Managing Finance in Health and Social Care Organizations: A Report

This report provides a detailed analysis of financial management within health and social care organizations, specifically focusing on the Embankment NHS Foundation Trust's physiotherapy division. It begins by evaluating the budget setting process, including stages from cost setting to budget approval, and the importance of budget reporting. The report then offers a financial critique of the trust, exploring factors that create financial pressure within the health and social care sector, such as debt, unpaid bills, and irresponsible financial practices. The report also addresses the impact of the changing business environment on financial stability. Finally, it includes a critical evaluation of a service development proposal within the physiotherapy division. The report highlights the importance of effective finance management for the optimal functioning of health and social care organizations.

MANAGING FINANCE IN
HEALTH AND SOCIAL
CARE ORGANISATIONS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Evaluation of the physiotherapy budget setting process and reporting of budget..................1
2. Financial critique of the trust and exploration of the key factors which tends to create
financial pressure upon the health and social care sectors..........................................................3
3. Critical evaluation associated with the service developmental proposal................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
For any type of business, the finance is the most important thing as without finance no
business can be worked up. Thus, for this the most important thing for company is to effectively
manage the finance. For a health and social care organization it is very much of importance that
they effectively manage the finance (Kantanen and et.al., 2017). This is particularly because of
the reason that these type of organization works for the betterment and upliftment of the society
and the people living in society. Thus, for this they need to arrange for finance and use it in
optimum and effective manner. Thus, the present report will outline the budget making process
for the Physiotherapy division of Embankment NHS Foundation Trust. Further the financial
critique of the factors creating financial pressure over the health and social care sector will be
discussed. In the end the discussion will list out the critical evaluation of the service development
proposal developed in the Physiotherapy division.
MAIN BODY
1. Evaluation of the physiotherapy budget setting process and reporting of budget
The budget is defined as the estimation of the budgeted or expected income and expense
which the company can incur in order to run their business for a period of time. The budget
making is very essential for the company especially in the health and social care as this will
provide an idea that how the finance in the business will be managed and what are the areas from
which the income can be generated and which are the areas in which application of budget will
take place. Thus, if the company will make the effective use of the budget making process then
this will help the company in making effective budget. This process will provide guidance to the
employees that how they have to make the budget and how effectively they can manage the
finance in proper and appropriate manner.
In the Embankment NHS Foundation Trust the setting of the budget takes place from the
financial year that is 1st April to 31st March. All the decision relating to the budget takes place by
the Director of the Finance and this is very essential that they take all the decision by keeping in
mind the past budget as well. The budget making is very important for Embankment NHS
Foundation Trust as this assist in analysing the financial performance and position of the division
to be monitored and controlled. Thus, this is the major reason for this the physiotherapy budget
setting is very much important (Ayatollahi and Zeraatkar, 2020). The process of budget setting
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involves the following stages which are being followed by Embankment NHS Foundation Trust
every month and these are as follows-
At the first stage the cost is being set for the improvement of the target and the budget
holders are provided with advice by senior management. This is essential because of the reason
that when the senior management provides their expertise then this assists the company in
making more effective budgets and this assist in managing the finance in very effective manner.
Further in the next stage the Trust of the Embankment NHS Foundation Trust agrees to
the strategies of the divisional and the departmental budgets which are incorporated of all the
fees and charges which the foundation can incur (Millar, Hall and Miller, 2020). Further at this
stage the company also looks for the changes which can take place within the economy or the
related factors like inflation, interest rates and many others. This is particularly essential to take a
provision of these changes as well because the future cannot be predicted and because of this the
foundation trust need to have provision of this.
In addition to this in the next stage the budget is being drafted and is presented among the
budget holder and to the experienced and senior management. This is done in order because
when the senior people will have look over the budget then they can provide their advice and
experience and try to improve the budget and level of the budget. The CIP incremental
adjustment for community physiotherapy is 6151 and because of this the net revised based has
reached to 301394. In addition to this the therapy assistant has CIP of 3900 which resulted in
191100.
Further in the next stage that is after the budget is drafted and if the budget is appropriate
then the board will agree to the budget and will give approval to budget for the trust. This will
only take place in the condition when the company will make an effective budget and when it
will be liked by the board then this budget will be finalised and this need to be followed in any
condition.
Budget reporting
In addition to this process of budget, the budget reporting is also very important. The
budget reporting is defined as the determining the expenditure level and the expected income and
how this will be helpful in providing the budget information to other people as well. Thus, for
the purpose of budget reporting it is very important for the company to time to time provide
information and budget to the employees and other people so that they can have the latest facts
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and figures for the company and its effective running. These reports are to be provided within the
timeframe of 15 working days for every end of the month. This is particularly important as there
are continuous changes in the rates and the working of the budget and the related activities
(Sturmberg, 2018). Thus, it is the responsibility of the budget maker to evaluate the budget every
fortnightly and this will help them in taking in consideration the latest changes taking place in
the company and in the external environment as well. Further in addition to this major purpose of
making budget report for Embankment NHS Foundation Trust is that this will provide a clear
idea to the employees and other decision making parties that how the fund need to be evaluated
and managed. This is very important because of the reason that when the people know what the
budget is then this will provide an idea to the employees that how they have to manage the
budget and optimally use the limited finance (Islam and et.al., 2019).
