Financial Control and Budgeting in Health and Social Care Sector

Financial Control and
Budgeting

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
(a) Critically analyse the legal, financial and regulatory environment of health and social care
.....................................................................................................................................................1
(b) Critically evaluate the use of alternative funding options and outsourcing in health and
social care sector.........................................................................................................................2
(c) Discuss agency theory in the context of the NHS. Explain the importance of and ways of
communicating with stakeholders in the context of budgeting...................................................4
QUESTION 2...................................................................................................................................5
(a) Critically discuss the impact of financial constraints, costs and budgets on health and
social care service managers, their clients and other stakeholders.............................................5
(b) Explain the particular challenges of budgeting in public sector organisations.....................6
(c) Critically discuss the advantages and disadvantages of incremental and zero-based
budgeting.....................................................................................................................................7
QUESTION 3...................................................................................................................................9
(a) Calculate the break-even point and margin of safety in both units and revenue for the two
years, 2018 and 2019, and briefly comment upon the results.....................................................9
(b) Critically discuss key assumptions attached to the break even model, within the light of
the reality of today’s business environments............................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Financial control is a procedures, policies and means by which an organization. For this
require to monitor and control the direction and usage of its financial resources. It is essential to
control very core of resources management and operational efficiency in any entity. Moreover,
Budgetary control is a procedure by which budgets are produced for upcoming period and are
compare with the actual efficiency for finding out variances. The comparison of budgeted figures
with actual figures will supports in proper management to find out variances and take right
decision without any delay (Bleyen and et.al, 2017). This report based on the NHS (National
health service) is the publicly publicly funded healthcare system in England (United Kingdom).
It is the second biggest single payer health care system in the world. In this report consist of
evaluate of financial, legal, regulatory and structural atmosphere under health and social care.
Analysis alternative funding options in the health and social care sector and apply agency theory
in context of NHS. Moreover, define impact of financial constraints, costs and budgets and
particular challenges in public sector. Along with advantage and disadvantage of zero based and
incremental budget and calculate break even point and margin safety in units and amounts.
QUESTION 1
(a) Critically analyse the legal, financial and regulatory environment of health and social care
The health and social care industry involve various organisation that consist of health
care support to individual like hospitals, specialist and many others. The legal as well as
regulatory perspective can attach with funding arrangement, duty of care of the local dominance
and also commissioning of service and the tendering processes in the public sector provision for
the support and care service. This industry follow a particular legal, financial and regulatory
framework that are mentioned below:
Legal environment: The health and social care industry follow a legal structure that is
identified as crucial of health care department that is related with deduction of increasing
infections, viruses that are very critically for human health (Ellul and Hodges, 2019). A
particular nation requires to follow a particular legal structure that helps to follow all the
regulations in proper manner. Such as, The NHS follow quality issues that have been set forth by
the government and these issues are adhered so that the patients in the hospital are safe. To
operate NHS in UK follow the different legislation like social work 1968, National assistance act
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1948, Human rights act 1988 and many others. NHS being national health service provider in
UK where are following different regulations like safety at work 1974, human right act 1998 and
many other. These acts applied by NHS in good manner through an entity so that no legal
complications will originate further in working activities.
Financial environment: It is most essential part of economy that plays major role in any
industry that could be regulated on basis of health and social care activities. In this sector
organisation mainly concentrate on financial support to the patients having ill health by
insurance and other claims. Such as, NHS is treating various patients but has not accomplished
any key transformation in finance and service authorities required to meet increasing demand.
The short term fixes that are regulated by DHSC in England and NHS improvement put in place
to arranging different resources in a affected financial environment are not sustainable (Kamawar
and et.al, 2019).
Regulatory environment: Health care industry based on the different resources that has
receiving particular inputs of material, water and energy that outcomes in waste, effluents and
emission pollution. Regulation in the NHS is applied by a mix of command as well as control,
self regulation and varying forms of agency. In modern years, NHS follow new regulatory
techniques and instruments have been formulated and expanded in which consist of risk based
profiling, national quality standards and results indicators. This environment impacts on patient
safety and measures have largely been assumed instead of explored. These regulatory activity
enhance organisational efficiency and patient results beyond some alteration of existing
development plans.
It is highly critical regulatory environment with different, overlapping assurances wanted
by outer bodies. Different challenges lie ahead that deserve systematic, high quality examination.
Effective regulation is held to be one of the foundations of high quality and safe patient care.
(b) Critically evaluate the use of alternative funding options and outsourcing in health and social
care sector
Funding is the money that lenders as well as equity holders provide to an entity for daily
and long term requirements (Górnik-Durose and Boroń, 2018). In the health and social care
sector, different types of entities which are taking funds from different sources to conduct their
business activities that are mentioned below:
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