Importance of Financial Management in Healthcare

HEALTH FINANCIAL MANAGEMENT0
HEALTH FINANACIAL MANAGEMENT
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HEALTH FINANCIAL MANAGEMENT1
Answer number 1:
A capital expenditure is defined as the major investments that is done by the health
care organization to maintain their business and also generate further profits in the form of
long-term assets. The healthcare organization have to make huge investment in buying any
health equipment’s but once the equipment is used, they seek huge profit, as they use the
similar equipment for assessing different patient’s (Connolly & Wren, 2016). On the other
hand, revenue expenditure refers to the short-term expenses that the healthcare organization
have to make and is generally classified under two different categories. The initial category is
expenditure for producing revenue, which includes the expense that the healthcare
organization have to make to fulfil the prevailing operational cost of the organization such as
tax deduction. The other category includes expenditure for preserving the revenue-producing
assets, which includes the cost for maintenance and repair of the asset. Hence, the factors that
influence the expense and revenue in the health system are total number of patients, source of
insurance, the services offered by the health system and the prevalence of practicing different
types of health services (Mossialos et al., 2016).
Answer number 2:
The total well-being expenditure of Australia is subsidized by the government, either
by Australian government or state and territory government. The funding distribution among
the non-government and government sector differs and primarily depend on the kind of
services and health goods that is being provide to the organization. The community hospitals
is subsidized by the Australian, territory and states government, although, they are
extensively managed and owned by the territory and state government. The government of
Australia provide huge amount of funds for the subsidised medication and medical services,
maintaining the balance with non-governmental sector. The flow of federal and state funding