The Health care industry has become highly dynamic with the onset of modern technology and the surfacing of information science. The changes seen are quick and drastic. At the same time the policy changes have made the operations more complex. The health care industry has a variety of issues in the changing environment. To make the conditions worse, healthcare costs are rising day by day, and the medical reimbursements dwindling. The issues faced by the hospital CEOs, are more often than not financial. The issues concerning reimbursements, bad debt losses, Medicare, Medicaid, etc are also alarming. The situation is finance for non financial managers.
To manage finance you have to take decisions which are sound. The decisions can be based on the financial indicators, which are tools in the hands of the managers.
The financial indicators generally consulted before making managerial decisions are:
Financial capability indicator
This is the ability to raise finance on its own to replace assets and technology and meet the growing demands in the service sector.
This is the ability to meet cash requirements within a specific time.
This is the ability to meet long-term financial demands, and perform the maintenance of the long-term assets.
This is seen as the ability to provide the best services in the industry, at the minimum cost.
Human resource efficiency
This is the ability to provide the best human resources, and ways to manage their practices.
These financial indicators when put into use gave the best results in terms of profits, utilization of the optimum capacity, and reduction in borrowings with time.
The reasons that necessitate the establishment of such sound methods include the reluctance on the part of the clinicians to involve themselves in the financial management practices, budgeting, costing and cost management. Most Healthcare organizations are with the non-profit sector. The government or the non-profit sector is not keen on preventing loss-making systems and to give incentives to the efficient systems. If such checks are present, they will curb the occurrence of such problems henceforth.
Health care organizations, when they employ financial recording methods, are faced with objections when it comes to budgeting and raising funds. The FASB has issued Accounting Standards updates to make accounting work more simplified and easy to infer from.
The lack of knowledge, and the implementation of efficient accounting methods, are causes for the bad financial health of the Health care organizations. Finance for non financial managers will help solve such problems.