Financial Management of St. Patrick Hospital

This assignment requires a financial analysis of St. Patrick Hospital. Students must examine the hospital's funding sources, implement cost accounting principles, and propose strategies to ensure financial stability. The analysis should consider factors like patient expectations, personnel quality, and market competition.

Managing financial resources in Health
and Social Care

TABLE OF CONTENTS
Introduction..........................................................................................................................................
Task 1...................................................................................................................................................
1.1 Principal of costing and Business control system..................................................................1
1.2 Information needed to manage the financial resources.........................................................2
1.3................................................................................................................................................3
Task 2...................................................................................................................................................
(A)................................................................................................................................................4
2.1 Sources of income available for St. Patrick Hospital............................................................4
2.2 Analyse factors that may influence availability of financial resources.................................5
2.3 Different types of Budget expenditure...................................................................................6
Task 3...................................................................................................................................................
Covered in PPT............................................................................................................................8
Task 4...................................................................................................................................................
1.4 Systems for managing financial resources.............................................................................8
2.4 Evaluate the decisions about expenditure..............................................................................8
3.3 Budget monitoring arrangements...........................................................................................9
4.1 Require information for financial decisions making.............................................................9
4.2 Analyse the relationship.......................................................................................................10
4.3 Factors affecting the individual...........................................................................................10
4.4 Measures for improvements.................................................................................................10
Conclusion..........................................................................................................................................
References..........................................................................................................................................

INTRODUCTION
Cost is important to every business. Different types of cost are there for different type of
businesses. Generally two type of cost are their absolute cost and relative cost. In this case we
have to measure the method of costing through which the company St. Patrick Hospital can
analyze their cost and can improve their profit through this (Banerjee, 2006). This case involves
the method, practice and processes that can be adopted by the company for better managing their
cost of business. A number of costing are used for costing are used for costing products, cost
control and managerial decisions.
TASK 1
1.1 Principal of costing and Business control system
The cost accounting principle working at measuring the cost of business efficiently and
effectively that the company can manage their cost and reduce the expenses over that.
Stakeholder engagement
It is the process by which an organization can involve the people who can be affected through the
decision of the business. Costing can affect the supplier because it directly relates to the profits
of the business. Costing decision affects the management of the company and also the profits of
the company because it is related to the expenses (Xanthopoulou and et.al, 2009).
Data accuracy
Data collected on the basis of costing method should be accurate and clear because on the
basis of the data’s the results of actual cost which is in the business can be evaluated over a
period of time in the business.
Consistency
Accountants are expected to be consistent at the time of applying the method of costing.
This principal states that if any method of costing is adopted than the same should be followed in
the future costing process, so the company can analyze the cost effectively (Drake and Fabozzi,
2012). Using different method all the time make confusion every time in proper costing.
Comparability
Principle of costing states that the costs of the company could be compared to the cost of
previous year and to different companies, that can help the organization to improve the results.
Reliability
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Data on the basis of which the costing is done should be reliable and verifiable, this could
help the organization to evaluate actual cost of business and helps the organization to manage the
things effectively (Cortes, 2009).
Business control system
This is the business system that helps the company to protect from the costly things, careless and
uninformed behaviors or on taking wrong decisions. Three types of controls are there:
1) Visual control
It deals the numerical portion the business which includes the budgets, balance sheet etc.
If the right things are not going on in the business that issues can be solved with this method.
2) Procedural controls
It includes the things like two unrelated parties are there and cheeks the flow of
money .this procedure controls the flow of money into the wrong direction and the cost can be
controlled through this (Daly, 2011).
3) Embedded controls
This method includes automatic data backups and intentionally designed financial
controls that works automatically and the cost of different things can be controlled through this
because it focuses on the wrong expenditure which re going on in the business and attract the
managers towards those expenses that should be controlled.
1.2 Information needed to manage the financial resources
Managing the information of financial resources is the main important task of the
business that should be done effectively in any business. Profit and loss statements: To manage the financial resources information of profit and
loss account plays a vital role (Stolowy and Lebas, 2006). It evaluates the profits and
losses of the company through which a company can manage their financial resources.
 Balance sheet: Balance sheet is the document that analyze the total earning of the
business over a period of time. Recognize changes in plans and activities accordingly
helps to manage the financial resources of the company. Budgets of the company: Different types of budgets have to be evaluated regularly on
basis of which the financial resources can be managed effectively (Epstein and Buhovac,
2014).
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 Income and payment statements: Statement of total income of the business is required to
manage the things that income and payment are in the acceptable ratio or not.
