Managing Financial Resources in Health and Social Care

This report discusses the principles of costing and business control system, regulatory requirements, diverse sources of income, factors affecting availability of financial resources, budgeted expenditure, and more in the context of health and social care. It provides insights into managing financial resources in Silloth nursing and residential care home. The report also highlights the actions to be taken on suspicion of fraud and ways to improve services by making changes in the financial system and process.

Managing Financial
Resources in Health and
Social Care

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Explaining the principles of costing and business control system........................................3
1.2 Identifying information which is required to manage financial resources............................3
1.3 Explaining regulatory requirements for managing financial resources.................................4
1.4 Evaluating system that can be used in health care organization for managing financial
resources......................................................................................................................................4
2.1 Discussing the diverse sources of income in the context of health and social care...............4
2.2 Analyzing factors that affects availability of financial resources in HSC.............................4
2.3 Reviewing different types of budgeted expenditure which are made within Silloth nursing
home............................................................................................................................................5
2.4 Evaluating the system or manner in which decisions are made within health care
organization pertaining to expenses.............................................................................................6
TASK 2............................................................................................................................................6
3.1 Assessing the manner in which financial shortfall can be managed within the nursing home
.....................................................................................................................................................6
3.2 Explaining actions that need to be undertaken on suspicion of fraud...................................7
3.3 Evaluating budget monitoring arrangement in the context of Silloth nursing or care home \
.....................................................................................................................................................7
4.1 Identifying information required in health care organization for making financial decisions
.....................................................................................................................................................8
4.2 Analyzing relationship which takes place between services delivered, cost and expenditure
.....................................................................................................................................................8
4.3 Evaluating the manner in which financial considerations have an impact on individual
decision making...........................................................................................................................8

4.4 Suggesting ways to improve services by making changes in the financial system and
process.........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Management of financial resources is vital for each and every organization for the
attainment of organizational goals. In the competitive business environment firm can attain
success only when it employs fund in suitable activities. Now, health care organizations are also
placing high level of emphasis on undertaking competent financial; framework which in turn
facilitates optimum use of monetary resources. From R&D to operational level health care
organization also requires huge funds. In this, it is the accountability of manager to allocate
funds in every activity by assessing the level of priorities and outcomes. The present report is
based on Silloth nursing and residential care home which is one of the leading unit of UK. In
this, report will describe principles and control system that is associated with the aspect of
costing. Besides this, report will shed light on the regulatory aspects that ensure effectual
management of funds in health and social care. It also depicts the sources of income and
different types of budgeted expenses which are associated with HSC. Along with this, it also
entails the manner through which shortfalls and level of fraud can be managed.
TASK 1
1.1 Explaining the principles of costing and business control system
Principles of costing are as follows:
1. Cost related to cause-
Every cost is related to its cause. Therefore, exists cause relationship in HSC. The cost
incurred in that cause should only be charged to that cause only not in other costs.
2. Abnormal costs-
Abnormal costs are not added up in the direct cost and also it has no direct relationship with the
costing of the product. Abnormal costs mean that costs which occurs due to fire, theft or any
negligence.
3. Cost should be charged after it incurs-

A cost should be added only after it has been incurred that will give true picture of the
costs.
Business control system is as follows-
It follows the procurement procedure in HSC. It makes the procedure so that no wastage
should be done to funds. Procurement refers to that mechanism that owner purchases some
product through systematic way which may be related to bidding or auctioning for its purchase
by him. It states that Silloth nursing care home should carefully analyze and evaluate the needs
of the business so that resources are effective way (Ahn and et.al., 2017). HSC should search for
supplier and then should bid the deal and should close deal for the procurement process to be
completed.
1.2 Identifying information which is required to manage financial resources
For managing financial resources, Silloth nursing care home is required to exert effectual
control on cost level. Moreover, cost is one of the main aspects that have significant impact on
the liquidity and profitability aspect of firm. Cost may be defined as a sum of all the expenses
which nursing and care home incurs for delivering services to the patients. Hence, it is the
accountability of the manager of Silloth nursing to assess the cost level which in turn helps in
making suitable allocation of financial resources. Along with this, financial information enables
manager to make comparison of actual performance with budgeted aspects and thereby assess
deviations (Agarwal and Randhawa, 2015). In this way, financial information helps in assessing
deviations and taking corrective actions for improvements. Hence, specifically manager of health
care firm requires information about cost. In the context of HSC, cost can be distinguished in the
following manner:
 Direct cost: It implies for the cost which is directly associated with offering services to
the patients. Hence, in the context of Silloth nursing home direct cost includes salaries of
doctors, and nurses, ambulance as well as medicine expenses.
 Indirect cost: It includes cost which care home has to incur for ensuring smooth
functioning of operations. Hence, indirect expenses of firm include

