In retrospect of the past five or so decades of the healthcare system, it is evident that financial management of America has not been favorable. The cost of care experienced a drastic rise from barely $27.2 billion in 1960 to $3.2 trillion in 2016. The increase is nearly 10 times more than 56 years ago and has become one of the largest industries in the country nearly 18% of the Gross Domestic Product (GDP). In light of this, financial management of health care organizations is no simpler than the country itself. The operations of such institutions continue on a daily basis due to three major factors influencing its progression. The business trifecta, includes the patients, healthcare employees and the financial health of the organization, all of whom should be considered in the daily objectives and running of the institutions. Despite the popular notion that patient needs are the most important factors of a healthcare organization, neglecting financial health and the employees will result in complete disaster for the institution.
Monitoring Customers, Employees, & Financial Health
The consumers as with every business are an important factor of ensuring the success of the company. In the same way, the patients are essential to the proper management of the healthcare organization. Through its various activities, the institution takes keen concern in the treatment and eventual outcomes of the patients (Van Olmen et al., 2012). The customers play an integral role in achieving the goals of quality healthcare. In this regard, the organization has to provide adequate resources in terms of competent and skillful medical practitioners along with medication to deliver treatment (Van Olmen et al., 2012). The healthcare institution also seeks to attract more customers than in the industry through incentives and lower costs of care.
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In the financial management of healthcare organizations, it is crucial to monitor the health workers as they serve as an effective means of maintaining continuity. The institution takes up the role of a business whereby employees are considered as primary stakeholders in the ultimate success. Some of the issues reflected upon include the working conditions of the medical workers and their development within the company. The healthcare institution identifies the importance of guaranteeing that the satisfaction of employees in their various roles in the company (Van Olmen et al., 2012). Such a practice is an integral factor towards developing effectiveness and efficiency in the organization resulting in positive patient outcomes.
It is critical that the leaders of a healthcare institution monitor the financial health of the company equally to the needs of the patients and employees. The healthcare organization cannot function appropriately without the financial resources. The senior executives have to consider the fact that the company incurs significant costs on a daily basis to ensure the proper functioning and progression of operations (USAID, 2013). In this case, medical tools, treatment medication, and salaries among other expenditures are critical to continued excellence. Therefore, a healthcare organization should not neglect the importance of financial health as it is equally important to the sustainability of the company in delivery of care to the community.
Decentralization in Maintaining Financial Equilibrium
The concept of decentralization has drawn an array of meanings in the transfer of power and accountability systems. In the healthcare industry, it includes allowing members of the lower management to take up significant responsibility of roles and decision-making process. The process ensures that organization can improve its efficiency in the delivery of the service while earning profits on service delivered (Sreeramareddy, & Sathyanarayana, 2013). The practice of decentralization is a means of sectoral reform to minimize the powers of the senior executives while increasing those at the lower levels. A results-based management strategy could work effectively through decentralization where different sectors of the healthcare institution receive feedback from patients and employees on the best practices to implement (Sreeramareddy, & Sathyanarayana, 2013). The healthcare organizations identify the benefits of feedback loops as a means of improving the service provided to the patients (Van Olmen et al., 2012). In this case, management of workers and creating autonomy in the different sectors of the company is an integral practice in decentralization.
In financial management, decentralization plays an effective measure of ensuring the financial equilibrium is maintained. The recent decades in the healthcare industry have brought about numerous demands for the health corporations. The federal and state governments introduced numerous policies that increase the pressure on organizations in delivery of care (USAID, 2013). The healthcare institutions take into consideration the demands of low cost care and high-quality treatment as an integral part of the decentralization process. The lower management personnel understand the integral goal of the institution and utilize feedback from all channels to make improvements (Sreeramareddy, & Sathyanarayana, 2013). This practice enables the different sectors of the company to highlight problematic areas and provide solutions that will not only increase efficiency but also improve financial health (Sreeramareddy, & Sathyanarayana, 2013). Healthcare organizations can direct their services to serve the critical needs of the community they serve. In this regard, the firm allocates resources to areas that will maximize productivity and service to the consumers.
