Financial Resource Management of Bupa Care Homes - Essay Example

?ESSAY: FINANCIAL RESOURCE MANAGEMENT OF BUPA CARE HOMES By Introduction This paper delves on outlining and analyzing the how to manage the financial resources in the health and the social welfare. In this paper, BUPA Care Homes is our case study. Costing has five fundamentals that should be adopted in any costing exercise. 1.1 Principles of costing Stakeholder engagement Under this principle, all stakeholders should be identified, concentrate on the ones that would be positive or negative towards your targeted goal. Be very precise and detailed on the demands you want from each stakeholder, link stakeholders’ interest with your aims, and prioritize. In the BUPA report, they work with the government and other organization to aid in aligning the agenda and long-term policies. BUPA Company should involve all the stakeholders for the proper costing to be enhanced. (Baker 2007,pg.125).   The principle of consistency This principle needs the following of a similar procedure and in case of any change then an explanation to the effect is therefore ideal. BUPA Care Homes should ensure that the auditors follow similar steps in the preparation of the financial statements, without this, any change might make correct interpretation of the financial data impossible (Haldane 2011, pg 134). Principle of Transparency This principle states that for effective costing, it requires openness and honesty visibility in all transactions, ensuring that all information on procurement procedures, opportunities, and processes are well outline and publicized. In BUPA Care Homes, transparency is seen when the Directors read out the annual reports and the audited financial statements (Higgins 2004, pg 118). The materiality concept An item is considered material it affects the decision making process of the users. This is the case when the material is not stated correctly or it is omitted. Materiality concept explains that costing considers the tangibility of an item and the processes involved. In BUPA Care Homes, costing should focus on the tangibility that is attached to the residential homes and the health care service. An error that is too minor to affect anyone’s knowledge of the accounts is immaterial. In the accounts preparation, tangibility and intangibility of an item should be considered, so that resources do not go to waste in the pursuit of further detail. This is usually a very subjective exercise (Field 2007, pg. 105). Objectivity: This principle requires that an accountant should work with the view of promoting the aims. They should be showing high levels of neutrality while executing their duties. The accountants not be biased in their operations. This therefore means that they should keep of implementing their personal responses and wishes. They should be straightforward and focused to the facts as the case guarantees. BUPA Company should ensure that the accountants prepare detailed financial statements that are simple and easy to analyze. The accountants should therefore adopt and implement neutral grounds during the analysis of the financial data and statements (Armstrong 2004, pg 46). Causality principle: In many costing exercises, it has always been noted that the cost of payment for any event or service has a relationship with its cause. The nature of the cause therefore is used in the appropriate allocation and budgeting. BUPA should use this principle; do costing after doing proper investigation and coming with the correct findings about the cause of an occurrence so at to reduce the chances of subjectivity. This is almost similar to the principle of the proximate cause in the cannons of insurance that states clearly that for one to be compensated; the risk that has occurred must relate directly with the property insured. In insurance the compensation cost is usually based on the amount of loss and the premiums paid are based on the nature of the property to be insured (Britton 2007, pg 34). Data accuracy principle The cost of an item is always charged after the situation has occurred these are called no cost and can therefore not be carried in any cost center. This is for the actual ascertainment and determination of the actual value of the item or cost incurred. BUPA care for homes adopts this continuous record keeping and preparation of the financial accounts that reflects the business financial position (Edward 2013, pg. 54). 1.2 The main heads / amounts of income for BUPA Care Homes The main heads in the last financial year were; Income from shares which amounted to British ? 318972, Health care revenue British ? 73454000, Other receivable British ? 122542, Bank deposit British ? 900000000 (Armstrong 2004, pg. 26). The following pie chart shows BUPA Company main heads in the last financial year. 1.3 The regulatory requirements for managing financial resources Following the set regulations in the any state assists in the improvement and the development of the educational tools in health and family home care centers. BUPA financial statements should be prepared according to the Generally Accepted Accounting Principles of United Kingdom. Health care or social care institution regulations are the rules that make access to the access to the facility easier (Field 2007, pg. 122). BUPA Care Homes complies so much with the laws of the industry. The United Kingdom Services Authority is the financial regulator of BUPA. The business is also on the move of establishing and making a strong relationship with the regulators in the surrounding environment and the home country. The Board of BUPA business also requires that the staff should undergo regular training so that the quality of the services delivered , the detriment of the customers are averted, the business reputation is maintained and even to prevent the financial consequences (Haldane 2011, pg 46). 