Tim manages the surgical department at the hospital. His job is to schedule surgeries based on urgency and availability of surgeons and medical staff. On a daily basis, four non$-$urgent surgeries are completed with one to two urgent surgeries. Urgent surgeries consistent of those that come into emergency due to medical urgencies such as heart attacks or car accidents. When there is an urgent surgery to be performed, and there is a scheduling conflict with a non$-$urgent surgery, Tim has the decision rights to postpone the non$-$urgent surgery to have the urgent surgery done first. Tim's annual budget is based on prior year spending with increases for inflation. Any unspent funds are taken out of Tim's budget and put into a general fund for the health authority to use in any department that needs more money. To correlate the spending, Tim is required to report the number and types of surgeries completed on a quarterly basis. Tim collects the information and sends it to his supervisor, who reports it to the Ministry of Health.

The strategic objective of the hospital is "accessible care to all". This has proven to be difficult especially since the pandemic. Since COVID, knee and hip replacements surgeries have been waitlisted for a minimum of $2$ years. To get people through, the Ministry of Health has provided a goal of having a knee or hip surgery completed within $1$ year of the patient being registered for surgery. As incentive, the Ministry of Health has provided additional funding which will be increased each year if targets are met for the knee and hip surgeries. Tim is required to report how many knee and hip surgeries are completed each quarter to his supervisor, who in turns sends it in to the Ministry of Health.

Required

Discuss the organizational architecture of the surgical department, specifically identifying the components of the three$-$legged stool.

Discuss the agency problem with how the annual budget is determined each year.

How does the Ministry of Health's initiative for knee and hip surgeries align with the hospital's strategic objective?

Identify the issues with the Ministry of Health incentives for completing knee and hip surgeries.