Managing Financial Resources in Health and Social Care: A Case Study of CareTech Holdings Plc

Managing Financial Resources in Health
and Social Care
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Contents
Introduction......................................................................................................................................3
1.1 Explain the principles of costing and business control systems that may be adopted in
CareTech Holdings Plc................................................................................................................4
1.2 Identify the information needed to manage financial resource for CareTech Holdings Plc in
financial ending............................................................................................................................6
1.3 Explain the regulatory requirements need to be satisfied while managing financial
resources in CareTech Holdings Plc............................................................................................7
1.4 Evaluate the systems for managing financial resources in CareTech Holdings Plc..............8
2.1 Discuss the diverse sources of income available to CareTech PLC in the financial year in
2016..............................................................................................................................................9
2.2 Analyse the factors that may influence the availability of financial resources in CareTech
Plc...............................................................................................................................................10
2.3 Different types of budget expenditure in health and social care organizations...................11
2.4 Decisions about expenditure within a health or social care organization............................12
3.1 Management of financial shortfalls......................................................................................13
3.2 Actions to be taken in the event of suspected fraud.............................................................14
3.3 Budget monitoring arrangements in a health or social care organization............................15
4.1 Information required to make financial decisions relating to a health and social care service
....................................................................................................................................................16
4.2 Analyse the relationship between a health and social care service delivered, costs and
expenditure.................................................................................................................................17
4.3 Evaluate how financial considerations impact upon an individual using the health and
social care service......................................................................................................................18
4.4 Suggest ways to improve the health and social care service through changes to financial
systems and processes................................................................................................................19
Conclusion:....................................................................................................................................20
References......................................................................................................................................21
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Introduction
The report prepared in the following assignment deals with the various issues faced by an
organization operating in health and social care industry. In order to prepare the report a case
study relating to Care tech Holdings has been taken and the issues faced by the organization in
managing its resources will be analyzed and solved accordingly. The Basic principles of costing
along with the regulatory requirements associated with managing the financial resources will be
discussed in this report. The diverse sources of income for health and social care company
together with the factors which affect the availability of financial resources will be discussed in
this report. The report will also include a description relating to various expenditure issues
together with the financial; shortfalls faced by the company and the solutions will be provided.
The information required for making financial decisions and the financial considerations which
can impact the company will be provided in this report.
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1.1 Explain the principles of costing and business control systems that may be adopted in
CareTech Holdings Plc.
Cost accounting can be represented as the branch of accounting which has been evolved for
overcoming the limitations of financial accounting. The term can be defined as the process of
accounting cost of company by ascertaining, distributing, allocating and classifying the various
aspects of costs. Thus it includes classifying and recording the various cost items concerned with
the operations of company (Hayes, 2015).
The importance of costing lies in the fact that it helps in:
 Controlling the costs – The various cost items of the company can be identified and
classified separately and they can be analyzed for the purpose of reducing them. Thus the
system helps in controlling the excessive cost of company.
 Determining the profitability of company – The various types of profitable and non-
profitable activities can be separated and identified in order to ascertain the profitability
of company.
 Making decision related to economic aspects – The economic decisions of the company
can be taken after careful evaluation and analysis of the cost activities of company.
Principles of costing – There are six principles of costing which includes stakeholders,
consistency, data accuracy, causality and objectivity, transparency and materiality.
 Stakeholders – The sound costing system of the company should enable and encourage
the use of costing system for clinical and non-clinical stakeholders of company. The
costing information should be of use for the stakeholders of company.
 Consistency – A good costing system must be consistent across all the services which
will enable in cost comparison within and across the organization (Glasby, 2017).
 Data Accuracy – The good costing system should be developed with high quality of data
and this will help in building more confidence.
The business control system of the organization consists of the control system which helps in
controlling the economic and other activities of the company and this includes budgetary control
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system, computer control system, auditing system, internal control system and physical control
system.
Cost benefit analysis in Caretech Holdings – The cost benefit analysis conducted in the
company will help in making cost evaluation for different activities and identifying the benefits
concerned. The same will allow the business managers to concentrate on those activities which
can provide additional benefits to the company.
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1.2 Identify the information needed to manage financial resource for CareTech Holdings
Plc in financial ending.
The different types of information which are required to take decision for allocating financial
resources consist of:
Business costs – The business costs will be related with the items concerned with cost of sales
for the company including wages, bills, overtimes, interest on loans and overdrafts. The same
will also include the information related to cost of people, equipment’s etc.
Income streams – The income flow of the company will be of significant importance for the
business managers to take decision regarding the level of activity to be performed in future
periods (Hayes, 2015).
In context of Caretech Holdings revenues for the year ending 2016 amounted to £149 million
with an operating profit amounting to £30.5 million which has increased significantly by 71%
from the last year. The cost of goods sold has amounted to 94 million which has also increased
significantly in ten current years 2016.
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