Managing Financial Resources in Health and Social Care

Managing Past Financial Resources in Health and Social Care INTRODUCTION 1 TASK 11 1.1 Explain the Principle of costing and business control system adopted by CareSouth Group 1 1.2 Required information to manage their financial resources for CareSouth Group 2 1.3 Regulatory requirement of managing financial resources 3 1.4 Evaluate system for managing finance resources in CareSouth Group 4 TASK 24 2.1 Diverse source of income encountered in health & social care 4 2.2 Factors which influencing the availability of financial resources in CareSouth care home 5 2.3 Reviewing different

Managing Financial
Resources in Health
and Social Care

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explain the Principle of costing and business control system adopted by CareSouth Group
......................................................................................................................................................1
1.2 Required information to manage their financial resources for CareSouth Group.................2
1.3 Regulatory requirement of managing financial resources.....................................................3
1.4 Evaluate system for managing finance resources in CareSouth Group.................................4
TASK 2............................................................................................................................................4
2.1 Diverse source of income encountered in health & social care.............................................4
2.2 Factors which influencing the availability of financial resources in CareSouth care home..5
2.3 Reviewing different types of budget expenditure in CareSouth Care Home.........................6
2.4 Comparing expenditure related decisions made by CareSouth for FY2013-14 and FY2012-
13..................................................................................................................................................6
TASK 3............................................................................................................................................7
3.1 Management of Financial shortfalls in CareSouth.................................................................7
3.2 Explain the actions to be taken in the event of suspected fraud............................................8
3.3 Explain budget monitoring arrangements in a health or social care organization.................8
TASK 4............................................................................................................................................9
4.1 Identify information required to make financial decisions relating to a health and social
care service...................................................................................................................................9
4.2 Relationship between a health and social care service delivered, costs and expenditure......9
4.3 Financial considerations that impact upon an individual using health and social care
service........................................................................................................................................10
4.4 Recommendations to improve the health and social care service........................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Managing finance is the process which includes various activities such as budgeting in
order to plan, control and forecast financial resources. It is important part of the financial
planning where individual or whole organization manage their personal finance which have clear
objective or goals what they have to do further (Ahnquist, Wamala and Lindstrom, 2012).
Financial management include the development of budget, tax payment, debt, investment,
retirement planning and other financial related decision. CareSouth Group selected for the better
understanding of this concepts. It is US based largest post acute healthcare service provider.
Company founded in 1995 and it's headquarter in Augusta, Georgia, USA.
This report include the various topics such as understanding of different system and how
they manage finance in health & social care. It include the role of planning in the management
regarding their budget and importance of monitoring budget. In addition, it include the
understanding of systems & process for managing financial resources influences in health &
social care sector.
TASK 1
1.1 Explain the Principle of costing and business control system adopted by CareSouth Group
Principle of Costing: Costing is the process wherein an individual or organization
conducts a detailed analysis of one's goods and services so as to identify and assign a cost to an
element of the business that has contributed in the production of such business offerings. It
provides basic guidelines in relation to how to evaluate the cost with the help of a suitable
costing method. It includes basic fundamental principle which is discussed below:
 Cost of the product & services are always related to its cause.
 Abnormal cost incurred due to theft or fire should not be included in the assignment of
costs as such an inclusion would result in distortion of cost figures and mislead the
management in taking uninformed or wrong decisions.
 Cost of a product or service must include only those costs which have been actually
incurred.
 Past cost will not be included in the consideration of future cost because recovery of
past cost will not be consider in the future cost.
 Cost must be treated under double entry principle same as financial accounting.
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Principle of Business control system: It include the procedure and process which help
the business to achieve their organizational goals & objectives in order to increase productivity
or profitability of the company. Control system define that how individual manage their job
responsibility and fulfill their duty and it will include the various principle which is discussed
below:
 Basic principle of business control system is to clear their objective what exactly
they have to do. Basically assure the objectives.
