Financial management is a critical procedure in healthcare institutions. Healthcare managers are obliged to ensure accurate service pricing, reduced administrative costs, as well as reduced costs from medical malpractice. The primary challenge facing healthcare financial management today is the emerging financial challenges and paradigms. According to Gapenski (2013), it is critical for financial managers to maintain equilibrium between costs and the provision of quality care. Nonetheless, the use of traditional financial management strategies has been ineffective in meeting the goals of financial management. Artificial intelligence and blockchain systems have the potential to make financial management more efficient. The technologies are anticipated to increase the amounts of revenues generated and reduce the costs incurred by health medical organization. The use of health IT technology platform for financial management is said to be productive in attaining the set financial management objectives.
Part 1
Problem
Haakenstad, Templin, Lim, Bump, & Dieleman (2018) argue that the key challenge facing financial management in a healthcare organization is ineffective financial management. Most health organizations have been unable to create more revenue to cover the costs incurred in the provision of medical services. In addition, these organizations have failed to make more profits by taking in more revenues than the ones expended. Profit maximization is critical since it enables healthcare managers to put the resources back into the ongoing health programs, for significant improvements.
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According to Bai, Gu, Chen, Xiao, Liu, & Tang (2017) healthcare organizations have become unable to guarantee proper patient mix to secure compensation, accomplish timely billing, fostering good financial management, maximizing efficiencies which are critical for the organization. Current financial management procedures fail to efficiently analyze utilization, revenues, as well as cost recovery,( Haakenstad, Templin, Lim, Bump, & Dieleman, 2018), which impedes these institutions from adequately identifying their strengths, weaknesses, as well as gaps in revenue generation. In addition, the current financial management strategies fail to provide financial managers with the best analytical tools to determine the best prices for new services.
The use of the break-even analysis is ineffective in enabling managers to determine the effects of alternative assumptions regarding costs, prices, and volume, as well as its aptitude to provide a specific service. The use of health IT technology platforms can transform the way these processes are carried out, making them more efficient and productive (Gapenski, 2013). IT platforms can enable finance managers to make proper evaluations of future courses of actions regarding costs and the establishment of new services. Consequently, healthcare organizations would be able to produce more income due to effective decision making, to cover the expenses incurred in various healthcare procedures.
Due to the existing financial gaps, medical providers have conducted unethical and illegal practices. For instance, there is a prevalence of fraud among healthcare providers globally. The lack of adequate financial management has led to the emergence of financial losses and gaps, which exposes healthcare managers to potential lawsuits due to the lack of accountability for organizational funds. As a result, medical providers give unnecessary medical services or overcharge the provided healthcare services with the aim of claiming additional money from insurance companies, to cover the existing financial gap (Haakenstad, Templin, Lim, Bump, & Dieleman, 2018). The need for IT platforms for financial management is required to promote tracking of organizational transactions, to determine the cause of various financial gaps. In addition, the use of IT technologies for financial management will promote corporate and financial efficacy (Gapenski, 2013), which will enable the organizations to avoid revenue gaps, thus preventing them from engaging in illegal practices.
Furthermore, the financial management strategies used in modern day fail to conduct productive internal fiscal controls. Hence, health care settings fail to maintain accountability for generated funds, as well as expended funds. As a result, the majority of healthcare organizations have experienced dramatic losses. The use of fiscal controls such as payroll analysis and accounting audits has been unproductive in fostering the timely identification of significant cash outflows, as well as other cases of inappropriate use of funds. Consequently, healthcare organizations have been unable to dodge billing errors which have impacted expensive fraud investigations.
Revenue generation is a critical driver of efficient and effective healthcare operations. When medical institutions can generate maximum revenues, they can fund various medical resources such as disruptive technologies to enhance diagnostic and treatment procedures, leading to positive patient outcomes. In addition, effective financial management prevents an organization from incurring losses, since the revenues generated to cover the existing revenue gaps. Concurrently, an organization can conduct its daily operations.
