believes that most of these types of
patients are covered by BCBS. Extend your analysis from Question 6 so that the cost
of a CABG for different payors (consider only Medicare and BCBS) includes the
costs of the average number of no-charge office visits. What advice do you have for
MCCS?
8. Suppose that the MCCS surgeons actually work 80 hours per week each, 50 weeks per
year (not every work hour is ‘‘billable,’’ as they spend time studying new medical
procedures and drugs and managing the business). Now comment on the ethical and
social policy issues raised by your analyses in earlier questions. Should government
play a role if surgeons make decisions that are best for their practices’ profitability but
perhaps not best for society? Explain, and make sure to consider the long-term rami-
fications of your suggestions. For a good approach to moral reasoning, see ‘‘Thinking
Ethically: A Framework for Moral Decision Making,’’ developed by Velasquez et al.,
and located at http://www.scu.edu/ethics/publications/iie/v7n1/thinking.html.
5
The AICPA Core Competency Framework can be found at http: / / www.aicpa.org / edu / corecomp.htm.
6
Go to http: / / www.aicpa-eca.org / library / ccf / competencies. You must register, but it is free. Choose the Library
tab, then choose Core Competency Database.
7
King, P. M., and K. S. Kitchener. 1994. Developing Reflective Judgment: Understanding and Promoting Intel-
lectual Growth and Critical Thinking in Adolescents and Adults. San Francisco, CA: Jossey-Bass.
new accounting professional to understand both internal and external business environ-
ments. This case gives students practice in several elements of this competency category.
For example:
● Strategic/Critical Thinking: The case questions are quite open-ended and request that
students evaluate the pros and cons of a potential merger, locate and discuss the
strengths and weaknesses of one business model over another, and interpret accounting
information in a new and unfamiliar context. Level 1 of this competency includes the
ability to identify uncertainties about an organization’s strengths, weaknesses, oppor-
tunities, and threats, and the ability to analyze strategic information is a Level 2 skill.
For an undergraduate class of juniors or seniors, it is likely that students will only
exhibit these skills to Level 2. In a graduate class, however, you may see students with
skills at Level 3, which includes the ability to list pros and cons for various decisions.
Just about every question in this case requires students to use strategic and/or critical
thinking skills.
● Resource Management: Question 5 in this case is specifically targeted at this compe-
tency. As students work on the case they realize that the doctors in the case are them-
selves the resource to be managed and allocated to the various services rendered by
the surgical practice. The ability to identify the scarce resources in an organization,
and to understand that there are uncertainties about resource availability, is a Level 1
skill in this competency. At Level 2, students should be able to discuss how the MCCS
surgeons should make decisions when they are at or near full capacity. Question 8 in
this case emphasizes Level 3 of this competency by asking students to discuss the
social costs and benefits that come from the business decisions of surgeons, such as
those at MCCS, when faced with capacity constraints. In our experience, undergraduate
students are likely to exhibit low Level 3 skills here, but graduate students may be able
to demonstrate Level 4 skills and describe how these social costs and benefits may
change as the environment (e.g., demographics) changes.
● Marketing/Client Focus: In Questions 4 and 6 of the case, we ask students to determine
the profitability of the product lines and the payors for MCCS. This makes them con-
sider uncertainties about its relationship with its customers, which is a Level 1 skill in
this competency. Students should be able to recognize that MCCS can define either the
patients or the insurance companies as the customer, and understand the expectations
of each. This is Level 2 for this competency.
Another category of competencies in the Framework is the Functional Competencies,
which are the skills that allow accountants entering the profession to assess pros and cons
of alternatives and implement decisions. The questions in this case give students practice
on these elements of the Functional Competency category:
● Decision Modeling: In this case students are asked to analyze relevant data and then
offer advice to the medical practice on issues such as case mix, evaluation of third-
party payors, and a possible merger. They must identify the problems (Level 1) and
consider alternative solutions (Level 2), given in the form of advice to the surgeons
(supporting their decisions with their quantitative analyses is Level 3). We believe that
undergraduate students will perform at a low Level 3 (the analysis might not perfectly
support the decision), but graduate students should perform at a high Level 3.
● Measurement: The case requires students to determine the best measurement to use
when comparing the costs of different medical practices. No guidance (except ‘‘re-
member to remove size effects’’) is given in Question 1, and the case write-up must
submission. The only information available is the comments we get from students either
orally or in their group member evaluation forms. Surprisingly, our anecdotal evidence
here is that undergraduate students perform at a higher level in this competency than
do graduate students. It may be that graduate students are also often employed full-
time and less likely to act as mentors due to time constraints.