Strategies of Maintaining or Restoring a Balance
It is crucial that the healthcare organizations closely monitor patient needs, employee demands, and the financial health of the company to strike a balance in its operations. The firm may deploy various strategies of maintain or restoring balance between these important factors of financial success. Screening the different services offered in the company is the first step (USAID, 2013). In this case, the healthcare organization defines the numerous services it offers based on the qualifications of the employees, needs of the community, and the operation costs. Screening is an effective measure as it highlights areas where the institution may have undertaken poor practices and failed to deliver to its potential. The next step is identifying the degree of decentralization in the decision-making process (USAID, 2013). The benefit of this method is to identify priorities, strategic planning and standards of quality service to make informed choices in hiring and evaluation of senior staff, placement, training and development of workers, and financial resource allocation. The techniques maintain a primary objective of delivering on demands from all three sides.
The healthcare organization can also employ the strategy of establishing and effective administrative model. The leadership of a healthcare organization is an important factor towards developing a seamless organization structure (USAID, 2013). The leaders oversee the operations of the different sectors of the company and make comparisons with industry standards. The governing team identifies the most effective measures of improving performance in the company using evidence-based research (USAID, 2013). Furthermore, the senior executives also consider ways of training and developing the workforce in an effort to realize the standards of the industry, individual goals of medical workers, and the improved services that will guarantee financial health of the company. Another strategy that healthcare organizations can enforce is increased transparency in delivery of reports. In this case, open and clear communication is an integral practice of improving transparency in the firm (USAID, 2013). Financial performance, employee recognition, service quality, and the strategic plans of the institutions are some of the issues communicated to the relevant stakeholders.
Budgeting Process
The budgeting process is a critical factor in financial management of healthcare organizations in an attempt to balance the three aspects of healthcare. In regards to the needs of the patients, lump sum payments are provided to hospitals regardless of the total patients treated. Therefore, it is in the best interests of the organization to forecast the number of patients it should expect over the next financial year (Mukherjee, Al Rahahleh, & Lane, 2016). The prediction bases information of past patient numbers and the general population of the locale. The institution indentifies expected costs, expenses, and budgetary needs to make an informed decision on how best to realize positive financial performance.
Another important factor to consider during the budgeting process is the operating margins of the institution. Past budgets and expenditures can help determine the margins to incorporate in the forthcoming fiscal year. Large margins demonstrate a lack of active improvement in service quality (Mukherjee, Al Rahahleh, & Lane, 2016). However, slim margins show a lack of consideration for sudden influx in patients or other emergencies that may occur. Healthcare organizations should consider the feedback from employees on demands for training and development of their skills to provide higher quality of care and increase in services offered.
The nature of the healthcare company is critical in making informed decisions on the budgeting. For-profit organizations will usually identify the importance of providing stakeholders with increased avenues of making profit while monitoring the needs of the workers and patients alike (Mukherjee, Al Rahahleh, & Lane, 2016). Non-profit organizations take into consideration the funds available from donations and fundraising to prevent bankruptcy. Regardless of these factors, budgeting is essential to appropriate allocation of resources to deliver appropriately per the promises of the firm. The healthcare institution ensures its financial health by incorporating effective decision making that brings about accrual of revenues. Embracing statistically driven measures of budget planning will help maintain or restore financial health of the company.
Conclusion
From the above research, it is evident that patients, employees, and financial health are integral factors to consider in financial management planning of healthcare organizations. The three aspects are important measures co-exist in the operations and strategies enforced. Despite the importance of delivering the demands of the patients, it is impossible to sustain the company while neglecting the needs of the employees and financial performance. Through decentralization of administrative power, the organization can serve all the above aspects of healthcare. The institution employs relevant strategies associated with decentralization to effectively deliver on the requirements of each standard.
References
Mukherjee, T., Al Rahahleh, N., & Lane, W. (2016). The capital budgeting process of healthcare organizations: a review of surveys. Journal of Healthcare Management, 61 (1), 58-76.
Sreeramareddy, C. T., & Sathyanarayana, T. N. (2013). Decentralised versus centralised governance of health services. Cochrane Database of Systematic Reviews, 11 : 1-14. DOI: 10.1002/14651858.CD010830
USAID (2013) Five smart strategies to govern decentralized health systems . Leadership, Management, & Governance Project, Retrieved from http://www.lmgforhealth.org/sites/default/files/files/MSH_Five_Smart_Strategies_To_Govern_Decentralized_Health_Systems_FINAL_7_30_13.pdf
Van Olmen, J., Criel, B., Bhojani, U., Marchal, B., Van Belle, S., Chenge, M. F., ... & Kegels, G. (2012). The Health System Dynamics Framework: The introduction of an analytical model for health system analysis and its application to two case-studies. Health, Culture and Society, 2 (1), 1-21.
