ABC Hospital operates on a charity basis. All expenses are paid for by the government.

Recently, the board of governors of the hospital has been complaining about the size of the budget and insisting that the hospital cut expenses. The major area of concern has been the cost of keeping patients in the intensive care. This cost has averaged Rs 1,000 per week per person, compared to only Rs 500 per week per person for keeping patients in the wards. Past history shows that of those patients in ICU at the beginning of the week, 50 per cent will be there at the end of the week, and 50 per cent will be moved to a ward. Of the patients in the wards at the beginning of the week, 50 per cent will be there at the end of the week, 10 per cent will get worse and be transferred to the ICU and 40 per cent will become outpatients. Of those persons who are outpatients at the beginning of the week, 85 per cent will remain outpatients at the end of the week, 10 per cent will be admitted to a ward, and 5 per cent will be admitted to ICU.

The board of governors believes the criteria for keeping patients in ICU are too strict and has instructed the ICU staff to relax the creteria so that only 40 per cent of the ICU patients remain in ICU each week and 60 per cent are transferred to wards.

The staff insists that if this is done, 20 per cent of the ward patients will be going into ICU each week and only 30 per cent will be transferred to outpatient status. The percentage of ward patients remaining will still be 50 per cent. There will be no change in the outpatient status.

Will the policy advocated by the board of governors actually save money?