As per the budget it is clearly visible that the if the workload will be there then the
variable cost of the physiotherapy division will increase. The major reason for this is that when
the company will increase in its business operations then this will increase all the operating
activities and hence this will increase the variable cost. In addition to this if the work will
increase then Embankment NHS will also have to increase their medical supplies so that they
will meet the required amount of work. In addition to this the admin and clerical expenses will
also increase in order to meet the current work requirements.
2. Financial critique of the trust and exploration of the key factors which tends to create financial
pressure upon the health and social care sectors.
The financial structure of the embankment NHS foundation trust is mainly linked with
the preparation of the specific budget plan. It has been estimated that, the financial position of
the embankment NHS foundation trust is considered to be highly significant. The budget
associated with the community physiotherapists is considered to be highly incredible. The budget
committed is 116514 and the budget remaining us 184881. The estimated budget for the period
2019-20 was estimated to be 301,394. There seems to be 61% of the budgeted fund which
remains and states the department of the community physiotherapists is financially sound. The
overall total budget for the period 2019-20 was estimated to be 1,471,549. The budget committed
is 872,671 and the budget remaining us 1,115,904. It means there is 76% remaining budget
overall for the period 2019-20. As per the King's fund site, it has been examined that, the key
financial figures of the trust are demographics, bed blocking and drugs which affects the health
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outcomes. This eventually ensures that the embankment NHS foundation trust is financially
sound and leads to improved business performance and efficiency at a greater scale. The key
reason behind the variance is that the fund has been optimally managed and is used only where
the fund is actually required. This eventually improved the business performance and makes the
embankment NHS foundation trust financially sound. However, it is of crucial importance to
maintain effective level of fund and reduce financial pressure to improve the functioning of the
health and social care sector.
Responding to the financial pressure is considered to be one of the key prominent Way to
improve the operational efficiency within the health and social care sector. It is of crucial
importance for the health and social care company to maintain effective set up budget in order to
maintain sustainable finance and does not go into deficit. This is useful in improving the
productivity and delivering the best possible value care to the patients in order to meet efficiency
targets and attain higher operational goals. Diluting the quality of service and restricting access
to the services Is of utmost importance because it helps in dealing with the financial pressure
within the health and social care sector (Durkin and Gunn, 2016). High degree of financial
pressure within the health and social care sector will result in an official business care and leads
to ineffective treatment to the patient who has been seeking care within the trust. Financial
pressure can affect the health and social care sector which in turn results in high degree of
financial crisis.
 High degree of amount of debt will result in creation of the financial pressure for the trust
within the health and social care sector. Large amount of debt will result in ineffective
funds for the sector and leads to ineffective operation officials and productivity. Increase
degree of debt will lead to affect the business operations and can dampen the growth of
the trust over a long period of time.
 Giving services on credit is also one of the key Major Problem which in turn results in
creating high degree of financial pressure and ineffective flow of money within the health
and social care company. It is of utmost importance for the trust to Maintain optimum
level of fund cash inflows within the company to maintain optimum level of fund within
the organisation to provide with the best possible treatment within the health and social
care sector.
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 Simply being irresponsible is one of the key prominent factor which in turn creates high
degree of financial pressure within the health and social care sector (Vickers and et.al.,
2017). It becomes difficult for the Management of the company to act in a responsible
manner and helps in improving the business performance and efficiency to maintain
optimum level of funds within the health and social care sector.
 Changing business environment is also one of the key prominent factor which eventually
affects and creates financial pressure within the health and social care sector. It is
important to realise that changing business environment which could affect the sector and
creates financial pressure upon the healthcare trust.
 Large number of medical bills which in turn has not been paid is considered to be as one
of the key factors which tends to create high degree of financial pressure and tends to
largely effect the business operations at a greater scale.
3. Critical evaluation associated with the service developmental proposal.
Y0 Y1 Y2 Y3 Y4 Y5
Capital Costs -50000
medical and travel -6000 -6000 -6000 -6000 -6000
wte
Physios 2.00 -57408 -57408 -57408 -57408 -57408
Assistants 2.00 -38220 -38220 -38220 -38220 -38220
Clerical 0.50 -9110 -9110 -9110 -9110 -9110
-50000 -1E+05 -1E+05 -1E+05 -110738 -110738
Income
Clinics
69120 69120 69120 69120 69120
Training
15000 15000 15000 15000 15000
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Sports teams
eg
450 80 36000 36000 36000 36000 36000
NCF -50000 9382 9382 9382 9382 9382
payback
Assumed rate 1.055 1 0.948 0.898 0.852 0.8072167 0.765134
5.50%
DCF -50000 8893 8429 7990 7573.3075 7178.491
NPV -9936.191
NPV calculation
Total
DCF -50000 8893 8429 7990 7573.3075 7178.491 -9936.191
Payback period is referred to as the amount of the time it has been taken in order to
recover the cost associated with the investment made within the health and social care company.
