Financial management in any sector include the managing of regular monetary activities including contract negotiations, cash availability for expenses like payroll, and emergency fund maintenance. Financial management at the executive level entails sharing data with the other members of the leadership team so that they may formulate long-term strategies. Large medical clinics and hospitals, for instance, may elect to purchase more machinery in order to provide additional diagnostics and therapeutic options to their patients. Financial management include both contributing to the decision-making process and determining the most cost-effective means of implementing it (Brumley, 2019).
Two types of accounting functions:
Financial Accounting: The financial accounting department is responsible for keeping track of business transactions and transforming that data into financial reports. Financial statement preparation and disclosures are its bread and butter. Investors, creditors, and lenders from the outside world stand to gain the most (Accounting Tools, 2022).
Management Accounting: The management accounting team analyzes the company’s financial and operational data to find ways to boost the company’s profitability and standing. They can also provide guidance to management on pricing issues. The top leadership directly benefits from them. Cost analysis initiatives may include this team across the company (Accounting Tools, 2022).
Describe how the accounting functions affect operational oversight:
Inputs and outputs, or inputs and outputs, respectively, are the focus of efficiency assessment. Several of the facets of this difficulty may be measured and managed with the help of the tools and procedures provided by management accounting. Because cost information underpins decisions on resource allocation and effectiveness at system and organizational levels for providers, purchasers, and regulators worldwide, cost analysis and management have come under increased scrutiny in response to rising health care costs brought on by population growth, demographic shifts, and advances in medical technology. The breadth and type of cost accounting are profoundly affected by the unique characteristics of health care as an industry (Huang, 2019).
First, health care is a highly regulated industry in most countries, and this regulation has a direct influence on costing definitions, including the calculation itself and related notions like the sort of cost object that becomes the subject of study.
A second way in which the unique characteristics of healthcare influence cost accounting is through the necessity of tailoring treatments to individual patients (Huang, 2019).
A third, reducing healthcare waste while retaining quality has a third benefit. This maximizes returns on investment. National and regional governments, regulators, health care organizations, insurers, providers, consumers, and the public now want costing data. As users are varied, it may be difficult to customize calculations (Huang, 2019).
How do these unique features affect the financial management of the sector?
Risk mitigation and resource allocation are the fundamental responsibilities of financial management in healthcare organizations. While all healthcare providers depend on a well-oiled administrative machine, the specifics of that machine will differ from one facility to the next. A company’s financial well-being is affected by a number of variables, and most will be able to enhance its procedures and systems (Binarystream, 2020).
By bolstering both service coverage and financial security, health finance is a vital component of health systems that can facilitate advancements toward universal health care. Millions of individuals today cannot afford to receive care. Even when they have to pay out of pocket, many people still get subpar care. Health funding strategies that are both well-thought-out and implemented can go a long way toward solving these problems. Care coordination and quality may be incentivized through contracting and payment arrangements, while timely and appropriate flow of cash to providers can assure sufficient personnel and medications (World Health Organization, 2021).
New regulations, technological progress, and the rising expense of providing efficient and effective treatment are just some of the difficulties facing the healthcare business today. In order to maintain its financial viability, healthcare administration must actively seek out and handle these issues. The same may be done if attention is paid to key cost determinants and steps are taken to uncover opportunities for cost reduction. Employment possibilities in the healthcare sector remain robust in many countries (Prakash Gupta, 2021).
References
Accounting Tools. (2022). Types of accounting functions. AccountingTools.
Binarystream. (2020). The complete guide to financial management in healthcare. Knowledge.binarystream.com.
Brumley, S. (2019). Role of Financial Management in Health Care. Chron.com.
Huang, W. (2019). Service and Oversight Functions of Accounting. Built on Value, 329–346.
Prakash Gupta, S. (2021). UNDERSTANDING THE IMPORTANCE OF FINANCIAL MANAGEMENT IN HEALTHCARE ORGANIZATIONS IN INDIA. International Journal of Advanced Research in Commerce, 83(04), 83–86.
World Health Organization. (2021). Health financing. Www.who.int.
this is was qoustion
Unique Aspects of Health Services & Financial Management
There are a number of unique factors relating to the health services sector:
Compare the two types of accounting functions.
Describe how the accounting functions affect operational oversight.
How do these unique features affect the financial management of the sector?
Expert Solution Preview
Introduction:
Financial management in the healthcare industry is an important aspect of ensuring the viability and success of healthcare organizations. This involves managing financial activities such as contract negotiations, cash availability, emergency fund maintenance, and sharing data with other members of the leadership team for long-term strategy formulation. Additionally, healthcare organizations rely on two types of accounting functions, namely financial accounting and management accounting, to keep track of business transactions, transform data into financial reports, analyze financial and operational data, and find ways to boost profitability.
Answers:
1. Compare the two types of accounting functions.
Financial accounting and management accounting are both essential components of financial management in healthcare organizations. Financial accounting is primarily concerned with keeping track of business transactions, transforming data into financial reports, and providing information to external stakeholders such as investors, creditors, and lenders. This type of accounting function helps external stakeholders to gain insights into the financial health of an organization and make informed decisions.
Management accounting, on the other hand, is focused on analyzing financial and operational data to find ways to boost profitability and provide guidance to management on pricing issues. This type of accounting function helps the top leadership team of healthcare organizations to make data-driven decisions that improve the financial performance of the organization.
2. Describe how the accounting functions affect operational oversight.
The accounting functions play a critical role in operational oversight in healthcare organizations. Management accounting provides insights into the costs of operations, which is necessary for making informed decisions on resource allocation and improving efficiency. It can also be used to measure and manage the efficiency of operations through the use of tools and procedures. Financial accounting, on the other hand, helps to ensure compliance with regulatory requirements and provides information to external stakeholders.
3. How do these unique features affect the financial management of the sector?
The unique features of the healthcare industry, including regulation, tailoring treatments to individual patients, and reducing healthcare waste while retaining quality, have a significant impact on financial management in the sector. Financial management in healthcare organizations is responsible for risk mitigation and resource allocation, and the well-being of the organization is affected by a number of variables. Through effective financial management, healthcare organizations can improve service coverage, financial security, and even advance towards universal healthcare. The importance of financial management in healthcare organizations cannot be understated, as it is critical to the success and sustainability of the industry.
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