Financial Management Processes in Health

Running head; Financial management processes in health 1
FINANCIAL MANAGEMENT PROCESSES IN HEALTH
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Financial management processes in health
There is a significant difference between revenue and expenditure in the health system.
Revenue in the health system involves the various forms of income and finances obtained by
hospitals and other players in the health sector so as to maintain sustainable progress and
welfare within the health system (Titman, et al (2017)). The sources of revenue within the
health system include insurance billing for patient’s care services, federal, state and private
grant funding which mainly fund medical services and research and any other financial input
that flows into the health sector. Expenditures on the other hand involves financial output and
transactions that revolve around the health system. This involves expenses incurred by
hospitals and other players within the sector to ensure the well running of activities within
hospital setting and the health system. This expenditures may utilize the revenue collected and
include labor costs, liability costs and costs used for research and tests involving the health
sector to bring advancement. The number of patients and the types of services given are some
of the factors that affect hospital revenues and expenses.
Activity based funding refers to a way in which hospitals are funded based on the
number and mix of patients that they treat. Since patient care and treatment requires funding,
the more the number of patients a particular hospital receives, the more the funding it receives
(Zietlow, et al (2018)). Since patients are also not the same, some conditions are complicated
to treat than others hence activity based funding also takes this into account. The NSW health
system sets a platform where allocation of health funding is based on priority concerns. It
comprises of a number of state-wide or specialist health services. According to Finkler, et al
(2016), allocation of funds is targeted to services that provide responsive and effective care and
has been aimed at services such as NSW ambulance services, improvement health