Payback period is referred to as the time estimated for the investment in order to reach out a
breakeven point. The key desirability associated with investment is mainly related with the
payback period (Horton and Farnham, 2015). However, the shorter the payback period the more
attractive the investment because it helps in recovering the amount invested in the specific
project. Payback period is one of the most significant ways to recoup the funds which has been
expended in a particular investment in order to maintain optimum level of funds and ensure that
the hospital or healthcare sector is financially sound. Evaluating payback period is considered to
be of the key relevant importance while maintaining funds and ensuring appropriate budget plan
within the health and social care sector because it is one of the simplest methods to calculate.
Payback period is also one of the key prominent tools to analyse the risk associated with
investment and the amount of time it will take to recoup the money back into the business
(Arnaboldi, Lapsley, and Steccolini, 2015). Payback period is one of the key prominent to
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because it helps in evaluating the liquidity of the company and analysed how much time will the
investment take to recoup the money back for the short-term liquidity in the mere future. In the
year 0 the payback period is 1. In the year 5 the payback period is 0.765. However, the shortest
period for recouping the amount back is in the year 5. It is considered to be way too prominent in
improving the business performance within the health and social care sector. Shortest payback
weirdest considered to be one of the most acceptable Project because it is in recovering the
money in a short period of time and helps in maintaining affective financial position within the
health and social care. In the given table the shortest payback period was in the year 5. However,
longer the money has been tied up within the investment the less opportunity it is to invest
somewhere else and leads to higher degree of financial pressure. One of the major
recommendations linked with the payback period is that, it is useful in adding the time value of
money and evaluates the discounted payback period. This is one of the key significant measure
to improve the business performance and efficiency within the health and social care sector
(Mason and et.al., 2015). Discounted payback period is considered to be highly significant in
effectively determining the profitability of the specific project. The trust company must also
focus on effectively recognizing the time value of money in order to reduce any sort of financial
pressure and take appropriate decision.
In addition to the payback period it is also very important for the Embankment NHS
Foundation Trust to ensure the Net Present Value of the new division as well. This particularly
involves the analysis of the current value of the future cash inflow and outflow (Greenwood,
Baylis and Tao, 2017). This is very important for the company to analyse the NPV of the project
because of the present value of the future cash flow will not be good then the investment is not of
worth for the company. Thus, for this the analysis of the current value of the future cash flow is
very important. In the present case the NPV of the project is -9936.191 and this reflects that the
present value of the future cash flow is -9936.191.
Thus, if the company will invest in the project or the division then this will result in the
outcome of -9936.191 as per the current value of the future cash flow. Hence, this will provide
an overview to the company that is they will invest in the company then this will result in
negative of -9936.191. Thus, this reflects that this will result in the loss for the company in the
current value of the future cash flow. Thus, this will assist the company in analyzing its
profitability of the future in respect with the present value which is currently going on. Thus, this
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will assist the company in analyzing the situation that in the near future whether the company
will be in position to earn from the investment or not. If yes, then it is better for the company to
invest in the project. On contrary if the project is not providing much of the income or result
from the investment then it is advisable for the company to not invest such kind of projects or
investment options.
Further it is recommended to the Embankment NHS Foundation Trust that they must
consider the Service Development Proposal as the present value of the project of physiotherapy
division is good and this will assist the company in yielding a good amount of profits. Thus, the
major recommendation for the Embankment NHS Foundation Trust is that in case of any of the
project the most important thing for the company is to first analyse the investment proposal and
then work in more effective manner and if the profits are high then it is advisable for the
company to manage and invest in the company and increase the profitability of the company to a
great extent (Vashishth, Chakraborty and Antony, 2019).
CONCLUSION
From the conducted study it has been summarized that, giving services on credit and
High degree of amount of debt will result in creation of the financial pressure for the trust within
the health and social care sector. With the evaluation of the study it was clear that the following
the budget setting process is very important for the company. In addition to this the budget
reporting is also very important as this assist the company in getting and sharing knowledge
relating to the fact that what are the areas in which company need to invest and which are the
areas where expenses are to incurred. Changing business environment and large number of
medical bills which in turn has not been paid is considered to be as one of the key factors which
tend to create high degree of financial pressure. Payback period is also one of the key prominent
tools to analyse the risk associated with investment and the amount of time it will take to recoup
the money back into the business. However, the shortest period for recouping the amount back is
in the year 5. Shortest payback weirdest considered to be one of the most acceptable Project
because it is in recovering the money in a short period of time.
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REFERENCES
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