As the healthcare sector expands, the economics of healthcare becomes more complicated. Teams must negotiate new rules, make sense of massive amounts of data, manage different leases, and stay in compliance with changing accounting standards. All of this must be accomplished while ensuring that healthcare stays inexpensive and accessible. Efficient financial management focuses on safely resolving these problems so that companies can continue to deliver exceptional care delivery and invest in improvements while also meeting budgetary obligations.
The fundamental goal of financial management is to mitigate risk and manage funds in order to achieve the goals of a healthcare facility. Providing healthcare requires a strong and well-organized administrative backbone, which will change from one healthcare institution to the next. Many elements impact an organization’s financial health, and the majority will find ways to improve both its systems and procedures.
Health care finance management teams assist institutions such as hospitals and nursing homes in running effectively and profitably. Finance specialists give financial and other accounting reports to general managers to assist them in making wise decisions. Financial management in healthcare has four components: producing revenue, controlling internal expenditure, preserving the hospital’s tax-exempt status, and determining areas of fiscal weakness and strength.
Objectives:
Maintaining the Hospital’s Financial Position: Because the governments are always seeking for new income streams, non-profit health care institutions must preserve their tax-exempt status. The health care financial management team of a health institution is responsible for ensuring that tax exemption standards are met. This might be accomplished by reducing rates for destitute patients or by performing a community needs analysis and adopting a plan to meet those needs.
Monitoring Internal Expenditure: One of the financial aims of healthcare administration is to monitor spending inside the organization. The goal of this form of financial assessment in hospitals is to assist management in detecting fraud or abuse of money. Physicians, in particular, are extensively monitored since they affect a large portion of hospital and nursing facility costs. A physician, for example, may put a purchase order for medication and gear that is incompatible with patient requirements, exposing the institution to needless costs and legal risks. To fight this behaviour, the hospital’s financial management team may form a special committee to undertake a monthly or yearly audit of all medicine and equipment purchases in order to discover theft of hospital money. If proof of fraud is found, the hospital may pursue disciplinary actions against the practitioner in accordance with institutional regulations, or court prosecutions in conformity with government legislations.
Controlling Third-Party Payers: Insurance companies and organizations that pay all or portion of a patient’s medical expenditures are examples of third-party payers. Third-party payers are primarily concerned with profit and are often aggressive in requesting reductions from healthcare facilities if they supply a big number of patients. However, hospitals might lose a lot of money when they do not obtain enough compensation for the services they deliver. By negotiating stronger contracts with insurance companies, the health care financial management team helps the hospital avoid financial risks associated with engaging into deals with third-party payers.
Role of a Financial Manager:
Financial managers are accountable for an organization’s financial health. Financial managers grasp both broad trends and the specifics of individual healthcare companies. For example, in health care, financial managers supervise patient-centered economic patterns all through the financial year. Financial managers are in charge of improving overall financial performance while also collecting financial data and educating office workers to reach targets more effectively.
Healthcare finance managers analyze company performance on a regular basis. They assist healthcare businesses in being compliant with new rules and provide advice as needed. Because of these responsibilities, finance managers are essential members of corporate strategy teams. A financial manager takes choices on the allocation, deployment, and investment of financial resources. Professionals in this profession must often share data insights with corporate teams – and make difficult decisions when required.
The significance of financial planning in healthcare businesses cannot be overstated. Although financial planning is a demanding undertaking that confronts new financial challenges every day, providers stay committed to enhancing the lives of their patients. Healthcare institutions have a chance to boost revenue, enhance patient care, and create numerous employment prospects in the next years via smart cost-cutting measures and unorthodox revenue-generating ideas.
Financial Management and the work associated with it is an integral part of hospital administration. We at Athar Institute of Health and Management Studies (AIHMS) provide BHA as well as MHA degree at an affordable fee providing students with best opportunities to combine their studies with practical experience and also provide extensive training opportunities in the healthcare quality as part of the course curriculum.
