Required: a. What type of specialized knowledge does Maxine Jones acquire in preparing the nursing schedule for the upcoming month? b. What are some of the consequences of the constraints Jones must operate under? c. Explain why City Hospital does not allow Jones as much freedom in her staffing decisions as her counterparts in private hospitals. Solution to Line item budgets, specialized knowledge, and control a. The major type of specialized knowledge Jones acquires in preparing the schedule is the working preferences of her staff. Next month one nurse wants to work only weekends, another wants nights because the kids are home from school, etc. b. Given the set of constraints on Maxine Jones’ staffing decisions (i.e., she has fewer decision rights than her counterparts in private hospitals), she is less able to take advantage of her specific knowledge of nurse preferences. This has a number of consequences: • The average quality of nursing services will be lower or nursing costs will be higher since Jones is less able to substitute among alternatives. Jones can’t substitute two nurse practitioners and a part-time registered nurse for two full-time registered nurses, for example. Since Jones is more constrained than her private counterparts in substituting among nursing types to meet schedule requests, she will not be able to compete as effectively and this will cause nursing costs to rise or nursing quality to fall, or some combination of the two. • There will be more turnover of nurses at City Hospital. • There will be more forced bed closings in City Hospital than other hospitals. Since Jones is less able to compete with private hospitals for nurses and will have more turnover, she will violate minimum staffing levels more frequently. These violations will cause beds to close, as new patients will be prevented from being admitted to an understaffed unit.