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Within a NUR-621: Principles of HealthCare Financial Management course, learners study principles of healthcare financial management and the role of fiscal responsibility within healthcare organizations. Along with an overview of operational budgets, learners delve into the key aspects of the economic drivers and financial requirements impacting organizations, including the financial demands and implications of specific health care delivery models, efficient staffing models, and the management of operational expenses. Learners examine the challenges of aligning key financial performance indicators with safety and quality measures as required in the evolving health care industry.
What is financial management in healthcare?
Financial management in health care deals with the business side of healthcare by making sure that facilities provide quality patient care in a fiscally responsible manner. Proper financial management in a health organization allows it to improve patient care, minimize risk, make needed investments, and explore new streams of revenue.
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5 principles of financial management in healthcare.
Financial transactions within a health organization must be handled in a consistent manner hence the creation of policies and procedures to address similar types of transactions in a routine manner.
Health care organizations should handle financial transactions within a reasonable period of time consistent with time frames outlined for federal agencies, private sponsors, and other formal organizations.
All financial transactions within a health care organization must be relevant and goal-oriented. That is, transactions must support the organizations’ goals and adhere to instructions provided by the federal agencies or other organizations involved.
The person in charge of authorizing a financial transaction must provide sufficient documentation to support the transaction. Most importantly, this documentation must be retained, organized, and complete enough to stand up to an audit.
All financial transactions within a health care organization must be approved and carry all the correct authorizing signatures.
Functions of financial management.
1. Evaluation and Planning
Financial management encompasses evaluating the financial effectiveness and overall operations of the healthcare organization. Thus, by using financial management techniques, the healthcare organization is able to plan for the future. For instance, if a health care facility assesses emergency room revenue and discovers that they’re losing patients to a neighboring hospital with more space, the hospital can respond by deciding to plan for an expansion of their emergency room.
2. Long-Term Investment Decisions
Although the financial team in any healthcare organization has a hierarchy, they must take input from all the managers at all levels when it comes to big investments in the business. This is because long-term investment decisions involve analyzing implementation strategies and determining how the investment might affect the financial future – for the better or for the worse.
It is the responsibility of any healthcare organization’s financial team to raise funds for expenditures. This financing process may involve things like fundraising, grants, loans, or using internal funds. Additionally, this process also involves the financial team looking at the cost and benefit of the investment or the kind of debt that they will incur. After the financial team has considered all the possible outcomes from every decision they would take, the senior manager then makes the ultimate call on financing.
4. Working Capital Management
The financial management team must manage their working capital, which is their current assets minus their liabilities. Assets might include cash, marketable securities, receivables, and inventories. Most importantly, they must manage their capital wisely since it helps them to reduce costs and make sure that the organization runs effectively.