Management and Organization of Nursing CareFinancial Management of Healthcare & Emerging Issues Healthcare, the field concerned with the restoration or maintenance of health of the mind or the body, is an industry which involves much more than just doctors and hospitals. Although the latter two entities form the major part of the expenditures in the industry there are other healthcare providers too which have a fair share of the remainder. The industry is almost as large as $ 1.9 trillion and expected to go up to $ 2.5 trillion by the year 2009 which means tremendous resources are available to companies that serve patients and hence tremendous opportunities too.
This large sum of money should lead to the best possible outcomes, at the least possible cost and in the most consumer-friendly manner that is possible. Before we look at what is financial management it is imperative to look at what is management by itself. In a managed venture which is profit oriented and investor owned, management could be observed in terms of its standard objectives that is to maximize the shareholder’s or owner’s wealth.
Towards achieving this goal, management skills like planning, organizing, coordinating, motivating and controlling are essential to execute the management roles and responsibilities that lay ahead. Even though this management philosophy is not applicable to healthcare industry directly since it is a not-for-profit set up under section 501(c) (3) of the Internal Revenue Code. Still the healthcare industry management has to deliver the best possible bottom line even though the employers are not-for-profit. For this they have to carry out optimal patient care which is both satisfying and most efficient.
In a profit oriented organization, management has to administer the assets owned by the enterprise in order to maximize wealth for the owner. Here therefore the primary goal of the management is to identify that combination of earnings and risk associated with generating those earnings to yield the highest possible value. Margin is the term associated with profit or earnings in a not-for-profit organization. In both the above type of organizations what remains after expenses, or costs, are deducted from revenues is the margin or profit generated. So emphasizing again, the role of management is to generate the best possible financial returns, while reducing the associated risk to the organization to the minimum level.
Although there is an emphasis on social goals in not-for-profit organizations both type of organizations meet with success or failure as dictated and decided by the board of directors based on the quality of the bottom-line. Financial management can be viewed as initiating and executing a strategy for the financial direction and day to day financial operations of the organization. Thus there are two management functions or tasks which are usually handled at the executive level by two designated individuals namely (1) the Chief Financial Officer (CFO), who takes care of strategizing the financial direction by getting the financial plan of the organization endorsed by the board and implementing their recommendations as to the nature of investments as per policy drawn on various assets and the other (2) the Financial Controller who manages the day to day financial operations ranging from departmental payroll to banking activities etc.
The major issue involved in this financial management activity is the management of information.