1.2 Outline regulatory requirements for managing financial resources in HSC
Different regulations are enacted to form and manage the financial resources. These
regulations are required to monitor and check the legislation of individual and
organization. These regulations to reduce financial crime, fraud, promote honesty and
integrate effective organized structures so that effective use of financial resources can be
done and manage by HSC. The different legislations, policies regarding financial
management that must be complied with by all clinical activities. The different
legislations in healthcare sector. They are CQC (Care Quality Commission), HMRC (Her
Majesty Revenue Customs) etc.
CQC ensures that all the policies, procedures are in the health care which are in
compliance with the health and quality standards. It is Silloth care should take care of
those standards and care takers should be trained to get acquainted with the standards.
HMRC is tax collection authority from individual and corporate. It is the duty to fill
returns and pay taxes which arise out of its liability. HSC are required to comply with all
these provisions so that it may carry on giving quality services to the patients legally
sound.
1.3 Discuss system which can be used in health care organization for managing financial
resources
The organization will be able to achieve desired results. Transparent information should
be to be accurate which may be increase its revenue in its functioning. This provide efficient use
of managing financial resources so that it can achieve its desired results in effectual manner
which maximizes its revenue and enhanced customer base and customer’s satisfaction.
Risk management system helps HSC so that it can make good profits in the long run by
taking risk in uncertain conditions. Silloth care should develop deep understanding how it can
manage its financial resources which are likely to affect returns. This is essential in healthcare
institution since it can cause fluctuation in returns which reduce the goodwill of the organization.
It should have long term and short term goals so that it plans to achieve its goals and aims in

efficient manner. It can maintain its efficiency so that it can provide effective results in short as
well long term. Budgets can be prepared efficiently with effective use of financial resources.
2.1 Discussing the diverse sources of income in the context of health and social care
By doing assessment, it has been identified that several sources were accessed by Silloth
care home for the generation of income. Profitability statement of such care unit clearly shows
that through the means of fees and subscription £206 & 205 generated by it in the year of 2007
and 2008. Besides this, high level of income was generated by Silloth care home in 2007 and
2008 from donations, legacies as well as gifts. There are several people who prefer to donate
funds and equipment in the care organization (Agarwal, 2016). Along with this, now with the
motive to build distinct image in mind of customers or people other companies lay high level of
emphasis on the aspect of legacies etc.
In addition to this, by organizing fundraising events such as strawberry cream tea,
Christmas sale and cake as well as dance activities fund has been generated by Silloth. In
addition to this, by investing money in bank and securities income in the form of interest as well
as dividend has been generated. Hence, by taking into account all the above aspects it can be
presented that major sources of income in the context of Silloth accounts for dividend, interest,
events and fees.
2.2 Analyzing factors that affects availability of financial resources in HSC
There are several factors that closely influence the availability of financial resources in
Silloth nursing care home such as:
 Documentary formalities: In the recent times, government authorities are providing
more support to the care organizations with the motive to deliver quality services to the
patients. However, in this, care unit including Silloth is required to comply with huge
documentary formalities which in turn impose issue in front of it.

 Along with this, in the case of private funding care unit faces difficulty to some extent.
Moreover, sometimes large sized business units compel care unit to highlight the name
of sponsor (Linnemayr and Rice, 2016). This aspect also creates issue in front of Silloth
nursing home in relation to raising fund.
 Interference in decision making: Silloth also hesitate to create trustee who provide fund
to the care unit for purchasing equipments etc. The rationale behind this, after some time
period trustees start to interfere in the decision making aspect and thereby affects
strategic framework.
Hence, all the above mentioned aspects are the main factors which in turn place direct
impact on the availability of financial resources.
2.3 Reviewing different types of budgeted expenditure which are made within Silloth nursing
home
Considering the income statement of Silloth nursing care home it can be said that there
are several budgeted expenses which are associated with it. This in turn includes both direct and
indirect cost. Budgeted expenses account for the one which business unit will incur in the near
future. In the business unit including Silloth care home, budgeted expenses are assessed by
manager on the basis of past trends and deviation assessed. Hence, by taking into account the
income statement pertaining to the year 2008, it can be said that wages and salaries of personnel
will be inclined from £56510 to £56800 in 2017.
In accordance with the time, salaries of personnel increase significantly. In addition to
this, it is estimated that expenses pertaining to medical officer and CRB will also be increased in
the upcoming time period. Further, now patients and their family members lay high level of
emphasis on hygiene as well as quality (López-Bastida, 2016). Thus, by considering such aspect
it can be presented that expenses in relation to maintenance, water, light & heat, repairs etc. will
be increased by 10%. Hence, through considering all such aspects manager of Silloth care home
would become able to develop sound financial plan and exercise budgetary control.