1.4 System of managing financial resources in BUPA In BUPA the system of managing financial resources is that, there must be an approval by the board for the budget or the management for the resource to be in operation in the business (Field 2007, pg. 12). 2.1 The diverse sources of income that may be encountered in health and social care A health care facility can have very many sources of earning for the operations to run, as they are planned by the management. Like for the case of BUPA, the business has continued in its dealings with the government and this has fostered a long-term development strategy for the business. The local authorities in the area also provided some funds to the business for its various operations to continue running (Field 2007, pg. 89). 2.2 The factors that may influence the availability of financial resources in BUPA The changes in the in the financial clinical and health and safety standards in the BUPA markets could possibly increase the cost of operation of the business, and thereby reducing the revenues and diminishing the rates on returns (Haldane 2011, pg 64). 2.3 The budget expenditure in BUPA The transactions could involve the various cash flows. The cash outflows are those that are paid out by the business. In BUPA the operating expenses in 2011 was ? 435,255,000 while in 2012 it was ? 443249000 2.4 How decisions about expenditure are made within a health or social care organisation A health or social care centre makes various decisions on its own expenditure. In BUPA health care and social homes, various decisions are made on revenue expenditure and on the capital investment. The development of the facility is the top priority factor that the management focuses on so much for the better of the services that are provided by the facility. Major decisions in the business are always approved by the Board. The decisions are the information that is required in making the financial decision in any institution can be based on various parameters that must be weighed before the final decision is made. The factors that are considered include emergency or urgency, priority or the order of importance, the amount of funds or money that is available in the accounts of the institution (Field 2007, pg. 48). The business maintains various operations by the expansion and continuous establishment of new health care homes and residential homes. In the year 2012, BUPA implemented a worldwide and global risk website or portal. This program enhanced faster reporting of risks and incorporated the various tools of check up. It also facilitated the close and proximate monitoring of risks. The businesses investments on the area are mainly done in cash Haldane 2011, pg 41). 3.1 How financial shortfalls can be managed Iin BUPA In any health care facility, there can be arising financial shortages. Financial shortfalls are cases that arise when the amount of money that is available is below the amount money that should be spent. It can as well occur when the amounts payable are more than the amounts receivable. The shortages can be met following different strategies. In financial management, funds are solicited from various sources to aid in the continued operation of any business. The money can be sourced from the financial institutions in the state, the ploughed back profits can as well be used, the savings that were kept aside can be used and through the government. In the case of the BUPA business for health and social care, they propose for the increased payment of the bed space on their rental houses and a higher conversion rate in the foreign exchange rates Haldane 2011, pg83). The business again has a higher and a larger access to the various debt capital markets that can aid the business in case of any deficiency and insufficiency in the operational funds. BUPA can also access top bonds in the markets to assist and boost the operations of the business. The financial shortfalls can as well be managed by disposing and releasing of the assets that are readily and easy to convert in to cash. Reserving and transferring of funds can as well be employed by the management. This can assist the management in the running of the business in the event of any emergency service that may need to be attended to and the main account is capital deficit and deficient. BUPA homes can as well take short-term loans and even bank overdrafts to assist in their operations. The various stakeholders of the business can as well do capital injection in cases where there are bankruptcy to help the business run is it should (Drury 2004, pg. 71). 3.2 The actions to be taken in the event of suspected fraud In the event that a BUPA Care Homes anticipates or suspects certain form of fraud, various measures are always undertaken to curb such kind of risks. In this situation the business make enquiries from the parties that are affected, conduct an investigation to know the actual truth on the fraud anticipated or that has occurred. The board of management thereafter conduct a consultation meeting among themselves to make the final decision on the appropriate measures that should be undertaken to the affected parties of fraud. BUPA also do close monitoring of the key risks and the various ways to curb them (Higgins 2004, pg 53). 3.3 The budget monitoring arrangements in a health or social care organisation In business operations, a plan has to be drawn. The plan acts as a blue-print that guides the operations of the business. This is done by the budget controller in the business. According to Baker, budgeting is all about preparing a plan, trying to work with it that is implementing it and also attempting to regulate the results of the plan so that they meet the financial expectations in the business. In monitoring the budget arrangements in a health care or social care organization, the monitoring reports have to be produced and submitted after an agreed period of time. It could be monthly or annually depending on the company or the organization. BUPA budget reports contain the actual spending by the end of the month or year compared to the budget and projected spending and other expenditures. In BUPA, operating expenses is ? 