Health Care Financial Management - Coursework Example

Health Care Financial Management Administration of a non-profit hospital is a rather complicated process which involves application of fundamental levels of finance management with ultimate consideration for balancing demands and requirements of different departments. 1 According to the given context, I am to raise $100,000 in two days toward payroll; but have little idea about the organization’s current cash balance. Although there are hundreds of accounts payable checks sitting in drawers, all meant several purposes. Since employees are the central point of an organization that determines the overall sustainability of the firm, they should be paid right time. In the opinion of Eisen, “payroll represents the compensation that is regularly paid to the employees of a business organization” in the form of salaries, wages, or commission (Eisen, p.179). Since satisfied workforce is the essential part of an organization, I would only consider the stability of the firm, and all other issues are secondary. In a modern healthcare organization, a considerable volume of business transactions take place each day by which a hospital owes debts to its suppliers. Normally, these debts are not paid directly to the vendors at the time of good/service delivery. Large business concerns maintain separate accounts for the payment of debt to the vendors, namely ‘accounts payable’; and instead of cash payment, debtors are paid through checks which is a safer and easer method for payment. “The cash payments for business expenditures are mostly for supplier’s invoices processed through the accounts payable system.” (Trenerry, 1999: 119). Initially, I will report the issues to my senior manager and with his consent I will temporarily make use the accounts payable checks to overcome the crisis. I would implement ‘float’ tactic, the ‘slow disbursements of accounts payable’. Float is defined as “the amount of money tied up in checks that have been written, but have yet to be collected and encashed” (Khan & Jain, 2004: 18). In other words, it is the difference between book balance and actual balance of cash, which happens due to the delay in proceedings. There is a time gap between issue of a check and its encashment. The check amount is debited in its books of accounts as soon as a firm issues the check, but it is actually debited from the bank account only at the time of its encashment. Therefore, I will withdraw money from the bank with the prior sanction of my manager so that I can disburse the salary amount. By using the float technique my organization can issue the accounts payable checks, although the bank balance is insufficient to meet the required money. I believe that the firm will be able to arrange money from proper sources by the time of the submission of the respective checks. This is the possible remedy I find, which can resolve the issue without causing harm to anyone. 2 The second issue is more complex which requires strategic approach to bring out the real story of organizational misconduct. Hence, in order to avert all situations that might affect my own integrity, I will report the matter to the higher authorities in time. However, there are certain actions that I can initiate for resolving this particular problem before taking it to the higher levels of the organization. To illustrate, I will give priority to patient’s problem as this issue would have caused lot of inconveniences to many of the potential customers. Generally an institution will record all cash transactions in a book called cash book from which one can identify the persons who actually paid their bills. Having examined the cash book, I would make arrangements for crediting the patients’ accounts to solve the persisting discrepancy. The involvement of one or more employees is evident in the theft. However, being a fresher I can not easily identify the fraud all by my own efforts because there are hundreds of employees working in the office. The sole element that might lead me to the culprit is the copies of receipts sent by the patients which bore the signature of four officials. Some of them might have manipulated the receipt book in order to commit some unfair deals. I can confer with some of them to verify the genuineness of the receipts sent by the patients. Since many of them are officially seniors to me, my intervention may cause employees’ resistance that would affect my career future. However, in order to comply with the organization’s code of ethics, I must do all possible things to disclose the secret. In addition to the matter of legal or ethical compliance, there is another cause of threat that I might face in future if I do not inform about this account fraud. For instance, an efficient audit program can bring out the theft in the future for which I might become answerable. Hence, it is always advisable for an individual like me to submit a detailed report to the higher authorities regarding the identified theft. 