Reference no: EM132297995

A Decision-Making Challenge for Healthcare Risk Management

Two major risks have been identified in a healthcare system. The first one is “Delay in Service”, called Risk A, and the second one is “Leave of Personnel”, called Risk B.

For Risk A, if the service is completed by two days delay, client will apply $4,000 penalty. The possibility of this type of delay is 40%. If the delay is more than two days and less than four days, which has a probability of 25%, then $8,000 penalty will be applied. For more than four days with a chance of 10%, penalty is $20,000.

For Risk B, two categories for human resource leave are possible: Leave of a doctor with 30% possibility and leave of a nurse with 70% possibility. In the doctor category, the probability that a doctor who leaves the healthcare team is superintended is 25%, and in that situation the compensation will be $10,000. For any other doctor this amount is $4,000. Similarly, in nurse category, expert nurse leaves with 40% probability and entry-level nurse leaves with 60% probability. Compensation for expert and entry-level nurses are $2000 and $1000, respectively.

Compare Risk A and Risk B using decision-tree technique .