1.3
This thing points out that government has sets some rules and regulations for health care
organization like to improve the status of health of the citizens of that country, effectively use the
charity funds and incentives which are provided to the health care to government. Govt. bounded
the health organization to report the additional notes other than the financial statements (Herman,
2011). This is basically done for the purpose to evaluate the sustainability of the health
organization in the market. Regulatory requirement are done in health organization to find the
fees of hospital for consultation and other services. Apart from this it gives the idea of
management style and directorship of the company. The Health and social care act, 2012: this act is come into force to make significant
changes in the system of health care organizations. Through this act a new organization
has been developed for the welfare and benefits of the patients of the health care system.
In this they made certain rules for the health care organizations that they have to follow to
make their patient comfortable and beneficial from this (Stomierowski and Lorette,
2011). Apart from all this things they make a new provision which can better help the
patients to take advantage of the health care centers named National Health Service
Commissioning board and Clinical Commissioning groups, it helps the patients to get
better services from the health care centers.
 Care Quality Commission: It is an independent regulatory authority of the UK which is
responsible for analyzing safe, effective and health services which are provided by the
health organization. If the organization needs any improvement than this authority helps
the organization to improve their quality and services timely (Bhowmik and Saha, 2013). The care act, 2014: This act deals with the any criminal sanction or any false or
unacceptable thing if going on in any health care organization, if happened than proper
action will be taken on that organization .This act is established to deal with the statuary
rules of the hospital and health care organizations. Monitor: This body regulate the health organization within England with taking the
responsibility of monitoring, regulating and authorizing the health organization with
England (Aggarwal and Koo, 2008). It gives the protection to the patients through the
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behavior which is not according to their interest and provide better quality of services to
them.
TASK 2
(A)
Particulars Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Brought
Forward
40,000
Sales 200,000 300,0
00
300,00
0
300,00
0
250,00
0
260,00
0
300,00
0
260,00
0
300,00
0
325,00
0
265,00
0
265,00
0
Total Income 240,000 300,0
00
300,00
0
300,00
0
250,00
0
260,00
0
300,00
0
260,00
0
300,00
0
325,00
0
265,00
0
265,00
0
Purchases 150,000 140,0
00
135,00
0
135,00
0
140,00
0
130,00
0
135,00
0
145,00
0
140,00
0
140,00
0
145,00
0
145,00
0
Wages 55,000 55,00
0
55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000
Rent &
Rates
56,000 56,000 56,000 56,000
Light &
Heat
55,000 55,000 55,000 55,000
Advertising 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Insurances 55,000 52,000
Equipment 50,000 10,00
0
10,000 10,000
Vehicles 20,000
Directors'
Salaries
22,000 22,00
0
22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000
Motor
Expenses
11,000 11,00
0
11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000
Sundry
Expenses
11,000 11,00
0
11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000
Total
Expenditure
432,000 251,0
00
291,00
0
302,00
0
293,00
0
296,00
0
292,00
0
246,00
0
296,00
0
297,00
0
246,00
0
301,00
0
Monthly
Deficit /
Surplus
-
192,000
49,00
0
9,000 -2,000 -
43,000
-
36,000
8,000 14,000 4,000 28,000 19,000 -
36,000
Accumulativ
e Deficit /
Surplus
-
192,000
-
143,0
00
-
134,00
0
-
136,00
0
-
179,00
0
-
215,00
0
-
207,00
0
-
193,00
0
-
189,00
0
-
161,00
0
-
142,00
0
-
178,00
0
2.1 Sources of income available for St. Patrick Hospital
There are several sources of income present for the St. Patrick Hospital but it is the duty
of senior finance officer to make sure that they evaluate each and every source so that financial
needs and wants of different operations of hospital can be manage effectively (Arffa, 2001). In
general, both internal and external sources are available through the means of which cited
hospital can generate income and carry out their work in feasible and reliable manner.
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 Sales: St. Patrick Hospital generate revenues by offering wide range of medical services
to its patients in suitable way. However, the main purpose of hospital’s existence is to
provide superior quality of health care services to its patients so that they can recover
quickly from the diseases. Further, sale of medical services is considered as one of the
major internal source of income which is raised by delivering the medical services as per
the expectations of the ill person (Stansbury, 2012). Moreover to this, business volume
assist in developing long term aims with realistic and achievable objectives for the future
sustainability.
 Share capital: Operating in the market of UK, top level management of St. Patrick
Hospital can raise income by issuing shares in the market. However, having better
goodwill in the market helps the course of company in influencing large number of
audience to invest in the shares of the hospital and raise funds for providing medical
services to the patients. This is one of the external source of income for the St. Patrick
Hospital and management can issues shares at nominal prices to enhance number of
shareholders.
 Central government: In general, it can be defined as the important source of income for
healthcare organisation because, legal body of UK has allocated funds for different
healthcare organisations so that they can carry out their operations (White, 2006).
However, on the yearly basis, central government of UK provides funds to the St. Patrick
Hospital and ensure that people of country are getting best possible treatments for their
health related issues.