2.4 Evaluating the system or manner in which decisions are made within health care
organization pertaining to expenses
For making suitable decision in relation to expenses Silloth nursing care home lays high
level of emphasis on undertaking incremental budgeting technique. On the basis of such
budgeting technique manager of care home makes some addition in the existing framework by
taking into account inflationary aspects. It is one of the most effectual techniques which provide
high level of convenience to finance manager. However, it is to be critically evaluated that in the
modern era incremental budgeting technique does not offer suitable results. Now, fluctuations
take place in both internal and external environment more frequently which in turn places direct
impact on monetary aspects (Lord and et.al., 2013). Hence, for developing sound financial plan
or framework Silloth is required to employ zero base budgeting technique. On the basis of such
aspect, after making assessment of activities care unit should allocate financial resources. This in
turn helps firm in eliminating unprofitable activities and thereby helps in preparing effective
plan. Hence, by employing such modern technique of budgeting Silloth would become to make
use of financial resources prominently.
TASK 2
3.1 Assessing the manner in which financial shortfall can be managed within the nursing home
For managing financial shortfalls Silloth needs to lay emphasis on the aspect of
continuous monitoring. In this regard, by undertaking the tool of variance analysis, manager can
assess deviation which takes place in specific area. For instance: In the year of 2016, actual and
budgeted direct cost accounts for £600000 & 590000. In this regard, by making comparison of
actual figures in against to the budgeted aspects manager of care unit can assess deficiencies. On
the identification of deviations manager is required to review the reasons due to which such
loopholes occurred (Louzon and et.al., 2017). Hence, by evaluating reasons and taking corrective
action for improvement within the suitable time frame Silloth can manage shortfalls prominently.
Through managing all the financial downsides finance manager can ensure smooth functioning
of the operations.

3.2 Explaining actions that need to be undertaken on suspicion of fraud
Fraudulent activities negatively influence profitability and brand image of care unit.
Hence, for the assessment of fraud, Silloth should make focus on conducting internal audit which
provides clear indication about the areas that demand for strict monitoring. Along with this, on
the suspicion of fraud manager of care unit should review financial aspects in against to voucher.
This in turn helps firm in identifying the extent to which fraud prevail within the care unit
(Mariotti and Glackin, 2014). Besides this, on the confirmation of fraud higher management
team of Silloth should punish the concerned authority through the means of either penalty or
termination. By doing this, firm can restrict other personnel in relation to doing similar kind of
activities. Apart from this, by indulging the system of conducting internal audit care unit can
easily identify fraudulent activities. This in turn helps in creating threat among the personnel and
assists in managing financial resources more effectually.
3.3 Evaluating budget monitoring arrangement in the context of Silloth nursing or care home \
For the purpose of budget monitoring, Sillioth undertakes the tool of standard costing. On
the basis of such tool, finance manager primarily do assessment of actual performance in against
to the budgeted aspect. Thereafter, manager makes effort in relation to identifying the causes of
deviations. Hence, such budget monitoring technique is highly effective which in turn provides
high level of assistance in taking suitable action that aid in performance level. However, on the
critical note, it can be presented that variance analysis is highly time consuming process for
which manager has to devote more time. Besides this, when manager sets high standards in
relation to income and expenditure, then it may result into high deviations. This in turn places
negative impact on the satisfaction level of personnel (Variance Analysis: advantages and
disadvantages, 2017). Hence, for dealing with such situation finance manager of Silloth should
prepare budget by considering either activity or zero based technique. By doing this, manager of
the care home can make suitable comparison and thereby would become able to develop sound
strategic as well as policy framework.
4.1 Identifying information required in health care organization for making financial decisions
The information will give complete overview so that financial decisions can be made in
effective manner. Growth in quality measures increases as a result different organization use
measures to evaluate the performance of service providers. This will give clarity to HSC in