 It will increase efficiency or responsibility of the employees in order to maintain
their operational functions (Bennett, Lutz and Jayaram, 2012).
1.2 Required information to manage their financial resources for CareSouth Group
In order to manage financial resources in a business organization, the managers of the
company need to identify critical processes as well as points which are related to business costs.
Some of them have been enumerated as under:
 People- Human Resource is one of the most important component of any business entity.
This is due to the fact that most of the operations carried out by an enterprise largely
depends on how well its personnel is able to manage and conduct activities in an efficient
and effective manner. In addition to this, they are also responsible for taking various
strategic decisions that define the current as well as future course of the business in a
profitable manner. Hence, the People component is important for an organization such as
Care while taking management of financial resources into consideration.
 Buildings, Equipment and Consumable Items- Some of the other items which are
important from the perspective of financial resources management include Buildings,
Equipment and Consumables. For company such as CareSouth, the building utilized by
the business along with equipment and consumables related to healthcare ensure that
proper services are provided to its visitors. Without which, there would be chaos and
confusion among the service providers as well as seekers associated with CareSouth.
 Finance and Administration- Due to scarcity of resources, it is important to obtain and
utilize resources in a manner which does not result in over-expenditure or wastage.
Hence, using tools of budgeting can help CareSouth in administering costs as well as
ensure reduction of optimal utilization of resources in the business through proper
coordination and control across all levels of CareSouth.
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1.3 Regulatory requirement of managing financial resources
 There are various regulations that are required by business organization to
manage their financial resources. For this purpose, a business may fix their own principle
and procedures to complete their task. Being a health and social care provider, it is
important for CareSouth Group to ensure the safety of its patients by way of
implementing the practice of Due diligence at all levels of the organisation. These
regulations make sure that organization fulfill their obligations in respect of the
government. Following regulations adopted by the CareSouth Group for the further
functioning and it will be discussed below:Care Quality Commission (CQC): In the
context of given case scenario, CareSouth has been working closely with Alzheimer's
Society on the Dementia Friendly communities project. Wherein CareSouth holds various
awareness campaigns or events such as Dementia Awareness Tea Party. Thus, being an
independent regulator of health and adult social care, the Care Quality Commission
ensures that such an event or the treatment of patients suffering from Dementia is being
carried out by the carers in a safe, effective and highly qualitative manner. This also
includes the protection of interests of such patients. CQC also requires the healthcare
providers such as CareSouth to follow national standards, on the basis of which,
necessary inspection is carried out to help improve the care services of the providers.
Along with this, CQC also communicates the performance of such institutions to the
service seeker so as to enable better choices on their part.
 Healthcare Sector Regulator Monitor: This regulatory body, now known as the NHS
Improvement, is a monitor which is responsible for authorizing, monitoring and
regulating various NHS Foundation Trusts. One of the main function of this body is to
issue licenses to those entities who seek establishment of health and social care
facilities. Also, it focuses on the price determination in terms of financial aids as well as
safety of patients.
 Generally Accepted Accounting Principles (GAAP): This regulatory body requires
various organizations including healthcare providers such as CareSouth to record,
classify and report important information in relation to financial resources as well as
income streams so as to encourage transparency and fair practices of accounting systems
in a business enterprise such as CareSouth (Cowling and Mailer, 2013).
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1.4 Evaluate system for managing finance resources in CareSouth Group
For the effective management CareSouth Group have to follow adequate system. Systems
are the set of instruction, procedure, policies and guidelines which are required to be followed by
the organization such as CareSouth. Manger of the CareSouth Group relies on certain systems to
monitor or evaluate some or all the information for managing their financial resources. It will
include various activities related to the financial transaction, medical treatment, social care etc.
