The two concepts finance and accounting are much related, and both describe the fiscal aspect of an organization. The concepts are often used in tandem and are sparingly separated or distinguished from one another. Finance and accounting create the protocol and tools for the analysis and evaluation of an organization’s working capital analysis, often referred to as the organization’s budget. Effective finance and accounting management and practices are integral to the performance and success of an organization of any union or company. Healthcare organizations are among the business entities whose sustenance, profitability, and effective service delivery is contingent on the management and appropriation of resources (Pflueger, 2015). Fiscal policies, performance evaluations, and transparent accounting and audit of financial records are pertinent aspects of finance and accounting that determine the financial viability of a healthcare organization.
Accounting comprises of the recording of an organization's processes of a corporate as well as presenting the data in the outline of profit and loss accounts, which validates the gain or forfeiture of the business annually. It also contains provisions of a balance sheet repeating the financial situations of an organization at a definite timeframe while finance is the concept of using numbers from accounting to manage the assets of the corporate (Brief & Peasnell, 2013). They together relate to the checks and balances inside a business with firm differences between them as to how the firm utilizes them
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The progression of the healthcare sector assures a development in the wellbeing of people through better-assimilated healthcare structures, value perfection, and access to care for additional persons (Tanna,& Lawson, 2015). However, monetary pressure from the management is part of outstanding challenges impacting the performance of a business administration. It consequently authoritative that we look at the fiscal well-being of healthcare structures. Documentations by certified auditors ensure that financial reports for healthcare schemes are reasonable and suitable illustrations for monetary measures and processes of a health care unit are well maintained.
For the financial report to be certified, three major indicators result from it. They comprise cash flow and liquidity, net income, and the weight of debt. These economic gauges are rudimentary for pursuing financial feasibility for the healthcare business. Many other methods can be used, but the three are major (Brief & Peasnell, 2013). For instance, return assets inwards, the proportion of wages and salary and expenditures arising from profits to disposable patient charge, and charity training, are other indicators which can be used to track the financial viability of healthcare institutions. For the healthcare to pursue its care duty on a long term basis, it is its obligation to be fiscally stable irrespective of fluctuations in its environment. Therefore, financial tendencies need to be assessed thoroughly to create the beginning point for a strategic plan of the health care institution. Thus, operational costs and strategies will have to sustain this fiscal proposal. For a hospital to be efficaciously operational, it has to possess the capacity to create money. This is the main principle as setting aside cash for the auxiliary and improvement of first-hand products is not an extravagance but an essential (Tanna,& Lawson, 2015).
A valuing policy should be put in place in hospitals for the regeneration of systems to trend in the market. Fund hovering, for instance, might be a foundation of revenue, whose cash could be diverged towards enabling the hospitals to acquire advanced equipment (Tanna, & Lawson, 2015). Healthcare structures must observe their output, which is controlled by an excellent working atmosphere. Factors suchlike market, performance, community essentials and amenities, and numerous more which are perceived to be upper gauges of impending performance and practicality of the organization. While using Medicare cost information in the calculation of the expenses on patients' care, two aspects are considered to be vital.
To start with is that the rules regarding Medicare payments do not include the cost of what is considered as good care in modern hospitals. Secondly, information and data are distributed using basic regulations (Pflueger, 2015). The feasibility of any company relies more on the new balance sheet and flow of money, including the company's market and management. Also, there arises a need for a company to earn a return but not just a break even. Therefore, for healthcare to remain viable as a community resource, they should have the ability to finance its activities and other vital areas such as employee motivation through remunerations and education advancements (Pflueger, 2015). Besides, health care should have several policies that allow them to meet the massive and dynamic community needs and finance for its potential developments.
In the recent past, the level of financial risk in the health sector has arisen. To some extent, pressure from the private purchasers and the government have also raised the risk for the healthcare providers. Because of this, the company's financial markets reports should have consistency in the way the organization is performing so that it can be seen as creditworthy. This should be followed by the publication of these financial reports (Brief & Peasnell, 2013). Besides, healthcare facilities should keep the traceable records of account receivables debt coverage per year, deficits and bad debts, capital spending percentage, and other debts proportions to determine its feasibility.
In conclusion, finance and accounting are both related in that they are both combined to determine the net worth, the creation of the budget, and giving of the summary of activities related to money in the healthcare. These are important factors that determine the profitability and sustainability of an organization. As far as accounting deals with recording, analyzing, and summarizing of money related events, finance, on the other hand, deals with the management of these funds. Both are vital aspects with a significant part to play in healthcare, and highly related to the other.
References
Flynn, J. (2016). Complete control: Developers, financial viability and regeneration at the Elephant and Castle. City , 20 (2), 278-286.
Brief, R. P., & Peasnell, K. V. (Eds.). (2013). Clean surplus: A link between accounting and finance . Routledge.
Tanna, S., & Lawson, G. (2015). Self-sampling and quantitative analysis of DBS: can it shift the balance in over-burdened healthcare systems?. Bioanalysis , 7 (16), 1963-1966.
Pflueger, D. (2015). Accounting for quality: on the relationship between accounting and quality improvement in healthcare. BMC health services research , 15 (1), 178.