3 In the context of two departments of the same hospital convincing the management about the possibilities of a successful turn of treatment results with installing new techno-aided equipments; it is difficult for me as the administrator to take a right decision as to which of them should be considered better. The proposal from both departments sounds useful and purposeful but the stress of financing the emergency improvement measures does not seem comfortable to me at this position. Sometimes both of the proposals perplex the chooser, because, their demand is convictional and result oriented with little scope any flaw in the operation as drafted in their lay outs. The proposal from the pediatrics department comes in the forefront while referring to the detailed requirements is concerned. Hospital is a place where ethics play a vital role in the operation. Considering the essential factors of child care and sustainability of the goodwill of the hospital, it is important to deem the department’s need as important to the hospital. Large amount of money needs to be spent on buying and installing new equipments as demanded by the pediatrics department. Children are subject to infections and contagious diseases in connection with changing climates of any region. A majority of children’s cases for medical treatment needs are due to massive attacks of seasonal diseases – some of them prove fatal as well. While the proposal of the department is forcible with obvious reasons of great gravity, it is too innocent to state that the hospital is not in a position to meet many of the demands of the doctors and supporting staff of the pediatrics department. Hence it is the need of the hospital to find a potential means to raise funds and facilitate the purchase of minimum requirements. All the trials required for this purpose should consider the importance of various factors related to the demands of the hospital staff. As the first phase of the purchase process it is necessary to identify the variable of actual purpose and actual consumption of the equipments. The purpose of the installation of new equipments is of a long term effect; doctors and staff take the chance to utilize the modern techniques to support treatment of patients. Recommendation of purchase can be made if the demand is for architectural supports used in the treatment of patients’ body. Another demand of the proposal is about an advanced intravenous medical support for patients suffering from serious illness. Doctors also demand a sophisticated operation theatre system which has all facilities technically governed – right from diagnosis to post operation bed shifting. These improvements require huge amount of money. For radiation therapy, it is another spectrum to be opened specially for the purpose. Priority of intensity of diseases is concerned; the hospital must consider the implementations of radiation equipments with immediate effect. A large number of cancer patients can be cured if the proposal is sanctioned as per the plan. Since the hospital is ailing for lack of funding from service bills, it is necessary to raise capital investment from outside sources. From the administrative point of view, the hospital has to form a purchase committee to negotiate with other hospitals for facilitating hiring of certain equipments rather than buying them out rightly. This committee studies the possibilities of fund raising by way of donations and sponsorship from large and medium donors. Employment of Public Relation Officers at different areas of possible potential donations also can be undertaken to solve the issue. Finally, ascertainment of public utility of the equipment is monitored with the information collected from other hospitals using similar ones. The variable usage of the new equipment by the two departments at different hospitals operating the same technical mechanisms is taken as the parameter to decide on what is to go with or discard. The administration does not rule out the possibility of a potential donor or sponsor coming forward on to the help line; that is what the hospital presently has to look forward. 4 The success of a small hospital depends on an efficient formulation of a realistic budget for the operation of it. The ability of a small hospital consisting 50 beds is proportionate to the relaxations and considerations allowed by the legislature and internal factors like financial management. Preparation of the financial budget for the operation of the small hospital sets guidelines for the management to effectively operate it (Newman, Clement and Cooper: 76). A budget should be, by all means a device to minimize the expenditure and increase the revenue thereby. The main purpose of framing a budget is to provide documental presentations of the hospital goals and to present evaluation strategies to financial performances that work as tools to control costs. The first step in preparing an operational budget is making a statistical budget. A statistical budget is the one which has to be prepared for the expected operational cost analysis (Neumann et al. 56). In this case the basic key is the estimated number of patients visited per day. In order to claim the information, at least five years operational inventory is needed. As statistics is a study of expected things or aspects, it is necessary to estimate expenditure too. The next step of framing a budget is the preparation of the revenue budget. This budget is drafted with due consideration for the estimated value of what could bring expected results. Revenue budget is the core of the entire system as it can give better ideas than we really afford. Next element of the budget is operating budget. This budget is purely based on the expenses and revenue budget. Surplus of the amount is transferred to capital budget. In order to prepare for the description of examination, it is essential to gather as much information as possible. Works Cited Eisen, Peter J. Accounting the Easy Way, Barron’s Educational Series, 2003, Print. ISBN-0764119761. Khan, MY and Jain, P K. financial Management: Text, Problems And Cases. Tata McGraw-Hill, 2004. Print. ISBN-0070583404. Newman, Bruce, E., Clement, Jan, P. and Cooper, Jean, C. Concepts and Applications for Health Care Organizations. Edn4, Kendall/Hunt Publishing Company, 1999. Trenerry, Alan. Principles of Internal Control, University of New South Wales. Press Ltd, Sydney, 1999. Print. ISBN- 0 86840 401 2. Read More