Every new day brings about more challenges for hospitals to make it in the present healthcare environment, particular with regards to financial matters. It has not been easy finding the cash to fund care quality initiatives together with other improvements while maintaining a competitive edge. In healthcare, budgeting is considered to be a vital element, but it is not usually a priority for many facility managers (Mukherjee, Al Rahahleh & Lane, 2016). It also requires the complete consensus between hospitals functions and management, and anything less than that will create a gap in anticipations.
There has been increased interest in the issue of value and cost in the healthcare sector, whereby those involved are keen to ensuring the accruement of benefits, utility, and/or maximum efficiency from investments (Spence, 2018). This interest may come at a time when there is economic recession and all budgets are coming under pressure. It is therefore important that hospital personnel be involved in the management of budgets in order to be able to change what could be simply an academic interest in value and cost, into practical actions and ensuing outcomes (Haas, Jellinek & Kaplan, 2018).
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Discussion
Considerations and challenges related to the financial and budgetary systems such as Detailed budgets, Rolling budgets, and Multiyear plan
Budget distribution and implementation practices and rules are crucial in supporting progress towards the set goals. This means that the way a budget is presented and managed determines how resources flow to and reflect hospital priorities. Two main types of budgeting and financial systems are commonly used and these are production targeted and resource based (White, 2015). While the former brings about undue attention to the production of procedures of care and scant regard for expenses, the latter brings about obsession with money restrictions and little or no regard of the profits, especially at the margins (Mukherjee, Al Rahahleh & Lane, 2016).
Detailed budgets, Rolling Budgets and Multiyear plans are some of the considerations related to the financial and budgetary systems in healthcare organizations. In establishing a detailed budget, organizations develop their objectives for the gaining and utilization of its resources (Spence, 2018). Multiyear planning is also considered an important tool for healthcare organizations, particularly those experiencing financial difficulties. A multiyear budget, thus, projects costs and revenues for many years into the future (Haas, Jellinek & Kaplan, 2018). On the other hand, rolling budgets consistently extend the initial budget time. It is useful to healthcare organizations in that it includes information from experiences to construct or renew the budget for the coming period (White, 2015).
The use of data analytic and tools in the monitoring, assessing, and evaluating of the performance of healthcare organizations
The healthcare system has for a long time suffered from limited resources, questionable value, and increasing demand. It is only recently that the future has looked more promising following increased sophisticated and extensive uses of analytics and data (Mukherjee, Al Rahahleh & Lane, 2016). Notably, the application of data tools and analytics in healthcare needs the shift of data into usable information that can be communicated back to end users. The adoption of electronic data devices makes the use of data analytics and tools more tractable through the provision of key electronic data upon which to respond.
Healthcare performance and care improvement tends to require very distinct points of view and utilize the information in special ways (Spence, 2018). Data analytics and tools are involved in the improvement of patient care, and the data incorporates genetic information. It is important to note that the main objective for any data analytics and tools is to bring about a worthy output for caregivers, those conducting research, or deciding on how the healthcare organization operates (Haas, Jellinek & Kaplan, 2018). The main challenge with using data analytic and tools in the monitoring , as well as evaluating the performance of healthcare firms, is to find and maintain the staff able to carry out such complicated analytical and data management assignments.
The importance and efficacy of financial statements used in the decision making process of healthcare organizations
A healthcare organization’s fiscal statements are quite significant and efficient when used in the process of decision making. This is because they provide necessary fiscal information needed by creditors, analysts, and investors in order to have an idea of the organization’s performance (White, 2015). Fiscal statements are also considered a means of communication in terms of historic triumphs and future anticipations. By issuing fiscal statements, healthcare organizations are able to communicate with potential outside parties about its achievements running the organization (Mukherjee, Al Rahahleh & Lane, 2016).
Some of the most commonly issued financial statements include Statement of Stockholders’ Equity, Cash Flow Statement, Income Statement, Statement of Comprehensive Income, and Balance Sheet (Spence, 2018). It is, thus, important and efficient to utilize financial statements in decision making processes in healthcare because they lessen errors or inner wrongs early on in the course of action. Today’s healthcare organizations acknowledge that having accurate financial statements means the induction of trust in the organization (Haas, Jellinek & Kaplan, 2018).
Conclusion
Budgeting is a significant element in any given organization, particularly in healthcare. In today’s competitive environment, healthcare managers must get or have a basic comprehension of fiscal principles such as operating budgets, and fiscal statements. It is also crucial that healthcare management understands that there are various factors that may influence or impact the organization’s budgeting process. Management should also participate in budgetary planning early enough to be able to effectively influence results. Challenges and considerations need to be made with regards to financial and budgetary systems in healthcare. Additionally, data analytics and tools must be implemented to ensure better performance of healthcare organizations.
References
Haas, D.A., Jellinek, M.S., & Kaplan, R.S. (2018). “Systems are holding back innovation.” Harvard Business Review .
Mukherjee, T., Al Rahahleh, N., & Lane, W. (2016). “The capital budgeting process of healthcare organizations: A review of surveys.” Journal of Healthcare Management , Volume 61, Issue 1. Pp. 58 - 76.
Spence, J. (2018). “ New complexities require a new approach to budgeting and forecasting .” Retrieved on 12 November, 2018 from www.healthcarefinancenews.com/blog/new-complexities-require-new-approach-budgeting-and-forecasting
White, A. (2015). Importance of financial budgets in a company’s strategic planning . Retrieved on 12 November, 2018 from http://www.portebrown.com/Consulting-Blog/importance-of-budgets-in-strategic-planning