435255, financial expenses was ? 11811. Taxation expense was ? 11520 in 2011 (Armstrong 2004, pg. 17). In 2012, the BUPA budgetary plan was, operating expense ? 443249, financial expense ? 15045 and taxation expense? 9490. 4.1 Information needed to manage financial resources for effective financial management in the business. In financial resource management, BUPA should have a well-trained accountant who keeps records of the various financial transactions. Accounting knowledge is therefore needed by the finance controller of the business institution for proper management without any shortfall. For an effective and financial management, there is need for quality and accurate information on financial matters about the business (Haldane 2011, pg 76). 4.2 Relationship between care service delivered and ‘costs and expenditure’ The relationship between the care service delivered and the costs and expenditure is very vivid and can be clearly noted basing your argument and reasoning from the fundamentals of costing. The fee is paid upon the utilization of the facility and therefore the cost is not carried forward over to the next financial year. The expenditure related part of it comes when he consumer of the service spends and actually enjoys the service. The services delivered in the BUPA health care and social homes are charged based on the relationship. For the clients who are consuming the nursing service are charged based on the facility service rendered to them and not fixed cost. The clients who consume rental housing services for the elderly people that is provided by the organization also pay a different fee because the nature of the services are completely different (Baker 2007, pg. 102). 4.3 Financial considerations impact upon an individual using the health and social care service Consideration of financial factors to the individuals who use the health and social care services can have negative implications on such individuals. When BUPA chooses to escalate the prices on the for the services it provides, many will not be able to access the services (Haldane 2011, pg. 142). 4.4 Ways to improve the health and social care service through changes to financial systems and processes. Investing on health equipment to improve the service quality Certain cases may require use of technology for better operations and also for the desired output and outcome to be realised. BUPA Company should invest in equipment as one way of improving the health care and social care service standards (Drury 2004, pg. 121). Better remuneration of the employees For the employees to work well and diligently, BUPA Company should reward accordingly so that their working morale is stimulated and aroused. With this the quality of the service that the employees will deliver will be of great standards thereby attracting more customers to the business as well as improving and keeping the good image of the organization itself. By this the overall output of the firm will be great thereby increasing the volume of sales made by the firm (Field 2007, pg. 29). Better housing In the case where an organization would prefer to increase the sales the staff welfare should be of great concern to such organizations. This will boost the loyalty of the employees to the organization. BUPA Company deals with residential homes; it should therefore and will give the staff better houses to boost their morale towards the Company services. (Edward 2013, pg. 57). Better salaries and wages When the salaries and wages that are paid to the employees are low according to the prevailing wage rates, the employees will prefer to work in other firms and not the initial one. This will lead to poor quality services that will be delivered by the firm. To improve on the quality of the output or services delivered, BUPA Company should put into consideration the employees’ salaries and wages should go as per the prevailing wage rates so that they work in an environment that they find conducive and suitable for them. By so doing this they will interact well with the customers and the service delivered will be of quality (Drury 2004, pg. 61). Mobile clinics On the improvement of the health care service, BUPA Company adopt the mobile clinics that help in the emergency cases especially in the remote area and interior parts that are far from various health facilities. This is a vibrant and brilliant move that should be adopted to ensure that the emergencies and urgent cases are attended to and even the old who cannot move on their own to seek medication (Higgins 2004, pg 128). Conclusion In summary, this paper has explained much on financial resource management in BUPA Care Homes. The paper has shown the financial position of the Company, spending habits, and the ways of improving the services provided. References Armstrong, M & Baron, A 2004, managing performance: Performance Management in Action, CIPD, London Baker, J. 2007, Essentials of cost accounting for health care organizations, Jones & Bartlett Learning Britton A. & Ann Jorissen A. 2007 International Financial Reporting and Analysis, Cengage Learning, Boston, Massachusetts Drury, C. 2004 Management, and Cost, Thompson publishers, London Edward, J. 2013, Principles of cost accounting, Cengage Learning. Field, R. 2007, Managing with plans and budgets in health and social care, UK, Learning Matters Grier, W. 2007, Credit Analysis of Financial Institutions, Second Edition, Euro-money Books, Boston Haldane A. 2011, Capital Discipline, American Economic Association, Denver, Higgins R.2004 Analysis for Financial Management,McGraw-Hill Irwin, New York Lundelius, C. 2011, Detecting financial fraud in world of IFRS. Read More