Therefore, these are some of the sources of income that are available for the St. Patrick
Hospital and it is the responsibility of top level management to make sure that utilize these
source to a great extent and generate higher revenues for the firm so that advanced technology
can be employed to provide better services to the patients.
2.2 Analyse factors that may influence availability of financial resources
There are varied factors that may influence the availability of financial resources within
the St. Patrick Hospital. However, it is the duty of senior authority of hospital to evaluate and
analyze these factors and make sure that potential measures are employed to mitigate the
negative influence. Following are the factors that may influence the availability of economic
resources:
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 Nature of services rendered: In general context, it is considered as one of the biggest
factors that influence the financial resources of business enterprise. Considering the
current portfolio of St. Patrick Hospital there are varied services that are offered by the
healthcare practitioners are visual therapy, residential support, transition program etc
(What to include as income, 2012). However, in context to the available portfolios it is
essential for the cited hospital to have large funds to carry out the practices. In addition to
this, visual therapy requires advanced equipment’s and machinery for which hospital has
to invest high as well as incur maintenance costs this indeed increases the financial needs
of the business (Drake and Fabozzi, 2012). Therefore, evaluating different types of
services offered by the St. Patrick Hospital assist in evaluating the requirement of fund on
the basis of which future decisions can be made on the allocation of funds. Whereas, the
drawback of this factor is that it does helps in identifying and understanding the exact
funds required for the betterment of various departments in the St. Patrick Hospital.
 Government policies: It is the responsibility of government of UK to pass on the
unaffordable level of debt to the next generation so that services can be carried out
appropriately. Considering the present condition, there is need to remove the deficit by
using more sensible and balanced approaches (Stolowy and Lebas, 2006). However, it
will assist in increasing the spending for the health and social care services. Therefore, it
is important for the legal authorities to frame all the government policies that assist in
giving the benefits to both service provides as well as the users.
 Agency objectives and policies: In UK, Department of Health enables the health care
firms like St. Patrick Hospital to offer medical services as per the priorities. However,
these departments are required to work in tandem with the government bodies (Herman,
2011). In this regard, the Secretary of State for Health holds the major responsibility
towards making sure that whole healthcare industry work in coordination to satisfy the
needs and wants of patients.
2.3 Different types of Budget expenditure
Particulars January February March April May June
Receipts
Cash from this month's sales 9600 9600 9600 15600 15600 15600
Cash from this month's sales 0 2400 2400 2400 3900 3900
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total cash received 9600 12000 12000 18000 19500 19500
Payments
Premises -70000 0 0 0 0 0
Equipment -15000 0 0 0 0 0
Vehicle -12000 0 0 0 0 0
Salary -2500 -2500 -2500 -2500 -2500 -2500
Garment Purchases -5000 -5000 -5000 -7000 -7000 -7000
Drawings -1500 -1500 -1500 -1500 -1500 -1500
Advertising -1100 -1100 -1100 -1100 -1100 -1100
Other expenses 0 -2400 -2400 -2400 -2400 -2400
Total cash outflows during
the month -107100 -12500 -12500
-
14500
-
14500
-
14500
Net Cash -97500 -500 -500 3500 5000 5000
Opening Balance 130000 32500 32000 31500 35000 40000
Closing Balance 32500 32000 31500 35000 40000 45000
There are several expenditures which are to be paid by the senior authority of St. Patrick
Hospital in its operations:
 Staffing: It is one of the most significant expenditure that management has to incur.
However, in order to carry out the operations of St. Patrick Hospital it is important for the
authority to employee best healthcare practitioners and provide them better salary so that
can satisfy the needs and wants of patients effectively (Arffa, 2001). In this regard, firm
has to bear the high costs of recruitment, staffing and training and development of the
people.
 Fixed assets: In medical services there are varied costs associated with fixed assets which
consist of land, building and medical equipment’s and machinery etc. Further, it is
essential for St. Patrick Hospital to maintain good infrastructure for comfort-ability of
patients.
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 Loan interest: In order to raise funds from debt financing cited hospital has to incur the
costs of interest. Thus, the amount charged on loan at monthly basis is another major
costs associated with the firm (Stansbury, 2012).
TASK 3
Covered in PPT
TASK 4
1.4 Systems for managing financial resources
There are several types of systems that assist in managing the financial resources for St.
Patrick Hospital are as follows:
 Open Accounts: Opening different accounts are considered as the highly integrated and
widely used system for the management of available financial resources. The main
purpose of this is that it assist in reducing the burden from the finance team of the
company. Further, it helps in providing management related information across different
levels of the business in accurate and smart way (Daly, 2011). In addition to it, this
reduces the costs and enhances the financial visibility.