● Communication: The magnitude of the final product and the dynamics of the group
environment require students to work on their communication skills. Additionally, each
group is given its own webpage within Blackboard or WebCT, complete with email,
discussion board, digital drop box, chat rooms, and virtual classrooms. This is often a
new means of communication for the students but we have found they make very good
use of many of these tools. We see all students exhibit a Level 1 skill here in that they
identify uncertainties about the best way to communicate. Postings on the group dis-
cussion board show that they take a few iterations to figure out whether they should
all commit to checking the discussion board daily or whether they should use email or
a cell phone to let group members know that something has been posted. Level 2 skills
here include the ability to place information in an appropriate context, but we can
assess this only for the group, which usually represents the person with the best writing
skills. Similarly, Level 3 skills can only be assessed for the group as they include the
capacity to display information so that it is meaningful to the reader.
● Project Management: The groups have approximately eight (under the quarter system)
or 12 (under the semester system) weeks to complete this project. To assist students in
the development of their project management skills, we usually provide interim dead-
lines for submission of drafts. However, within these deadlines, it is up to the groups
to manage the disparate schedules of the group members so that the project is completed
in a timely fashion. At Level 1, students can identify project goals and determine what
information is relevant to achieving that goal. When group members use methods to
measure the project’s progress, these are Level 2 skills. The facility to prioritize and
delegate is a Level 3 skill, and Level 4 skills include the capacity to effectively manage
the human resources assigned to the project. All four skill levels are needed in this
case study.
Implementation Guidance
We have used this case in several different settings and several different ways. Our
experience allows us to give advice on the audience, managing the case in the classroom,
and assessing the case.
Suggested Audience
Most frequently this case is used in an undergraduate cost accounting class with most
students being accounting majors. However, we have successfully used this case in a Mas-
ters in Accountancy program and in M.B.A. programs. When using the case in a graduate
setting, we change only our expectations for the results and we do not change the case.
Students should have been exposed to the concepts of direct and indirect costs, fixed and
variable costs, and activity-based costing. Most cost accounting texts include an early chap-
ter that reviews cost concepts, which should act as a refresher for students in a cost ac-
counting course. This is usually the first chapter we cover. Next, we usually cover the
chapter on job-order costing as it helps students remember the basics of assigning costs to
cost objects. After that, we go immediately to the activity-based costing chapter, and often
cover that material in the context of this case study. By the third week of class, we feel
that this gives the students enough background information to begin the case study.
some surgeries and procedures, despite evidence that these costs were increasing, was that
the reimbursement rates should not necessarily be based on practices’ cost per unit of the
surgery or procedure. The CMS stated that the cost per unit would increase if surgeons
simply did fewer surgeries and procedures. We call this ‘‘the lazy doctor argument’’ in
class. If many of the costs of a surgical practice are fixed costs, the CMS is indeed correct,
and this can be related to the volume variance coverage. This leads to a discussion about
the motivations of surgeons and how it is likely or not likely to alter their behavior.
Interim due dates, we’ve found, are essential. We provide feedback on these drafts and
keep copies of our comments so that we can assess whether the final submission has
incorporated this feedback. Additionally, instructors must consider the fact that students
may share files from semester to semester. If the case were to be used in consecutive
semesters, students must be made aware that reuse of any portion of a previously submitted
case will have severe consequences. We often use different cases from semester to semester,
and do not frequently use this more than once in an academic year.
student assessment of the case, and we have collected these assessments from 171 students.
These responses are summarized in Exhibit 4 in the Appendix.
We asked students whether the case helped them develop their analytical abilities and
their critical thinking abilities. We use a scale of 1 to 5 where 1 represents ‘‘strongly
disagree’’ and 5 represents ‘‘strongly agree.’’ (Refer to Exhibit 4 in the Appendix.) In class
we explain to them that, for evaluation form purposes, analytical abilities include the skills
to understand and manipulate the data. Critical thinking skills, on the other hand, are those
that allow a student to bring these details to a higher level so that he may analyze a bigger
picture. The average score for the students’ assessment of the case’s ability to enhance
analytical skills was 4.27. Nearly 91 percent of the student respondents said that they agreed
or strongly agreed with the statement that the case helped improve his or her analytical
abilities. Similarly, nearly 92 percent agreed or strongly agreed that the case helped improve
critical thinking abilities. The average score for whether the case improved critical thinking
skills was 4.35.
We’ve found that students often don’t like working in groups. Anecdotally, they tell us
that their schedules prevent a sufficient number of face-to-face meetings. Since the students
are given online communication tools to alleviate this problem, we asked them whether
this case improved their ability to work in groups. Nearly 70 percent of the students reported
that they agreed or strongly agreed that the case was helpful in this regard. The average
score on this questionnaire item was 3.88.