The deficiency of an effective financial management system can negatively impact the work of a healthcare manager. Furthermore, it inhibits healthcare managers from obtaining lucrative salaries, promoting the lack of job satisfaction and influencing a decline in the individuals work morale. In addition, the losses incurred as a result may necessitate continuous investigations, which may jeopardize the professional standing of healthcare managers. In addition, the failure of the organization to maximize its profits may prevent healthcare managers from providing quality services to patients, due to the deficiency of funds to purchase modern diagnostic and treatment technologies (Haakenstad, Templin, Lim, Bump, & Dieleman, 2018). As a result, a healthcare professional may be unable to attain the medical objectives of the organization, as well as those that he/she has set as a health professional.
Part 2
Alternative Approaches to Address the Problem
The use of emerging technologies in financial information systems fosters value-based care and promotes efficiency in financial management. Yli-Huumo, Ko, Choi, Park, & Smolander (2016) argue that Blockchain and artificial intelligence technologies can reshape financial management and reduce the problems that arise as a result of ineffective control of finances. The blockchain is an example of a technology which is deemed useful in addressing some of the issues related to data use in healthcare. Blockchain refers to a communal distributed digital ledger which indelibly records every piece of data. The recorded information in this technology is distributed on a peer-to-peer basis. Thus, it develops an ever-growing, permanent record which is not prone to retroactive modifications. In addition, the sequence of blocks cannot be transformed without affecting all the subsequent blocks.
Blockchain offers a robust method of data integrity confirmation as well as a permanent log of all the undergone events ( Kuo, Kim, & Ohno-Machado, 2017). The technology also fosters the utility of distributed health databases which require rapid synchronization each time a transaction occurs. In addition, the system promotes more accountability in health care managers since it enables these individuals to track financial transactions in the organization, and account for the used up money. Moreover, the use of this technology can reduce revenue losses since it records all the critical financial information, enabling managers to make good decisions for the best organizational and patient outcomes.
Kuo, Kim, & Ohno-Machado (2017) argue that since the medical field is a dynamic one, and new services emerge now and then, blockchain technology foster the creation of new business models, as well as the trusted exchange of health information which can promote new operations and services in the medical field. In addition, the platform is useful in fostering right decision making with regards to the costs of new prices, enabling medical institutions to produce cost-effective services to patients, and also generate maximum revenues to cover the expended funds. Blockchain technologies will enhance patient outcomes by boosting efficiency in health care services, benefiting both health organizations and their patients in their symbiotic relationship.
Since the failure of medical organizations to generate maximum revenues is due to the challenges in reimbursement, blockchain will create a platform in which health care providers can use and exchange information quickly, to verify insurance coverage (Yoo, 2017). The technology will foster the development of good relationships between all the stakeholders of medical institutions, by storing information about transactions and contracts, promoting constancy, and a casual contract implementation environment. As a result, the level and costs of administration would be reduced, and the capital that could have been used directed at enhancing other medical operations in the organization.
Artificial Intelligence is transforming the way in which risk management and the regular financial supervision is carried out. Al technologies have a potential to increase cost savings and operational efficiency for risk managers (Gapenski, 2013). The technologies are also beneficial in promoting a timely identification of erogenous and endogenous risks. As a result, finance managers in health organization can develop strategies to mitigate the identified risks before their occurrence. Furthermore, Al technologies promote good decision making. Hence, an organization can avoid certain risks that would increase losses. The use of AL technologies will enable the healthcare organization to heighten their profits, covering existing revenue gaps. Furthermore, the cognitive systems in AL technologies can help healthcare managers to effectively screen cases, and examine them with greater precision, which is crucial for making informed decisions.
Part 3
Recommendations
Based on the current problem facing the healthcare industry, blockchain is the most effective technology to use in financial management, as well as the promotion of organizational efficiency. Health organizations are therefore recommended to use blockchain technologies.
The blockchain is an emerging technology which is anticipated to promote efficient, cost-effective, reliable, and secure platforms for carrying out and recording any transactions. The use of this technology will prevent health institutions from incurring increased administrative costs since no middleman is required.