 Caresys: This is a software which is especially designed for the management of financial
resources within health and social care organisation like St. Patrick Hospital. The main
purpose of this software is that it assist in sharing information across different channels in
the best possible manner. Further, it helps in reducing time on administration activities.
 IFRS: IFRS standards are identified as the general policies and procedures for managing
the business affairs across the globe (Xanthopoulou and et.al, 2009). The main purpose of
IFRS is that it assist in analysing and comparing the accounts of the company across the
international boundaries.
2.4 Evaluate the decisions about expenditure
For making smart and effective decisions various factors that needs to considered while
taking any decisions which are as follows:
 Funds availability: Before making any decisions, managers requires to evaluate the
available resources in particular the financial resources so that smart and effective
decisions can be made. By the means of this, allocation of funds can be executed in the
best suitable manner (Herman, 2011). Further, it is essential for the St. Patrick Hospital
raise the money from stable sources.
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 Location: It is another crucial aspects before making any decisions because reachable
location for the people will assist in generating more patients and leads to higher
revenues.
 Legal framework: There are several legal bodies and policies that should be considered
before making decisions regarding expenditure such as Care Quality Commission, Care
Act 2014, Health and Social Care Act 2012 etc (Aggarwal and Koo, 2008).
3.3 Budget monitoring arrangements
These approaches are help to effectively control on preparation of budget monitoring.
These are considered: Internal audit- Internal audit is define as they check the internal employed status of an
organization. These task is to be perform for improving employees working condition, to
increase company's operation system and to make organization objectives in high
standard and effective (White, 2006). Internal audit very effective for organization
because it easily discover unethical misrepresentation, mistakes & fraud. It take accuracy,
transparency and flexibility in the business.
 External audit- External audit define as it is higher as compare with internal audit. These
kind of audit following proper producer, rule, regulation, laws and legal aspects. The
information which we get from these audit it is very useful and effective for stakeholders
of organization. In these audit it considered government, investors and public etc.
external audit find the actual and true information regarding company's status (Stansbury,
2012). Main work of external audit is to reduce risk level and control on internal audit.
4.1 Require information for financial decisions making Management accounts- In the management accounts the decision are taking on the basis
managerial information. These type of decisions are taken by company's managers. And
the data which is considered under financial decisions they are related with performance
of company, there strategic level and risk (Cortes, 2009). Financial statements- Financial statements include three major statements. Balance sheet,
profit and loss and cash flow statement. All the important decisions are taken on the basis
of these three statements. Balance sheet defines the assets and liabilities position in the
company. Whereas profit and loss specify the actual or gross profit and loss situation of
9

company. And else more cash flow statement define income and expenditure of
company. Budgets- Budgets also helpful to taking financial decisions. There are several type of
budgets cash budget, purchase budget, sales budget and marketing budget etc. each
budget calculate each department income and expenditures (Banerjee, 2006).
 Costing- Variable cost, fixed cost and semi variable cost etc are type of costing. Costing
is also helpful to taking important financial decision and it support to cost benefit
analysis.
4.2 Analyse the relationship
The relationship between health and social care service delivered, costs and expenditure
can be analysed on the basis of two prospects which are as follows:
 Transparency with stakeholders: To deliver superior quality of services to different
stakeholders it is important for the senior authority of St. Patrick Hospital. Further, there
should not be miss interpretation of any facts and figures in order to maintain the
authenticity of work (Cortes, 2009).
 Bidding process: The bidding process is to be ethical and of high standards. Further, there
is need of complete transparency in the passing of tenders of services to health and social
care.
4.3 Factors affecting the individual
There are various factors that can affect the course of individual while making the use of
medical services in St. Patrick Hospital. In particular, the mode of service delivery that should be
carried out in suitable manner. However, patients can withdraw the services if they find out any
undesired changes in the level of services (Herman, 2011). On the other hand, problems in
staffing level can also affect the process of the hospital. It is because lack of skilled healthcare
practitioners can hamper the quality of carrying out operations. Furthermore, issues regarding the
prices of medical services can influence the minds of patients and can impact on the reputation of
the St. Patrick Hospital.
4.4 Measures for improvements
Looking at the present condition it can be said that, reassessment of expenditure can help
the course of managers in evaluating the expenses. By the means of this process, finance
manager of St. Patrick Hospital can get the idea about the fault within the budgets. Further, top
10

level management should consult with the experts for better execution of operations. In addition
to this, costs and unit estimation per head can also be made for maintaining the expenditure or
controlling the financial costs.
CONCLUSION
In conclusion to the above report it has been evaluated that development of Health care
facilities require adequate amount of funds and in case of St. Patrick Hospital, management has
to maintain the financial position of firm because patients or users expects high quality of
medical services from the practitioners. Further, by hiring quality of personnel will assist the
course of company to generate desired results and outcomes for the firm which indeed leads to
better position of the firm in exiting market.
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