Managing Financial Resources in Health Essay
Managing Financial Resources in Health
This is a report which is written based on the concept of financial management and the business resources in health care based company (Bryans, 2007). It is aimed to provide emphasis on the impression of costs and control that are available in the social health care settings. It is also required to provide deep examination of the system that are used in the health care industry to provide effective financial and resource management (Groppelli & Angelico, 2000). This ensures that the organization resources are managed effectively to provide adequate returns. 1.1 The principles of costing and business control systems
There are a number of costing principles and business controls which require the company to examine its current costs with the budgeted costs. This ensures that there is good cost control since the company spends its financial resources in accordance with the budget (Mick and John, 2003). Costing methods which the company uses should be the ones which control the company expenditures. The company should use bidding system when purchasing its health care resources since this provides amore legal guideline of procurement procedures (Martin et al, 2010). During the procurement process there should be high level of transparency, integrity and due diligence so that the company manages its expenditures and costs efficiently.
1.2 Identify information needed to manage financial resources There are a number of financial and non financial information which are required in the management of financial resources of the company (Martin et al, 2010). The availability of this information is very important in costs allocation, decision making and cost control so that the resources of an organization can produce high investment returns.
Transparent and Accurate Accounting Information
It is important for an organization to have accurate and transparent accounting information which can increase the confidence of their users (Watson and Head, 2012). This provides them with an opportunity to make appropriate decision which can improve the welfare of the company (Martin et al, 2010). Accurate information provides the management with a clear picture of the profitability, liquidity and efficiency of the company so that the information that the management have reflect a true state of affairs of the company.
Risk Management Information
The business organization must have deep understanding how it can manage both financial and business risks which are likely to affect its returns. This is necessary in health care business organization since it can cause fluctuation in returns which reduce the goodwill of the company.
Short and long term forecast
The health and social care company must have short and long term projections on the results which it plans to achieve. This is important in development of goals and strategies since these long and short term forecasts can only be met through establishment of good management strategies (Bryans, 2007). It is also important in the creation and formulation of budgets which reflects future performance of the company thereby allocating resources which is able to achieve the set objectives.
Audit Report Information
This is also important information which the company critically needs to manage its financial resources (Watson and Head, 2012). The Audit report information is important is providing an assurance whether the company has been properly managing its financial resource in the past or not (Martin et al, 2010). This can be used to improve the financial management styles which ensure that there is proper allocation of resources based on the audit report. It also influences external stakeholders to have confidence on the company so that they can provide credit or any financial assistance to the company.
1.3 Explain the regulatory requirements for managing financial resources Care Quality Commission
This is a very important regulatory body in UK which forces all health care settings to provide quality, effective and compassionate health services and ensure that there is constant improvement in healthy care service delivery (Watson and Head, 2012). It monitors the operation of health and social care settings and regulates the quality of their services.
Health care sector
This is a very important regulatory body which monitors the functions of health and social care settings. This ensures that the health care providers are transparent on their duties and follow certain health care procedures when handling patients (Martin et al, 2010). This is important in establishing high level of transparency and accountability in the management of health and care financial resources.
NHS Commission Board
This a is a very important regulatory body which helps health care settings in developing financial plans, budgets and management of operating activities (Bryans, 2007). This ensures that the financial resources are used according to the financial plan so there is effective financial control as set out in the health care act.
This is a regulatory body which requires the company to use accounting principles which are used in the preparation of accounting records (Jones and Atwal, 2009). These ensure that the financial statements are made in accordance with the law and they can easily be understood by all the users who are not financial experts. 1.4 Evaluate systems for managing financial resources in a health or care organization Financial management is the efficient use of the financial resources to meet the stated objectives of the company. Financial management system involves the use of different tools and procedures that authorizes the control, distribution and investment of scarce resources of the company to produce returns (Martin et al, 2010).
Financial systems are very important in generating current financial position of the company. This is through the use accounting procedures and principles which are used in the preparation of accounting records. The current status of accounts shows changes which had been made foe every disbursement (Watson and Head, 2012). The accounting systems such as automated management system ensure that the company receives instantaneous feedback. This reduces the errors which could have been reflected in the financial statements by correcting accounts which fails to balance or in case of over distribution of resources (Jones and Atwal, 2009).
The availability of financial resource management systems also is important in producing accurate financial reports which reflects true states of affairs and therefore the users of the financial statements can rely on them for decision making. 2.1 What are the diverse sources of income available to CareTech PLC in the financial year in 2013? There are different sources of income for CareTech PLC which they can use to meet its operating costs.
