Financial Control and Budgeting

FINANCIAL CONTROL
AND BUDGETING

Table of Contents
INTRODUCTION...........................................................................................................................3
Legal, financial and regulatory environment of health and social care..................................3
Use of alternative funding options.........................................................................................4
Agency theory and importance of communication to stakeholders.......................................6
Impact of financial constraints, costs and budgets.................................................................7
Challenges of budgeting in organizations..............................................................................8
C. Advantage and disadvantage of incremental and zero base budgeting...........................10
Q3. a) ...................................................................................................................................14
Q3. b)....................................................................................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
The study is about financial environment prevailing in the health sector. It talks about the legal,
financial aspects in regulatory environment, use of alternative funding sources in health care,
agency theory implications on health sector, importance of communication with stakeholders.
The impact of financial constraints on health care services along with budgeting issues have been
discussed. Merits and demerits of incremental and zero-based budgeting have been discussed.
Break-even analysis in the study has also been emphasised.
Legal, financial and regulatory environment of health and social care
The legal and financial regulations are of prominence in health and social care as the laws and
regulations set the rules for health planning. The laws help in setting and implementing
mechanism for changing the health policy objectives in action by setting standards and
requirements and using sanctions for exerting a leverage over the system (Regenstein and et.al.,
2018).
Governments use laws in the following ways:
a) The countries use the legal system for getting efficiency in work and following compliance.
The legal system ensures responsibility and accountability for improving performance of health-
system functions.
b) The governments introduce regulations to make the policy advanced in the health systems. It
includes providing access to health services universally, encouraging efficient use of resources
and complying with obligations on an international forum.
c) There are regulations for protection of members of public from any harm or the effects of
unrestricted business activities in health system. The private players in health industry might
focus on a customer segment which is of high-income group or one which is of easy treatment

conditions. The regulation requires to oblige private players to provide broad service range and
cater to those patients also which do not fall in high-income group (Pandya-Wood, Barron and
Elliott, 2017).
The financial regulations or governance in the regulations imposed in health and social care
sector are designed to help use of finance resources for effective utilisation. They help in forming
of a strategic plan in which the resource utilisation of finance is monitored after proper
allocation. The financial planning of resources by forecasting and counting requirements of
different sections in health care are taken in count while allocation of resources through
budgeting methods. The finance regulations see to it that all kinds of taxes pertaining to health
sector are covered in the schedule of regulations and time lines are provided for the same. The
finance assurance and reporting regulations cover the accounting rules the health bodies have to
follow and also has made a provision of having regular internal audits to see or monitor the work
as per guidelines. The finance regulations cover the rule of capital and asset management in
which the capital assets owned by the health service will be used for integrated services. The
capital investment to be done needs to be included in strategic plan as per the guidelines
(Regenstein and et.al., 2018).
Seeing the other side of these regulations, there are some points needing to be addressed.
As suggested in regulations, speaking of health service, the private hospitals have to not be just
profit-focused, they have to cater to the different group s also who are not of high-income
category. Private hospitals do follow the guidelines but still the fee structure of the hospital is not
affordable for the common man. Thus, there has been no limit kept on the fee structure which
makes the rule's implementation go weak. Speaking of financial regulations, there has been a
lack of clear understanding of different types of taxes by health bodies and it happens that these
taxes end up not being paid on time. There has to be a simple approach bought in to understand
the tax structures (Pandya-Wood, Barron and Elliott, 2017).
Use of alternative funding options
The funding options used like PFI(Private Finance Initiative), agency partnerships, tenders and
outsourcing in health sector have both merits and demerits.