In this context, CareSouth can adopt a highly customized software which would cater to the
needs of its business operations in the most effective manner. Some of the most effective systems
for enabling financial resource management on CareSouth's part are enumerated as under:
 Implementation of IT System- Implementation of an Information System would help in
the integration of business processes which would further result in assistance of various
healthcare related procedures. An example of such system is the 'Open System Software'
that enables its users to collect all necessary financial information at one place which is
important for accounting, auditing and taxation purposes. After which this software
immediately evaluates the income earned and expenditure incurred for a particular
business entity. Thus, enabling informed decision making and controlling of financial
resources on the part of CareSouth's top level management.
 Caresys- This is a care home management software solution provider that is specifically
tailor-made to serve the health and care industry. Some of the solutions featured in this
system include Care Planning & Scheduling, Behaviour Support, Staff HR, Finance
Income and Billing, Equipment Maintenance as well as Enquires among others. Thus,
integrating a diverse set of modules into one easy-to-use solution.
TASK 2
2.1 Diverse source of income encountered in health & social care
 In the health and
social care organizations, a company is required a source of income to complete their
expenses and provide various service in order to achieve their goals & objectives. There
are various income sources available for the CareSouth Group and other health & social
care organization for the financial year ending on 2013/14 have been discussed
below:Residential Care Services- In the end of financial year 2013-14, income from
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Residential Care Services contributed worth £29.1 million to CareSouth Group which
forms 81% of CareSouth's total income amounting to £36.2 million.
 Domiciliary Care Services- Income from Domiciliary Care Services contributed worth
£5.9 million to CareSouth Group which forms 16% of CareSouth's total income
amounting to £36.2 million for the year ended 2013-14.
 Investment Income- Also, income from Investments contributed worth £0.2 million to
CareSouth Group which forms 0.55% of CareSouth's total income amounting to £36.2
million.
 Other Income- In the end of financial year 2013-14, 2.77% income was earned from
other sources such as sales and letting of close care accommodation worth £1 million to
CareSouth Group.
2.2 Factors which influencing the availability of financial resources in CareSouth care home
Their are various factors which affect the organization and the availability of the finances
and it will be discussed below:
 Funding Priorities- Like every organization, CareSouth Group also has funding
priorities which result in ranking of financial resource requirements in descending order.
Thus, giving more importance to critical resources and vice versa. For instance, it is
CareSouth's policy to have reserves of 9 months operational expenditure so as to assure
sufficient cash flow to meet working capital requirements.
 Government Policies- Another factor that influences the availability of financial
resources in CareSouth Care Home relates to the prevalent government policies. Policies
set by regulatory bodies such as Care Quality Commission, ensure that a certain
benchmark of service quality is maintained.
 Partnerships- CareSouth Group has collaborated with various care homes. As per the
Financial Summary statement presented for the year ended 2013-14, 2.77% of the total
income earned by CareSouth is from sales as well as letting out close care homes.
Recently, the business has partnered with Alzheimer's Society on the Dementia Friendly
Communities Project so as to spread awareness for the condition. Hence, partnerships
helps in sharing of financial resources in a manner which enables the elevation of
competitive advancements of both Alzheimer's Society and CareSouth itself.
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2.3 Reviewing different types of budget expenditure in CareSouth Care Home
Budget is the simple estimation process which include the income as well as expenditure
for the specific type period. So they have to make sure that manage of the organization will
follow the budget in proper way which can reduce the cost and increase their productivity.
CareSouth Group can adopt various budget in order to take effective decision regarding their
expenses and it will be discussed below:
 Cost Center: Cost centers are typical business units which indirectly contribute to
overall revenue generation in a company. Hence, while reviewing different types of
budget expenditure in CareSouth Care Home, Cost Centers play an important part as they
form a critical part of the operational effectiveness for a business. Thus, enabling the
specification of anticipated budgeted cash receipts and disbursements that result in the
attainment of overall objectives of CareSouth in an effective manner.
 Project Management: CareSouth Group undertakes projects such as Alzheimer's
Society on the Dementia Friendly Communities project. This helps them in creating
awareness among various conditions, Dementia in this case, for a large group of people.
Hence, the review of project on regular basis in reducing support costs and other direct or
indirect costs related to such projects.
