Financial Management in Health and Care Organisations

This assignment provides a detailed examination of financial resources management in health and care organisations. It discusses various systems and techniques that can be used to efficiently manage these resources, as well as the challenges faced by such organisations in procuring funds. The report also highlights regulations that control expenditures and budgetary control, and mentions general accounting principles for managing grants, funds, charities, and other types of financial resources.

Managing Financial
Resources in HSC

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 Explaining principles of costing and business control systems............................................4
1.2 Identifying information required for managing financial resources.....................................5
1.3 Explaining regulatory requirements for managing financial resources................................5
1.4 Evaluating systems for managing financial resources in HSC.............................................5
TASK 2............................................................................................................................................6
2.1 Discussing sources of income...............................................................................................6
2.2 Analysing factors which influence availability of financial resources in HSC....................6
2.3 Reviewing types of budgets .................................................................................................7
2.4 Evaluating about expenditure in HSC...................................................................................7
TASK 3............................................................................................................................................7
3.1 Managing of financial shortfalls ..........................................................................................7
3.2 Explaining actions for events of suspected fraud..................................................................8
3.3 Evaluating monitoring arrangements in HSC.......................................................................8
TASK 4............................................................................................................................................8
4.1 Identifying information required for financial decision........................................................8
4.2 Analysing relationship between Health and social care service ..........................................9
4.3 Evaluating financial considerations .....................................................................................9
4.4 Suggestions...........................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial resources are the monetary funds which are required to be managed by an
business organisation to effectively operate in their environment (Financial resources, 2018).
The main aim of this project report is to build an understanding about managing financial
resources in health and social care. In this project report principles of costing and control systems
are analysed along with information which is required to manage financial resources. These
sources are discussed by analysing factors which influence availability of financial resources.
Budget and expenditure is also mentioned in this report along with processes for managing
resources in HSC. Heath and social care services are the organisations which provides health
related services to society which the purpose of benefit them and not maximising profit. Various
regulatory requirements along systems are also analysed in order to manage financial resources.
TASK 1
1.1 Explaining principles of costing and business control systems
Costing is the method of determining and controlling the cost which is involved in
operations. In the case of health and social care organisations there are various principles by
which cost can be controlled and managed. Materiality is the most significant principle as it
allows to accurately record all the cost which is related with material items so that the process of
costing can be accurately applied. Transparency is another principle, under which all the
expenses must be transparent and clearly stated in financial books so that they can be easily
audited. Another principle which can help health and social care organisation in managing
financial resources is consistency, according to which these type of organisations use a single
method or process throughout the financial year to bring sustainability. Apart from costing
principles, there are few business control systems which can also help in managing financial
resources. The most important and primary system is cost centre approach in which all the costs
which are expected to be incurred by the organisation are recorded under expenditure budget.
Another system is cost computation in which organisations like national health services
determine cost of every patient they attend in to order to bring efficiency in this activity (Fassin,
Van Rossem and Buelens, 2011).
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1.2 Identifying information required for managing financial resources
Information such as financial data which is required to manage financial resources can
help in ascertainment of all the expenses and incomes which is incurred and acquired by the
health and social care organisation. This information which is necessary to manage resources is
data of salary which is provided to association's staff, expenditures which are incurred in
organisational activities, costing systems and principles. This information helps in managing
funds which are available to organisation. Organisation like national health organisation manage
their resources such as grants and donations are managed by ascertaining data for method which
is used to record cost (Benn and Dunphy, 2013).
1.3 Explaining regulatory requirements for managing financial resources
Health and social care organisations are engaged in providing services which requires
high monitoring and controlling as they deal with lives of individuals. Even in the case of their
financial resources, all the information must be disclosed and all methods must comply with
regulations. There are several regulations which are necessarily to followed by these
organisations. GAAP, generally accepted accounting principles states various rules and formats
for recording accounting information which is mandatory to be followed by health and social
care organisations. These principles are often used so that a familiarity can be developed about
accounting statements. In order to audit all the accounting information of these entities care
quality commission inspects whether, health and social care organisations are meeting national
standards or not. Besides these two regulations, general accounting rules such as cost principle,
full disclosure and many more are also required to be followed (Dela Rama, 2012).
1.4 Evaluating systems for managing financial resources in HSC
There are various systems that can be used for managing financial resources of health and
social care organisations like NHS which are mentioned as follows. Reliable recording is the
most important system which is used by health and social care entities. Under this system, a hack
proof operating system is used in which all the important information about the finance of entity
is recorded. Financial data such as income statement, balance sheet, tax statements, costing
sheets and many more are recorded in this type of system. Operating systems are based on
information technology due to which the data can be further interpreted for decision making
process. Another system which can be used by health and social care organisations are HR
software. This type of system enables it's user to gather and store information related to staff