Sale of Drugs and other health care facilities
The company generates revenues by selling health care facilities to different health acres settings and clinics (Martin et al, 2010). This makes it to raise income which is used to pay its staffs and purchase other important goods which are used in health care industry.
Some organizations such as charities can provide funds to the company in the form of donors to finance other health care projects (Bryans, 2007). These funds can be used as a source of income to pay operating expenses, buy health care equipments and other health care facilities.
National and Local Government
The local or national government can allocate funds to the company to enhance the provision of health services (Watson and Head, 2012). This financial resource can be used to finance different health projects and provide other basic health services.
Private Health Insurance
This is a source of income to the company by allowing the patients to get medical services which are paid by the insurance companies (Mick and John, 2003). This therefore acts as a very important source of incomes since the insurance company pays the services offered by the company.
2.2 Factors that influence Income of the Company
Central Government allocation
The allocation of more financial resource increases the income of the company. This makes it to produce quality services since it has high income. Political Sensitivity
The sensitivity of politics in the region also affects the amount of money the company receives as income (Steven & Sheffrin, 2003). High sensitivity of politics affects the operation of the business and therefore the company receives low income.
Ability to negotiate regional allocation
When the company has the ability to negotiate effectively for regional allocation of funds, it will receive high allocation which increases its income annually (Martin et al, 2010). The inability to negotiate properly for regional allocation of funds has an impact on income. 2.3 Review different types of budget expenditure in CareTech PLC There are very many different types of budget expenditures which are in health and care settings (Groppelli & Angelico, 2000). These include staffing costs, purchase of fixed assets, costs of consumables, loan repayment interest, long term building expenditure, marketing costs, training and health and safety costs.
Operating Expenditure budget
This is a very important type of budget expenditure which the company must use (Mick and John, 2003). It ensures that all the service providers of this company are remunerated and receive different rewards which motivate them.
Capital Expenditure budget
The company must incur costs to purchase fixed assets such as motor vehicle, health equipment and buildings (Steven & Sheffrin, 2003). These are very important in enhancing the quality of services which are provided by this company. This budget ensure that all capital assets are purchases and allocated to different departments to reduce cost and maximize returns.
Marketing Expenditure Budget
The company must prepare a budget on how it is planning to spend its financial resources during marketing (Bryans, 2007). This makes the company to use its resources efficiently during marketing since it can only spend money in relation to budget requirement.
Health and Safety Expenditure Budget
The expenses which the company expects to incur top provide health and safety services to employees are also budgeted for (Martin et al, 2010). This ensures that there is appropriate use of health and safety services without misappropriation of funds.
2.4 Evaluate how decisions about expenditure could be made in CareTech PLC Fund Available
The decision on the company expenditure can be made based on the available resources which determine what the company should purchase or not (Groppelli & Angelico, 2000). The availability of financial resources influence the ability of the company to acquire health care resources and therefore inadequate funds limits the expenditure of the company (Mick and John, 2003). The fund available is allocated according to priority in the budget so that most important expenditures are made to provide efficient health services to customers with little resources.
Demand on Service
The decision about expenditure is also depends on the demand of the service which the company provides. The services which are of high demand should use higher expenditures since there is need for high financial resource. This ensures that there is quality health service when there are enough health care facilities and equipments to enhance quality service demanded.
Central Government Guidance
The expenditure of this company is also influenced by the guidelines provided by the central government so that the company can meet the principles of regulatory bodies (Steven & Sheffrin, 2003). The expenditure for the purchase of capital assets or health and safety equipments should be that improves the quality of health service as required by Central Government guidelines.
3.1 Management of Financial Shortfalls
The company should also ensure that there is proper management of the budget deficit or shortfalls. This is achieved by operating within the budget so that there is no over or under expenditure. The shortages can be supplemented by the providing additional allocation from the central or local Government (Bryans, 2007). This will makes the company to purchase all the capital and operating expenditures within the budget. The shortfalls can also be managed by sourcing for additional financing from local stable financial institution to finance other activities which had not been accounted for in the budget (Watson and Head, 2012). 3.2 What action you would take if you suspect occurrence of financial fraud in your organization? There are a number of actions which the company can take when there is suspicion about fraud.
Fraud detection and investigation
The company has to determine the truth about the fraud by conducting an investigation and finding those involves in the fraudulent acts (Groppelli & Angelico, 2000). Before the investigation the possible financial loss which the company has experienced should be known and how it has been happening. Valid evidence should be determined before taking any legal action. The truth about the occurrence of fraud is detected by the nature of behavior of people in the company and the observation of discrepancies in the financial records of the company.