 Outsourcing Contract: Contract outsourcing also results in additional expenditure, even
though it does reduces the overall burden and costs for CareSouth (Finkler, Smith and
Calabrese, 2018). This is important for a business like CareSouth as excess allocation of
budgeted expenditure to contract outsourcing activities would result in imbalance among
other operational costs of the business.
2.4 Comparing expenditure related decisions made by CareSouth for FY2013-14 and FY2012-13
With the help of various internal as well external factors management can take their
decision in order to achieve high efficiency or effectiveness which further helps in completing
business goals & objectives. In order to analyse the manner in which CareSouth has undertaken
decision making regarding its expenditure, Financial Summaries for the year ended 2013 and
2014 have been analysed as under:
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The total expenditure incurred in FY2012-13 and FY2013-14 are £34.8 million
and £33.1 million respectively. They mainly relate to various services
provided by CareSouth as well as payment of interests for various loans
and liabilities undertaken by it. The services provided by CareSouth
include Residential as well as Domiciliary. Apart from this, Support costs
and other costs have been taken into account (Financial Summary, 2013).
Looking at their contributions one can say that the total reduction in
expenditure incurred for FY2013-14 can be attributed to 4.89%. Out of which the
main contribution is that of decline of expenditure in Residential Care services which
reduced from £24.5 million to £22.9 million. Thus, contributing a total of 6.53% to the
reduced expenditure in FY 2013-14. By mere observation it can be seen that the
reduction in expenditure for FY2013-14 from FY2012-13 was mainly targeted at
Residential arm of CareSouth as other components remained constant for both years.
Thus, indicating that the top-management largely focused at implementation of cost-
effectiveness strategy for 2013-14.
TASK 3
3.1 Management of Financial shortfalls in CareSouth
Financial shortfalls is the amount which exceed the amount of cash when it required.
Shortfalls can be temporary or for longer period which is totally depend upon the circumstance
which indicated that poor financial management practices. Lack of ability to pay their debt will
increase the chances of shortfalls. Their are different types of shortfalls such as fail to repay bank
debt, additional interest and other penalties. Their is various options available to manage
financial shortfalls in the organization and it will be discussed below:
 Alternative External Income Sources- Seek additional finance from the shareholders or
equity holders through selling additional shares (Glasby, 2017). This method provide
benefits because organization does not have to pay money because they have to pat
dividend only.
 Reserve Funds- Reserve Funds are the excess finance options that are available by way
of accumulating rewards of previous years. Utilization of such funds will help the
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CareSouth Group care organization to manage their shortfalls finances for the sustainable
development.
 Virement- Financial shortfalls can be manage by way of Virement which includes the
process of transferring budgeted funds from one unspent appropriation financial account
to another. This would help CareSouth in attainment of flexibility to achieve proper
management of financial resources and achieving targetted outputs in an effective
manner.
3.2 Explain the actions to be taken in the event of suspected fraud
When any organization find that any fraud will be happen then they will take various
actions which helps in reducing these activities. This can be done by conducting an in-depth
analysis of financial information for reliability, validity and sufficiency. This can be done by
properly evaluating the Income Statement or Financial Summary of CareSouth for the given year
in which it is suspected that financial fraud has occurred (Greene, 2017).
3.3 Explain budget monitoring arrangements in a health or social care organization
1. September cash sales $ 7,400
September collections on account:
July sales: $20,000 × 18% 3,600
August sales: $30,000 × 70% 21,000
September sales: $40,000 × 10% 4000
Total cash collections $36,000
2. Payments to suppliers:
August purchases (accounts payable) $16,000
September purchases: $25,000 × 20% 5000
Total cash payments $21,000
Cash Budget
For the Month of September
Cash balance, September 1 $ 9,000
Add cash receipts:
Collections from customers 36000
Total cash available before current financing 45,000
Less disbursements:
Payments to suppliers for inventory $2 1,000
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Selling and administrative expenses 9,000 *
Equipment purchases 18,000
Dividends paid 3000
Total disbursements 51000
Excess (deficiency) of cash available over disbursements (6,000)
Financing:
Borrowings 11,000
Repayments 0
Interest 0
Total financing 11000
Cash balance, September 30 $ 5,000
Working Notes:
*Selling and administration = $13,000 – $4,000
= $9,000.