such as payroll of employees, their attendance data, equipment maintenance and many more. All
these data is required to be stored as human resources are the most significant resources of
operating organisations.
TASK 2
2.1 Discussing sources of income
Heath and social care organisations like NHS acquire funds from various resources. This
type of entity does not usually charge from their patients as they work for social welfare. In order
to efficiently operate these services, they acquire funds. Grants are the first most source from
where NHS procures their funds. Grants are the monetary funds which are provided by
governmental authorities such as central and local government in order to ensure smooth
working of NHS and satisfaction of the society. Another source of funds which has been
identified is charities. This source is acquired by individuals who voluntarily donate their value
to the health and care organisations in order to provide benefit to society. Besides these sources,
there are few more sources of funds also. These sources are public care departments such as
foster care services, health care department and many more (Shaoul, Stafford and Stapleton,
2012).
2.2 Analysing factors which influence availability of financial resources in HSC
There are various internal and external factors which effects functioning of a health and
social care organisations. Funds are procured by these organisations from external sources such
as governmental authorities and social help due to which there are several external factors which
influence availability of financial resources. Political factors are the most important influencers
as it not important that ruling political parties are in favour of supporting health and social care
organisations. Economic factors are the budget influencers. Grants acquired by NHS from
government are pre decided by the budget developed under economic policies, if the policies are
against these organisations there are major chances of attaining low value grants. Social factor is
the thought process of individuals present in society which provides charities to NHS
(Mang’unyi, 2011).
2.3 Reviewing types of budgets
Budget expenditure is a statement which includes all expenses which are incurred by the
organisation or planning to be incurred by them. There are various kinds of expenditure budgets
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which can be prepared such as fixed cost budget, variable cost budget, inventory and
administrative cost budget. Under fixed cost budget, all the fixed expenses such as property rent,
licensing charges and salary to permanent staff is recorded to keep a record of all the expenses so
that it can be audited. In variable cost expenditure budget, all marginal expenses as property
maintenance charge, miscellaneous charges and wages are recorded. Administrative expenditure
budget records all the expenses related to admin department such as salaries to non clinical staff,
stationary charges and many more. Expenses related to all the inventories are recorded under
inventory expenditure budget such as raw material, clinical tools and machineries (Baydoun and
et. al., 2012).
2.4 Evaluating about expenditure in HSC
Decision making process in health and social care organisations is quite complex as they
are required to consider numerous factors. While making decisions about expenditure, things
which are required to be consider are balance between the expenses, growth of entity and
competitors. While preparing a budget of expenditures it is important for this type of
organisation to maintain a balance between fixed and variable expenses so that in the case of
even low funds, available finance can be managed and clinical activities must be performed
efficiently. Decisions about expenditures must be taken in such a way that priorities of
organisation can be fulfilled. For example, in the case of NHS their top priority is to satisfy
patients so the expenses must be managed so that they can provide maximum benefit to the
patients.
TASK 3
3.1 Managing of financial shortfalls
Financial shortfall is the situation when health and social care faces condition of low
funds. In this kind of situation, organisations like NHS should manage their finances in such a
way that they will eliminate burden of additional cost. To manage their resources, budgets should
be prepared in which future estimations must be included so that expenses can be pre planned
and there will be no burden on organisational activities. Health and social care organisations
must put efforts to acquire additional grants from government. If both of the above techniques
results in vague, than organisations such NHS should adopt the technique of disinvestment of

