Healthcare industry is an ever increasingly complicated field where the personnel needs to clearly understand the massive amounts of data, navigate the ever-changing rules and regulations in the process of providing value-based care to various patients and customers. Healthcare leaders are required to effectively manage the various challenges involved in this field and ensure that the cost of patient care does not get to an unmanageable level (Brumley, 2019). While patient care is the key mandate of all the healthcare institutions, they are still businesses that need to make profits in the long run, and hence the leaders need to manage finances accordingly.
Effective management of finances in a healthcare organization allows it to efficiently improve patient care (Gapenski & Reiter, 2011). Through financial management, healthcare providers have managed to offer value-based payment models where payments are made according to the health outcomes of a patient rather than in accordance with the services provided. This model enables patients to reduce the long term costs of seeking healthcare services.
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Financial management helps healthcare leaders to effectively monitor, mitigate, and prevent risks that may come up in the process of providing patient care. Healthcare risk management involves the safety of the patients, medical records, and even reimbursement policies ("Healthcare Financial Management: Health Information's Role | UIC Online Health Informatics," 2018). Healthcare leaders need to ensure that they maintain a substantial profit margin through maintaining risks involved in the process of providing care to patients at the lowest level possible.
Financial management enables the healthcare institutions to put up needed investments such as specialized medical equipments that can ensure cost-effectiveness in their operations ("Strategic and knowledge management in healthcare organizations: Discovery service for Florida Atlantic University," 2021). Healthcare leaders need to be equipped with the ability to analyze and track financial expenditure to ensure that they make smart and informed expenses that guarantee the quality of health services provided to patients and the future growth of their institutions. Through effective financial management, healthcare leaders can decide on new investments that would bring about new sources of revenue that, in turn, would increase profitability in the long run.
References
Brumley, S. (2019). Role of Financial Management in Health Care. Retrieved 14 January 2021, from https://smallbusiness.chron.com/role-financial-management-health-care-76263.html
Gapenski, L., & Reiter, K. (2011). Healthcare finance (5th ed.). Ringgold, Inc.
Healthcare Financial Management: Health Information's Role | UIC Online Health Informatics. ( 2018). Retrieved 14 January 2021, from https://healthinformatics.uic.edu/blog/healthcare-financial-management/
STRATEGIC AND KNOWLEDGE MANAGEMENT IN HEALTHCARE ORGANIZATIONS: Discovery Service for Florida Atlantic University. (2021). Retrieved 14 January 2021, from http://eds.a.ebscohost.com/eds/detail/detail?vid=8&sid=819fff4d-d454-432e-ad2a-91e28b6aad49%40sessionmgr4007&bdata=JkF1dGhUeXBlPXNoaWImc2l0ZT1lZHMtbGl2ZSZzY29wZT1zaXRl#AN=113731506&db=s3h
