The Efficient Outcome and the Contract that can Implement Outcome

Placement
Name
Institution
Placement
The Problem
In LTC homes, the principal is the board, and the manager is the agent. It is essential to note that the average wait for placement into a long-term case is too long yet some patients do not have the urgent need as it may be construed. Living a healthy and independent life is quite vital, but the way resources are utilized should also be taken into control. The demands and needs of the clients should be met adequately, and other factors such as the appropriateness of client placement and the needs of the clients awaiting placements should be taken into consideration. It is critical to only have the patients whose needs can only be met at the Long Term Care (LTC) homes and ensure that those whose needs can be achieved elsewhere are released. The LTC homes should ensure that they adhere to the government directives to those who are eligible for the homes and that the median placement is reduced.
Representing Placement for the LTC using the Principal-Agent Framework
As earlier indicated, the principal of the LTC homes is the Board which also sets standards for care and rules governing eligibility. The agent that operates the organizations is the manager in charge of daily operations. It is worth noting that the goals of the principal and the agent can sometimes conflict, especially when it is hard for the principal to understand what the agent is doing while both parties may want to maximize their utility. The interest of the Board may be that the funds disbursed to LTC homes are utilized efficiently and that all the patients that intend to be admitted in those homes are taken care of by the agents. The principal may also want that the average placement period is as short as possible and that all those that are eligible are admitted in the homes. If the agent is not controlled or restrained, there is likelier that the interest of the principal will be ignored because of the shirking behavior of managers. The Board expects that the more patients they admit, the more they get from the Ontario Ministry of Health while the management is in charge of the day to day operations.
The Efficient Outcome and the Contract that can Implement the Outcome
The efficient outcome would be a reduction of the average wait for placement in the LTC homes and ensuring that only eligible patients whose needs cannot be met elsewhere are admitted. LTC homes require sufficient Board members who can ensure that their managers deliver what is expected of them by introducing an effective control mechanism which does not lead to agency problems. Managers working in the LTC homes, sometimes do not work for the financial gain because of the wage is always low. The cause of the organization is, therefore, expected to be the primary motive of working in the LTC homes considering the little control of the LTC homes' Boards. Managers who are the agents are supposed to work for the interest of the LTC homes, and the board is expected to exercise low control.
In reducing the average wait placement for LTC homes, there is a need to have a pay-for-performance kind of contract which is likely to minimize the challenges between the board and the management. The incentive mechanism can boost the morale o...