services. For example: NHS should consider on those services which can provide them
immediate and huge cash (Social and Committee on Bioethics, 2013).
3.2 Explaining actions for events of suspected fraud
In current scenario, fraud is a common activity which is encountered by social services
organisation. But in order to evade these frauds, there are various techniques which can be used.
If health and social care organisations like NHS suspects fraud then they should immediately
conduct an internal audit so that culprit or problem area can be identified. In the case of vague
attempts by internal team, external auditors must be hired for this task. In order to set an example
in the workplace for consequences of frauds. The culprit must be punished according to basic
laws so that every individual of entity can learn the lesson out of that situation.
3.3 Evaluating monitoring arrangements in HSC
Budget monitoring is an activity of managing and controlling all the affairs related to
budget and expenditure. In the process of budget monitoring process, organisation must audit
and control all the activities of staff in order to ensure that the expenses are not going out of the
budgetary limit. The main aim of this process is to monitor expenses so that health and social
care organisation should not face the situation of financial shortfall. At the end of an financial
period, all the expenses incurred must be checked and ensured that they are not over the spend
limit set in the budget (Ottenberg and et.al., 2011).
TASK 4
4.1 Identifying information required for financial decision
Financial decision in heath and social care organisations are usually related with the
affairs such as expenditures on clinical and non clinical operations, allotment of funds in various
departments and many more. In order to take these financial decisions efficiently it is important
for them to use reliable information. This information can be identified by assessing operations
of heath and social care organisation. Financial data such as income statement, tax statements,
cash budgets and balancesheets can be used to interpret conclusions so that reliable decisions can
be taken. Along with financial data, non financial data can also be used such as performance of
employees, client satisfaction, growth report and sustainability. This non financial information
can be help organisation to ascertain problems areas and against those decisions can be taken
(Klug, 2011).
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4.2 Analysing relationship between Health and social care service
Services which are provided by health and social care are directly related with their costs
and expenses. It is considered that the services are the reflection of their price. But this
consideration is not valid in the case of health and social care as these organisations like NHS
works for the betterment of society. Every patient of these organisations will be treated equally
regardless of their status. Still, due low availability of expenses services of these entities get
affected. For example: if NHS only procures half of the funds then they has to prioritize their
activities and provide services which can fulfil requirement of patient and can also be easy to the
pockets of these entities. This relationship is adverse in nature as if the costs and expenses are
high on service then management of NHS will provide not so satisfying services and if the cost
and expenditure is low on any service than they has the scope of providing better services.
4.3 Evaluating financial considerations
Financial considerations are the monetary values which are paid by the patients attaining
services from heath and social care. As these organisations does not work for profit
maximisation, value which is required by these entities are comparatively less. These
considerations does impact on service users. This impact can vary according to the user. If the
user is willing to pay high value but against the high standard services, then health and social
care organisations has to provide and develop those kinds of services. But in this situation there
will be various patients who can not afford that high value service and even there is a possibility
that these patients will not acquire any clinical service. This problem can be solved by the
approach of equality.
4.4 Suggestions
Organisations which are provided by helath and care services like NHS can enhance their
performance by using few techniques. They should use the process of budgetary control so that
all the expenses can be monitored and controlled. These organisations should be ascertained cost
involvement of every patient so that record of every patient can be maintained and it can be
easily audited by internal team as well as by external auditors (Schwartz and et.al., 2013).
CONCLUSION
From the above project report, it has been concluded that managing financial resources in
a health and care organisation is a crucial task to perform but with the help of various systems

and techniques which are identified above this can be done efficiently. Various issues in
procuring the funds are ascertained in this project along with the measures overcome those
issues. Several regulations are also identified in this project which controls and monitors various
aspects of these organisations such as expenditures and budgetary control. General accounting
principles are also mentioned in this report to build an understanding about the management of
financial resources such as grants, funds, charities and many more. Sources from which these
funds are acquired are also discussed in order to identify the situation when these organisations
face financial pitfalls.
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REFERENCES
Books and Journal:
Schwartz, R. L., and et.al., 2013. Health law: cases, materials and problems. West Academic
Publishing.
Kluge, E. H. W., 2011. Ethical and legal challenges for health telematics in a global world:
telehealth and the technological imperative. International journal of medical
informatics. 80(2). pp.e1-e5.
Social, G. and Committee on Bioethics, 2013. Ethical and policy issues in genetic testing and
screening of children.Pediatrics, pp.peds-2012.
Ottenberg, A. L., and et.al., 2011. Vaccinating health care workers against influenza: the ethical
and legal rationale for a mandate. American Journal of Public Health. 101(2). pp.212-
216.
Fassin, Y., Van Rossem, A. and Buelens, M., 2011. Small-business owner-managers’
perceptions of business ethics and CSR-related concepts. Journal of Business
ethics. 98(3). pp.425-453.
Dela Rama, M., 2012. Corporate governance and corruption: Ethical dilemmas of Asian business
groups. Journal of Business Ethics. 109(4). pp.501-519.
Shaoul, J., Stafford, A. and Stapleton, P., 2012. Accountability and corporate governance of
public private partnerships. Critical Perspectives on Accounting. 23(3). pp.213-229.
Baydoun, N., and et. al., 2012. Corporate governance in five Arabian Gulf countries. Managerial
Auditing Journal. 28(1). pp.7-22.
Benn, S. and Dunphy, D., 2013. Corporate governance and sustainability: Challenges for theory
and practice. Routledge.
Mang’unyi, E. E., 2011. Ownership structure and Corporate Governance and its effects on
performance: A case of selected Banks in Kenya. International Journal of Business
Administration. 2(3). p.2.
Online
Financial resources. 2018. [Online]. Available through:
<https://www.igi-global.com/dictionary/financial-problems-of-the-small--and-
medium-sized-enterprises-and-solution-suggestions/45245>