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Why the interests of the converse health systems and the hospitals were not aligned when the hospitals are evaluated based on performance budget in the new budget. Prior, all the entities in converse used to be profit centers. When formulating the budget, they forecasted on the surplus expected. The figures of the projection were taken to the board for consideration. The board advised that the budget be revised by cutting on the unnecessary expenses or provider entities so as to improve on the profitability. The standard expense center approach would fit the bill. Transfer prices for scenarios in exhibit 6. Using a cost based approach to calculate the transfer price CONVERSE HEALTH SYSTEMS Exhibit 6.

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