operating its performance and help to manage financial resources in that manner which will
provide and help them in taking well-structured and sound decisions for the betterment of the
healthcare institution.
Patients are providing decisions which make healthcare to sound enough. They provide
them useful feedback which help them to be efficient in carrying out its functions in the
institution. By assessing demands and consumer’s needs, HSC can ensure that its gets good
revenue and can manage financial resources in making decisions for company in best possible
way (Gardiner and et.al., 2016). This will bring more benefit to organization and will generate
more revenue and can bring clarity in its accomplishing set targets in effectual manner. This
information is very important for Silloth nursing care as it will be provided with useful financial
information to make decisions.
4.2 Analyzing relationship which takes place between services delivered, cost and expenditure
The relationship which exists between the services offered and cost and expenditure is
that services which are delivered to patients comes from the funds. Funds are made available by
various sources by which organization makes investment in that. This helps them to be efficient.
To deliver quality of services to patients, they require good and technical staff. Staff comes from
applying cost. Costs incurred on hiring staff consists of salaries and wages to nursing staff,
salaries to doctors, administrative staff etc.
By applying all the expenditure related to healthcare premises, its different branches in
different cities, it incurs expenditure. This requires efficient management of funds so that no
costs lead to wastage of HSC in the process of delivering services to patients in effective way.
This increases and maximizes healthcare revenue and give it back good quantum of profit which
it had applied on its costs, expenses and service delivery costs (Matopoulos, Kovács and Hayes,
2014). This makes it to have effective use of finanace in the organization
4.3 Discuss the manner in which financial considerations have an impact on individual decision
making
Individual decision making can have a positive or negative impact in financial
consideration. One such factor which an individual has is brand impact. When brand like Silloth
nursing care is present then, it will produce effective results in long run. Organization positivity

like its brand name can have impact on patients. They will build trust and thoughts in positive
way that this organization provides best medical services to him. This will enhance more
customer satisfaction to it. Healthcare institution will flourish and will have good reputation and
more profits to it.
Another thing which has an impact on financial consideration is that past performance of
organization in the sector. when organization has good performance in the past, then patient will
think about it. He will show some concern and interest in particular organization. This will make
good impact on healthcare institution as it will be able to effectively manage its financial
resources in effectual manner.
4.4 Suggesting ways to improve services by making changes in the financial system and process
HSC can improve its services by making changes in following things:
1. Improve quality of services-
Quality of services should be maintained by it so that any gaps which had incurred more
cost can be effectively minimized by resolving them in instant way. This can be solving
by reviewing past performance and listening to patients’ feedback. Feedback regarding
complaints should be made clear in the organization and corrective action be taken to
solve the query and fill the gap and enhance the productivity in effectual manner.
2. Proper allocation-
Allocation should be made properly so that any work which is being carried out does not
get wasted. Wastage will lead to inefficiency in organization which is very serious threat
to it’s in the functioning and operations (Schmidt, 2017). So, organization should
properly allocate all the costs so that no funds are wasted and they are effectively
managed and full optimized by HSC in effectual manner.
CONCLUSION
From the above report, it has been concluded that by undertaking the principles of costing
Silloth would become able to take suitable decision pertaining to cost and profit margin. Besides
this, it can be inferred that by evaluating the areas of cost manager can assess the need for
improvement. It can be seen in the report that regulatory aspects and policies also have

significant impact on the financial management of Silloth. Further, it has been articulated that by
organizing events and investing money in the profitable securities concerned care unit can
generate high income. It can be summarized from the report that budgeting technique which is
currently undertaken by Silloth care home not highly effective. Thus, for effective financial
management care unit should focus on the adoption of modern techniques such as zero-base. It
can be stated that by using standard costing system care home can assess and manage monetary
shortfalls in the best possible way.

REFERENCES
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Louzon, P. and et.al., 2017. Impact of pharmacist management of pain, agitation, and delirium in
the intensive care unit through participation in multidisciplinary bundle rounds. American
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Online
Variance Analysis: advantages and disadvantages. 2017. [Online]. Available through: <
http://accounting-simplified.com/management/variance-analysis/>.