Consequently, medical institutions save capital and direct it to other areas which require rapid improvements. In addition, blockchain will be beneficial in the prevention of fraud, as well as unauthorized embezzlement of hospital funds since it is consensus-based (Yoo, 2017). Consequently, all the financial transactions would require approval from a number of participants or nodes, prior to execution. In addition, the transactions are public, but the content of the conducted transactions are kept confidential, based on the sensitivity of the information. The use of blockchain technologies will prevent health organizations from incurring additional costs due to continuous investigations which are conducted as a result of inappropriate use of funds.
According to Yli-Huumo, Ko, Choi, Park, & Smolander (2016) fraudulent claims and billing are one of the losses which should be eradicated and prevented in healthcare. Medical-billing fraud is exceptionally prevalent in healthcare settings. Today, patient’s encounter healthcare providers who charge patients for services that have not been offered. In addition, these individuals overcharge the given services and also provide patients with unnecessary services . Consequently, patients are forced to pay for services that have not been rendered (Gapenski, 2013). Furthermore, these providers claim money from insurance companies, to cover financial losses which the organization has incurred. Blockchain technologies will be useful in promoting an ethical and legal healthcare environment. In addition, the advancements will inhibit organizations from suffering huge losses, which then force medical providers to engage in fraud, to cover the losses incurred.
Moreover, blockchain will enable health providers to claim the required amount of money from insurance companies. The system will reduce the majority of the problems experienced by medical providers during claim adjudication, as well as compensation processing operations (Yoo, 2017). The technology will automate the required workflows. All the stakeholders are therefore able to share copies of the contracts, as well as billing related information.
Furthermore, blockchain technologies are characterized by decentralized management which enhances financial security and prevents the embezzlement of hospital funds ( Kuo, Kim, & Ohno-Machado, 2017 ). The decentralized control structure has nodes which run independently while still adhering to protocol. This makes blockchain appropriate in terms of applications where autonomously managed healthcare stakeholders wish to cooperate with each other without giving control to a central management intercessor ( Kuo, Kim, & Ohno-Machado, 2017 ). Moreover, blockchain technologies are also equipped with an immutable audit trail, which makes it very difficult for the data and records contained in them to be manipulated. To ensure effective financial management in the medical sector, the use of this technology is most suitable since it is an unalterable ledger in which financial managers can use to record vital financial data.
According to Kuo, Kim, & Ohno-Machado (2017), blockchain is characterized by data provenance. While other technologies can be changed by system administrators, the situation is different in the blockchain . The new advancement has been devised to ensure that only the owner can change ownership. In addition, blockchain is beneficial since the origin of information and records is traceable, promoting accountability in health organizations and augmenting reusability of certified information. The technology is therefore effective for the management of vital assets such as patient consent data. Blockchain technologies will enhance financial management in the health sector.
Technological advancements have promoted tremendous changes in healthcare as well as other fields in the contemporary world. Technology has made operations more efficient and effective. Financial management is a critical aspect of healthcare. It is the role of healthcare managers to ensure that organizational funds and resources are used accordingly, to maximize revenues and reduce costs. Nonetheless, the pressure that organizations have to provide patients with exemplary health services, as well as the need for more sophisticated diagnostic and treatment technologies deters health institutions from generating increased revenues as opposed to what is expended. The use of blockchain technologies can enable the health organizations to effectively manage their finances, while still offering value-based treatment to patients. Blockchain technologies are expected to transform financial management in medical institutions.
References
Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences , 4 (2), 122-127.
Gapenski, L., C. (2013). Fundamentals of Healthcare Finance (Second edition). Chicago: Health Administration Press
Haakenstad, A., Templin, T., Lim, S., Bump, J. B., & Dieleman, J. (2018). The financing gaps framework: using need, potential spending and expected spending to allocate development assistance for health. Health policy and planning , 33 (suppl_1), i47-i55.
Kuo, T. T., Kim, H. E., & Ohno-Machado, L. (2017). Blockchain distributed ledger technologies for biomedical and healthcare applications. Journal of the American Medical Informatics Association , 24 (6), 1211-1220.
Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where is current research on blockchain technology?—a systematic review. PloS one , 11 (10), e0163477.
Yoo, S. (2017). Blockchain-based financial case analysis and its implications. Asia Pacific Journal of Innovation and Entrepreneurship , 11 (3), 312-321.