We are aware that this is a time-consuming project and were interested in whether
students thought so as well. Before summarizing the evaluation forms, we thought the
average score on this item would be close to 5.0. However, the average score was 3.79,
indicating that the students’ perception of the workload was not as bad as we had thought.
Since we believe this case covers numerous AICPA core competencies, we thought we
would ask students if they believe the learning experience was worth the amount of effort
required on this case. Just over 53 percent of them agreed or strongly agreed that it was
worth the effort. The average score on this item on the questionnaire was 4.11.
We left space on the questionnaire for student comments about the case. Here is a
sampling of the positive comments:
● This project was very difficult, but helped [relate] what was taught in the classroom to
the real world. After the fact I can honestly say that I really did enjoy the case because
I learned a great deal.
● This case was great hands-on practice for the concepts we were learning in class. I
also felt a great sense of relief and accomplishment in completing this project because
it did take so much time and effort.
● This case study made me think about things from different perspectives ... It is probably
the first time that I did a project that encompassed accounting, ethics, and the practi-
cality of running a business all into one project.
● This case involved a lot of time and work, but I think it benefited the overall learning
experience of the course. I would definitely recommend continuing to use this particular
case in the future.
● I really enjoyed this case. I like doing real-world applications of classroom teachings.
This case provided a good background for a lot of the work we did this semester.
● It is nice to finally use real-world examples in the accounting program. I am tired of
problems that have ‘‘pretty’’ answers that aren’t realistic.
● This was a valuable project experience that added to my knowledge of the health care
industry. I cannot believe some of the things that take place out in the business world,
and this project highlighted those hidden realities. I had a good time learning about
analysis based on cost accounting.
● I like how we did not have to meet in person with the use of the message board. It
saved a lot of time and all of our thoughts were much more organized.
● At first, I was nervous about this case because just reading the information intimidated
me and I was sure that I would not be able to contribute because it was going to be
too difficult. But, since we took it step-by-step, it was easier to approach and dissect
one topic at a time, and after answering the first question and really understanding
what was required, I grew more confident in my abilities. At the end, I felt a real sense
of accomplishment and felt more confident in my ability to do analysis and use critical
thinking skills. I am glad I did this.
● It was definitely interesting. I guess I never knew that there was so much to consider
when providing health care.
● It was a good challenge, and a good way to prepare us for what we would expect to
encounter in real-life situations.
Although the frequency of positive comments was greater than that of the negative
comments, here is a sampling of the negative comments:
● It was definitely a tough assignment. It was especially difficult going into it without
any prior knowledge of surgery practices.
● The material was really confusing and it was hard to understand.
● I see how the case relates to the class, but I just hated it. It was really hard working
over the net. I don’t like working over the net and I hope that I never have to again.
● Some members had trouble doing this case due to the level of critical thinking involved.
The case did take up entirely too much of our time.
● I wish we talked more about the case in class where you could tell us more about the
situation.
● Hard to communicate via WebCT. I wasn’t in the habit of checking it regularly.
● I found the case a little confusing at times. The data did not make good sense to me,
but I guess that was intentional to make us think. I was intellectually challenged and
for that I thank you.
● We should be able to choose our own group members.
APPENDIX
SUPPLEMENTARY MATERIALS
EXHIBIT 1
Example Cover Page with Instructions
EXHIBIT 1 (continued)
ing of the material in the case that is apparent when I read it. Also, each group member will com-
pletean evaluation form about the other group members. This form will be used to determine whether
each individual group member deserves to get the same score for the case that the case itself earned,
or if they should receive a lower score. You should look at the example group evaluation form. For
example, in this group, all members said that Lazy Larry did nothing and Lazy Larry himself did not
even bother to turn in the group evaluation form. Therefore, the example case earned 122 points but
Lazy Larry got zero points. This is an attempt to reduce the free-rider problem often seen in such
group case assignments. So, participate in your group or your score will suffer!
Have fun and learn a lot!
* Note these interim due dates for drafts:
● A draft of your group’s response to Questions 1 and 2 is due electronically by midnight on XX-XX-0X.
● A draft of your group’s response to Questions 3–5 is due electronically by midnight on XX-XX-0X.
