Financial Control and Budgeting in Health and Social Care

FINANCIAL CONTROL AND
BUDGETING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
a) Analysing the legal, financial and regulatory environment of health and social care.............1
b) Evaluating funding options in health and social care industry ...............................................2
c) Explaining agency theory in context of NHS and importance of communicating regarding
budgeting with stakeholders........................................................................................................3
QUESTION- 2.................................................................................................................................3
(a) Impact of financial constraints, costs and budgets on health and social care service
managers, their clients and other stakeholders............................................................................3
(b) Challenges of budgeting in public sector organization..........................................................4
(c) Advantages and disadvantages of incremental and zero based budgeting.............................5
QUESTION- 3.................................................................................................................................7
(a) Calculation of the break-even point and the margin of safety................................................7
(b) Assumptions of break-even model.........................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial control and budgeting is important component for managing business. It helps
organization to evaluate income and expenditure so that required corrective actions can be taken.
The present report will include legal, regulatory & financial scenario of social and health care.
Case study will give emphasis on PFI, agency partnership, outsourcing and competitive
tendering in mentioned industry. Importance of communication to stakeholders in budgeting
along with agency theory implication. Present report will involve impact of financial constraints,
cost on stakeholders also challenges of budgeting public organization. Advantageous and
disadvantages of zero based & incremental budgeting. Calculation of BEP and MOS will be
shown along with its model's assumption.
QUESTION 1
a) Analysing the legal, financial and regulatory environment of health and social care
Legal scenario
Laws are made up by legislature, executed by government through making binding legal
proceedings. There are two types of legislations such as primary that is made by nation and
secondary that is implemented by local government. In health & social sector there are three
important factors that defines the whole structure (Meisner, 2017). It includes creating &
recognizing rights, developing obligations and penalty standards and set up of permanent
institutions that servers for safeguarding interest of people. These play role in protecting public
health from communicable diseases & risks and providing assistance and power to take action to
prevent.
Regulatory environment
The regulatory bodies of UK are GMC, NMC, GDC, GOC, GosC, GCC, Gphc, PSNI
and HCPC which monitors health care workers in UK. This is considered to be independent
bodies for managing doctors, nurses and other social care professionals in the industry
(Skipworth, Delbufalo and Mena, 2020). Every authority of these mentioned body is separate
piece of legislation. For this purpose 9 important authority has been established for standard
practices of professionals. These all is governed under section 60 of health care act 1999. It is
exerted for purposes so that social protection can be provided to public. This involves road map
for NHP and implementation of mechanism for achieving objectives into standardized manner.
Financial situation
1

Currently UK Health and social care department is financed by levy regulatory
authorities that provides it independence for taking corrective course of action according to need.
Its focus is on cost-effectiveness in turn economic and business efficiency can be obtained. In
addition to this, it will drive consistency and improvements. While financing, it also assures
there will be no role of authority in operational decisions.
b) Evaluating funding options in health and social care industry
PFI
United Kingdom as stated utilizing Private Finance Initiative (PFI) as an important
component for adding value through crucial resources in health care. With respect to this for
managing risk it uses plethora technique. For PFI this technique is used in generic nature there is
no evidence that it is appropriate for all the time. Basically the funds of private sector is used for
delivering improvements in public firms infrastructure.
Agency Partnership
It is essential for obtaining solutions for enhancing health equity through collaborating
multi sectors to have pool of resources, expertise & power-sharing. The aim of this is to enhance
efficiency and quality of services. This involves firm with health mission such as hospitals,
federal qualified centres and public health agencies. The guiding principle that is followed is
paradigm shift, innovation and strategic concision making thinking.
Competitive Tendering
It is the process in which large organization purchases newly issued government debts.
The biggest advantage that specified industry receives is production efficiency. The aim for
promoting this by UK is to achieve cost saving and effectiveness. It leads in attaining procedure
which attempts to undercut each other & causes unease. It provides the cheapest social care
services that result in the best value for public. In price variations ensures that financial
considerations are uppermost which will give differentiating factors.
Outsourcing
This decision usually bring vast change in organizational procedure of health care firms.
The reasons for which these companies opt for outsourcing comprises profitability, efficiency
and qualitative performance. In order to cope with clinical performance and numerous medical
act it becomes essential for healthcare organizations to obtain speed. The outcome that is derived
through outsourcing practice is cost diminution, redefinition of value course, execution of quick
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