Financial Principles Of Health Care

One of the major functions of a nurse manager is managing a budget and allocating resources necessary to manage the unit or facility effectively. “Major steps in the budgeting process include gathering information and planning, developing unit budgets, developing cash budgets, negotiating and revising, and using feedback to control budget results and improve future plans”(Yoder-Wise, 2012, p. 244). The nurse manager must be able to accommodate variances and acclimate the budget in both the projections and up-to-date expenditures. Proficiency in managing a unit level budget is essential for both a favorable variance and optimal patient outcomes. Budgeting entails reviewing revenues and expenses, staffing costs, supplies, and capital equipment costs (Contino, 2001). This case study examines personnel, overtime (OT), supplies, travel, equipment, and staff education and the manner in which management can address these factors.

Cleverley, W.O., Cleverley, J.O., & Song, P.H. (2012). Essentials of health care finance (7th ed.). Sudbury, MA: Jones & Bartlett Learning.

Each aspect plays a role, as financial management as a whole impacts the health care organization in a significant way. An example (that ties to evidence) of a primary component is the model analysis of the insurance system that affects the health budgeting spending on a statewide level. Further elaborating, the insurance system affects the input and output of the external categorization of the practical approach for a health care organization to utilize their primary care towards patients. Thus, as a result the aspects shift according to model process. Additionally, one’s perspective plays an important role in influencing decision-making in regards to financial management for healthcare. This is because the individual plays a primary role in the performance and internal indicators of the direction of the organizational mission; thus their output affects the organization’s advancement.

The primary role of finance is to plan for, acquire, and use resources to maximize the efficiency and value of the enterprise.

Examine the financial characteristics of health care delivery along with managing costs, revenues, and human resources

Essential healthcare management includes the financial growth and feasibility of the health care organization. In order for a healthcare organization to reach its full potential it needs to be fully staffed with both medical and managerial professionals, as well as having the funds to invest in the most up to date technology. According to the Kaiser Family Foundation “Baseline estimates show that over 41 million individuals were uninsured in 2013, 61% of uninsured adults said the main reason they were uninsured was because the cost was too high or because they had lost their job”. The EMTALA or Emergency Medical Treatment And Labor Act or anti-dumping law was enacted in 1986 it was designed to prevent hospitals from transferring the uninsured or Medicaid patients to public hospitals without providing a medical screening examination to ensure they were stable for transfer first. Regardless of their options to pay, they are to be seen and treated with life-saving and "stabilizing" emergency care with transfers to advanced trauma centers, if need be. Effective Human Resources coupled with a balance between cost and revenue are essential to being able to provide quality Health Care. It has been proven these elements all play positive roles in contributing to the overall efficiency of the system. An organization can enhance the quality of health care provided just by focusing on the major components.

Therefore the annual interest rate is 8% and the effective annual rate compounded quarterly is 8.24%

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There are 10 key economic concepts of health care. Each of the economic concepts is important when evaluating the different issues related to health care such as the increasing cost of health care. Henderson (2015), list the 10 concepts as follows: scarcity and choice, opportunity cost, marginal analysis, self-interest, markets and pricing, supply and demand, competition, efficiency, market failure, and comparative, advantage. The concept scarcity and choice address the issues related to the limited supply resources and the need to economize (Henderson, 2015). An illustration of the importance of the scarcity and choice concept is when there is a low quantity of available resources to meet the demand of individuals and rationing occurs. Opportunity cost emphasizes

Controlling is ensuring the validity and accuracy of all financial information within the firm. Controlling will become very profound as the industry overall undergoes fundamental change in regards to operations. Legislation imposed by the federal government regulates, to a certain extent, how health care organizations operate. As such, management must be able to control costs and assess the validity of the financially information presented to them. If the organization fails to do so, the results could be devastating. First, loses will occur due to the excessive lack of control. The organization may be forced to lower spending in some areas of compensate for the aggressive spending in others. In addition, the reputation of the firm could be harmed. Patients and other vendors may be unlikely do business with the firm for fear of the company's lack of financial security. Therefore, in order to ensure the continuity of the business, the firm must have adequate methods by which to check the validity of its financial information. Third party audits, independent audits, check and balances and management oversight all will help ensure that the overall financial position of the firm is sound and credible.

1A. Market failure is a situation in which the allocation of goods and services is not efficient. In any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium.

The major difference between healthcare finance terminology and business finance terminology is that these terms focus on factors unique to the health services industry. For example, the provision of health services is dominated by not-for-profit or¬ganizations (such as ours), which are inherently different from investor-owned businesses. Also, the majority of payments made to health¬care providers for services are not made by patients—the consumers of the services—but rather by some third-party payer (e.g., a commercial insurance company or a government program). Even the purchase of health insurance is dominated by employers rather than by the individuals who receive the services. These terms emphasize ways in which the unique features of the health services industry affect financial decisions. The healthcare industry is a service industry. It is not in the business of manufacturing, say, widgets. Instead its essential business is the delivery of healthcare services. It may have inventories of medical supplies and drugs, but those inventories are necessary to service delivery, not to manufacturing functions. Because the business of healthcare is a service, this overview of key healthcare terminology will focus on the practice of financial management in the services industry.

The major objectives of healthcare financial management include: generating income (which is the most important) because it is the financial status of the organization. It is important to ensure that revenues are exceeding expenses. After assets are invested in, they are meant to be used. They must respond to regulations and be accredited to qualify for loans, reimbursements, etc. Facilitate relationships with third-party payers because they are the ones helping with the bills. The health organizations must also influence method and amount of payment to avoid overpaying, when faced with capitated prices or prospective payments. Monitoring physicians is important because they are at the forefront of everything, so management must make sure that physicians’ orders are consistent with patient needs. Lastly, protecting tax status involves for-profit organizations trying to reduce tax liabilities, while not-for-profit organizations try to protect their tax-exempt

Government financed health care typically has more control to place limitations on care offered to patients and doctors in order to keep costs down. Since payers must try to deliver the most care for the

Healthcare managers participate in various important roles that allow them to form and maintain flourishing organizations. Managers ought to be aware of the decisive elements of management and the generally accepted accounting principles. At the same time, they must realize, stick to, and put into effect the general financial ethical standards. Successful management of finances of healthcare is one of countless tests that mug the organization. Revenues and expenses of the organization are essential because they establish the external and internal finances of the company. The