TASK 4
4.1 Identify information required to make financial decisions relating to a health and social care
service In the CareSouth Group, manager required various financial information in order to take
effective decision which help the organization to achieve their business goals & objectives.
Required information will be easily accessed through financial statements and it include various
information which is required for the decision making process. Income statement or balance
sheet are some of the reports that can be utilized to make financial decision. This is due to the
fact that it includes the an overview of various components that are utilized by CareSouth for a
given period (Harrison, 2013). For instance, support costs, interest payable on bank loans and
pension funds, short term or long term loan or investment, assets of the company and their other
liabilities. Also, prioritised elements such as Residential Care Services have been shown by way
of graphs to emphasize management's reliability on this arm of CareSouth.
4.2 Relationship between a health and social care service delivered, costs and expenditure
Cost and expenditure have direct relation because when CareSouth Group provide quality
services which is devoted to the patients (Hong, Siegeland Ferris, 2014). Organization such as
CareSouth have to invest on human resources, provide effective training and required equipment
which help to provide quality services which increase the efficiency as well as effectiveness.
Analysing the relationship between service quality, cost and expenditure of CareSouth it can be
observed that the Residential care services has reduced in income as well as expenditure from
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FY2012-13 to FY2013-14. This indicates that with a reduction in costs the income has also
decreased however it does not mean that there is a reduction in service quality. On the other
hand, Domiciliary Care Services have maintained its incomes and expenditure in FY2013-14.
Again this is not indicative of service quality. Hence, one can say that they are not mutually
dependent on each other and largely depend upon other factors such as purchasing agreements
and pricing policies (Kringos and et.al., 2013).
4.3 Financial considerations that impact upon an individual using health and social care service
At the time of taking financial decision, financiFinancial Summary. 2013al consideration
will be taken into accounts. For an individual user, the two main financial considerations that
would be taken into account relate to the quality of service and accessibility to it (Maier, Meyer
and Steinbereithner, 2016). This is due to the fact that unlike a product offering services are not
measurable on quantitative terms. Thus, it becomes necessary for an individual user to determine
the level of satisfaction achieved on the basis of service quality and how easily accessible such a
service was.
4.4 Recommendations to improve the health and social care service
CareSouth Group Limited required to follow proper management to manage their
finances where manager of the company maintain, monitor and evaluate the performance
(Prowle, Murphy and Prowle, 2014). There are various types of services which are provided by
Care South Group care home which includes residential and domiciliary. In order to improve the
ways in which all of them are delivered to clients organisation can choose different elements
such as available options, supporting evidences etc. Organisation can change its financial
systems and processes by analysing different market conditions. With the help of it the decision
makers within the organisation will be able to utilise all the financial resources appropriately.
Financial system could be changed by making modification in the pricing policies. The factors
which should be considers while changing prices are cost, expenditures, benefits of services.
With the help of all of them services could be improved and delivered to clients (Mechanic,
2012).
CONCLUSION
From the above discussion it has been concluded that, managing finance in health and
social care which help the organization to maintain their financial resources in order to complete
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their task. Costing and business control system will help the organization to maintain or manage
their cost in order to increase their productivity, sources of finance help the business to fulfill the
requirement of their expenses. In addition, various factors affect the company and availability of
finances which required to achieve their goals & objectives. Along with this, company have to
manage finance shortfalls which include various steps that will resolve the problems.
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Online:
Financial Summary. 2013. [Online]. Available Through:
<https://www.care-south.co.uk/wp-content/uploads/2017/05/Annual-Review-of-the-
Year-2013-14.pdf>
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