If fraud has taken place internally
The determination that the fraud has been committed by one of your employees, the management is required to seek for advice from professional advisors on the possible steps to follow to go on with the problem. The company can also do an overall investigation to ascertain the truth of the matter or take remedial action to fraudsters (Mick and John, 2003). The company can also take a legal action by reporting the case to the law enforcement agencies only if the fraud is material but immaterial fraud should result into suspension of those involves reducing legal cases which can also make the company to lose substantially.
3.3 Monitoring Fraud
For the company to monitor how the company uses its financial resources, it should ensure that it conduct both internal and external audits to provides the company with an opportunity to prepare its books in accordance with the law (Bryans, 2007). Internal audit is done throughout the year and it assess if the company prepares its books in accordance with the law and there is possibility that the books can provide a true and fair view of the company states of affairs. These actions ensure that there is no fraud and any other malicious acts which the employees can commit to suspect the occurrence of frauds (Groppelli & Angelico, 2000). The company can also employ an external auditor to monitor the company expenditure and income (Steven & Sheffrin, 2003). This is able to reveal financial misuse and intentional mistakes which reduce financial performance of the company.
4.1 Sources of Information for Fraudulent Acts
The company can use management accounts to determine the lapses where the financial proprieties have been taking place. It can also be ascertained through the assessment of actual and projected budgets which is compared with the actual result of the company (Groppelli & Angelico, 2000). When adverse variance is very high then the company can suspect that there is a financial fraud in the company (Department of Health, 2011). The result of internal or external audit can also provide adequate information which acts as evidence that there is a financial fraud which the management has committed. 4.2 Analyze the relationship between care service delivered and ‘costs and expenditure The relationship between care service delivered and costs and expenditure is very important in ensuring that the customers are charged fairly (Steven & Sheffrin, 2003).
The costs and expenditure of the company should be incurred transparently by informing the stakeholders on how the company has spent its financial resources. The expenditure of health and care settings should be done in compliance with some legal frameworks which provide guidelines on how the company should spend its funds. The purchase of health care equipment is also done through bidding process where the best bidder is to supply the required materials for health care facilities (Bryans, 2007). This ensures that all the company purchases and expenditure are done in accordance with the law through following legal purchasing framework.
The use of financial resources of the company should be used appropriately this is because those involves have financial obligation to account for any finance used in the company (Mick and John, 2003). This reduce the level of frauds which are likely to occur in the company since officers who are involves in the purchase is accountable for any financial loss. 4.3 Evaluate how financial considerations impact upon a service user Financial considerations have great effect on the health care service delivered to users.
Effect on the mode of Service Quality
The increase of financial resource in the company increases the quality of service delivered to users. This is because high financial consideration is able to pay for quality health care facilities which ensure that the users of health care settings receive quality service (Steven & Sheffrin, 2003). With low consideration, there will be a purchase of low quality health care equipment and facilities which cannot avail quality service.
Change in Staffing Levels
When there is high financial consideration, the management of this company will be able to pay salaries of many employees who are able to provide efficient health service delivery (Mick and John, 2003). When the services are offered at a low consideration, the income of the company becomes low and therefore the number of staff members goes down (Day and Wigens, 2006). This also affects the service quality which the users expect to get from the company.
Availability of Consumables
Financial consideration for health care services also affects consumable (Bryans, 2007). When the service user is allowed to pay high financial consideration, there will be adequate consumable to users since there is enough money to purchase these to users (Day and Wigens, 2006). When there is low financial consideration the company will not have the capacity to buy consumables.
Reduction of Services
Low consideration renders the company to be bankrupts and therefore it has to reduce the number of services that it offers to the public (Steven & Sheffrin, 2003). Low consideration also makes the company to pay for additional staff to provide all the service which the company is required to provide.
4.4 Improvements of the Company Expenditure
For the company to improve its expenditure capacity, it has to reassess its expenditure so that the company can minimize its expenditures and maximize it revenues (Bryans, 2007). Before spending the company funds, there should be an assessment of the value of money so that the purchase of any assets or payment of an operating expense matches with the value of the item of expenditure (Mick and John, 2003). It is also required to estimate unit cost of the item so that the total cost of the company expenditure is ascertained before the actual purchase. This ensures that there is no inflation of costs of the assets or any expenditure the company makes (Edwards, 2012).
For the company to make appropriate revenues, it must control the use of its finances so that the company can use minimum costs to finance its operation. Cost allocation is also important in efficient management of health care operations. High costs should be allocated to items of expenditures which are of priority so that the company goals can be achieved efficiently.
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