EXHIBIT 2
Example Competed Case Scoring Rubric
Max Group’s
Points Points My Comments
Met interim due 20 15 Your group was late with the first interim due date.
dates
Group dynamics 15 15 The group’s discussion board was lively and I could see
and case by reviewing it, and the group’s minutes of their
development face-to-face meetings, that most of the group
members contributed. Although most group members
contributed in different ways, most did add value. I
could see the seed of an idea in a spreadsheet or
document, and then the changes made to this piece
of analysis as the members made their comments.
Overall case 15 15 Your case looked very professional. You had headings
format and for your answers and even subheadings that helped
presentation me follow your logic. You had footers with your
group’s name and page numbers, which really helps
make a printed document look nice. Your graphs and
tables were included next to or near the text that
discussed them, and you even wrapped the text
around these images. Very cool. Everything about the
presentation made me aware of the time, effort, and
degree of care put into the creation of the final
submitted document.
(continued on next page)
EXHIBIT 2 (continued)
Written 20 12 This is the only part of your document that kept it from
communication being an example of something you would submit to
your boss. Your writing style was too informal. You
should use the spelling and grammar checker in
Word (under Tools, Options, Spelling and Grammar;
you can choose to check your writing style as
‘‘casual’’ or ‘‘standard’’ or ‘‘formal’’). It seems that
someone in your group should have noticed this
informality. For example, consider this sentence from
your case:
‘‘MCCS’ travel costs are way high. What’s up with
that? Are the docs just cruising around in their cars
all the time?’’ Remember that the document should
have been proofread several times by your group
members before I received it, and that Word’s spell
checker and grammar checker should be used each
time. It doesn’t catch everything but it does catch a
lot. At least you had complete sentences, and you did
separate your topics into paragraphs, rather than
leaving large masses of unrelated text for me to sort
through.
Depth of analysis 80 65 Please see my comments embedded in your case. Note
and content that the final rubric I use will be much more detailed
here, and will contain several SPECIFIC things I
will be looking for in each question. But I can’t tell
you those things here because I want you to discover
them.
Group Total 150 122
EXHIBIT 3
Example Competed Group Member Evaluation Form
Each individual group member: Please complete this form and return it directly to me via email in
order to complete your case submission. It is due at the same time as the case study is due.
Section 1—Please indicate the level of your agreement with the following statements.
1-Strongly Disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly Agree
Level of
Statement Agreement
This case helped improve my analytical abilities. 5
This case helped improve my critical thinking abilities. 5
This case helped improve my ability to work in groups. 3
This case was one of the most labor-intensive projects I’ve been assigned 5
in college.
What I learned doing this case was worth the time and effort. 4
(continued on next page)
EXHIBIT 3 (continued)
EXHIBIT 4
Summary of Students’ Assessment of the Case
Mean on Scale of 1
(Strongly Disagree)
to 5 (Strongly Agree)
Item on questionnaire n ⴝ 171 students
This case helped improve my analytical abilities. 4.27
This case helped improve my critical thinking abilities. 4.35
This case helped improve my ability to work in groups. 3.88
This case was one of the most labor-intensive projects I’ve been 3.79
assigned in college.
What I learned doing this case was worth the time and effort. 4.11
TEACHING NOTES
Teaching Notes are available only to full-member subscribers to Issues in Accounting
Education through the American Accounting Association’s electronic publications system
at http://aaapubs.aip.org/tnae/. Full-member subscribers should use their usernames and
passwords for entry into the system where the Teaching Notes can be reviewed and printed.
If you are a full member of AAA with a subscription to Issues in Accounting Education
and have any trouble accessing this material, then please contact the AAA headquarters
office at office@aaahq.org or (941) 921-7747.
REFERENCES
American Institute of Certified Public Accountants (AICPA). 1999. AICPA Core Competency Frame-
work for Entry in to the Accounting Profession. Available at: http: / / www.aicpa.org/ edu /
corecomp.htm.
———. AICPA’s Educational Competency Assessment. ECA Website. Available at: http: / /
www.aicpa-eca.org/ default.asp.
Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.
(undated). Effects of Health Care Spending on the U.S. Economy. Available at: http: / /
aspe.hhs.gov / health / costgrowth.
King, P. M., K. S. Kitchener. 1994. Developing Reflective Judgment: Understanding and Promoting
Intellectual Growth and Critical Thinking in Adolescents and Adults. San Francisco, CA: Jossey
Bass.
Velasquez, M., C. Andre, T. Shanks, and M. J. Meyer. Thinking Ethically: A Framework for
Moral Decision Making. Available at: http: / / www.scu.edu / ethics/ publications / iie/ v7n1 /
thinking.html.
Wolcott, S. 2006. College Faculty Handbook. Available under the ‘‘resources’’ tab at: http: / /
www.WolcottLynch.com.