Managing Financial Resources in the Health Care Sector

This report discusses the principles of costing and business control systems, identifying information required to manage financial resources, assessing regulatory requirements, and evaluating budget monitoring arrangements in the health care sector. It also explores ways to manage financial shortfalls, detect fraud, and improve health care services. The report is based on Silloth Nursing and Residential Care Home and provides insights into managing financial resources in the health care sector.

MFRD in HSC

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Principles of costing and business control systems...............................................................3
1.2 Identifying information which is required to manage financial resources............................3
1.3 Assessing the regulatory requirement for the management of finance..................................4
1.4 Evaluating the system for managing financial resources in the health care sector................4
TASK 2............................................................................................................................................4
2.1 Identifying the diverse source of income in the context of health care sector.......................4
2.2 Analyzing the factors that have impact on the availability of financial sources...................5
2.3 Different types of budgeted expenses associated with health care sector.............................5
2.4 Evaluating the manner in which decisions are made about budgeted expenses....................5
TASK 3............................................................................................................................................5
3.1 Ways to manage financial shortfalls......................................................................................5
3.2 Explaining the action that can be undertaken to suspect fraud..............................................6
3.3 Evaluating the budget monitoring arrangements within the health and social care
organization.................................................................................................................................6
TASK 4............................................................................................................................................6
4.1 Identifying the information which is required to make monetary decisions.........................6
4.2 Finding relationship between the services delivered, cost and expenses..............................7
4.3 Evaluating the impact of financial aspect on individual using health care services..............7
4.4 Suggesting ways to improve health care services..................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Management of finance is one of the main tasks of organization because without it
business entity is not in position to implement strategies on time. In the competitive business
environment, for the attainment of success it is highly required for the firm to deliver quality
services to the patients. For this purpose, health care organization needs to invest money in R&D
activity for finding the best alternatives ways to offer services to people at affordable prices. The
present report is based on Silloth Nursing and Residential care home whose main objective is to
provide patients with high quality services. In this, report will describe the manner through
which care organization can manage financial shortfalls and thereby would become able to make
optimum use of monetary resources.
TASK 1
1.1 Principles of costing and business control systems
In accordance with the cost principle, manager of care home is required to gather
information about the amount spent on each activity. On the basis of this aspect, it is the
accountability of higher authority of Silloth care home to identify the cost level and thereby
drafts suitable budge. Hence, by making evaluation of budgeted figures in against to the actual
spending level manager of care unit can easily assess the deviations (Martin, 2016). Hence, by
making assessment of causes of deviation firm can take suitable action within the specified time
for further improvements. Hence, by practicing control system firm can achieve success to the
significant level.
1.2 Identifying information which is required to manage financial resources
Information is required by care home for managing the financial resources more
effectually includes cost, activity etc. To deliver better services to the patients Silloth care home
has to incur direct and indirect cost. Direct cost associated with the care unit includes ambulance,
bed charges, medicines etc. All such costs are related to offering services directly to the patients
(Finkler and et.al., 2016). On the other side, indirect cost includes promotional, maintenance,
depreciation on equipments etc. all such expenses are the one which Silloth care home has to
incur for serving patients in the best possible way. In this, by identifying the cost effective way

of performing each activity care organization can manage monetary fund’s in the best possible
way.
1.3 Assessing the regulatory requirement for the management of finance
Companies which are listed on London stock exchange is required to prepare and publish
financial statements at the end of accounting year. Moreover, investors and other stakeholders
make decision regarding investment by making evaluation of final accounts. Hence, it is one of
the main regulatory requirements which Silloth residential and care home should fulfill. Besides
this, care organization also requires to prepare final accounts by following the rules and
regulations of IFRS and UK GAAP (Bosch and et.al., 2016). Thus, by following such guidelines
Silloth care home can meet legal requirements in the best possible way.
1.4 Evaluating the system for managing financial resources in the health care sector
By employing the budgetary control system Silloth care home can manage finance in an
effectual way. On the basis of such aspect, by evaluating the actual figures with the standard
criteria manager of firm can measure performance of each department. Moreover, such
comparison helps in finding the level of deviations and causes associated with it. Hence, by
resolving the issue within suitable time frame Care unit can frame suitable strategy that makes
contribution in the attainment of goals (Louzon and et.al., 2017). However, it is to be critically
evaluated that if business unit fails to set suitable budget then it may result into high deviations.
In this way, sometimes such control system negatively affects the financial planning and
framework.
TASK 2
2.1 Identifying the diverse source of income in the context of health care sector
Income sources that can be undertaken by Silloth care residential home are as follows:
 Large sized business organization: Now, to meet the objectives of CSR there are several
large sized business organizations that sponsor the event and provide firm with high tech
equipments.
 Voluntary funding: Sometimes, to make contribution in the welfare of others individuals
and organizations give surgical equipment to the care organization.

 Governmental support: In the present times, with the aim to provide effectual services
government authority has also taken initiatives (Buchbinder and Shanks, 2016). Hence,
approaching to government care unit can generate funds.
2.2 Analyzing the factors that have impact on the availability of financial sources
Availability of financial sources is highly influenced from the wide range of aspects
which in turn has direct impact on overall functioning. In the case of governmental support,
Silloth care home is obliged to fulfill large documentary process and other formalities. Along
with this, in the case of sponsorship care organization is compelled to highlight the name of
funder at each and every level (Fortier and et.al., 2017). Hence, all such aspects have significant
impact on the availability of monetary resources.
2.3 Different types of budgeted expenses associated with health care sector
Budgeted expense which Silloth residential and care home has to incur for the smooth
functioning include promotional, petrol, medicine, cleaning, maintenance and many more.
Hence, for the preparation of highly suitable budget care unit is required to make in-depth
assessment of each and every activity (Lord and et.al., 2013). Hence, by evaluating all the
expenses care unit can develop highly competent plan or framework.
2.4 Evaluating the manner in which decisions are made about budgeted expenses
By conducting cost-benefits analysis care organization can easily identify the funding
requirements. Moreover, such analysis clearly presents the number of patients which care unit
needs to serve for attaining the situation of no profit no loss (Mariotti and Glackin, 2014).
Further, by conducting such analysis care organization can also identify the number of patients
which need to be served foe attaining the desired level of profit margin (Cost Benefit Analysis,
2017). Along with this, by identifying the activity and ways to perform manager can prepare
highly suitable budget.
TASK 3
3.1 Ways to manage financial shortfalls
Manager of care home can manage financial shortfalls by making continuous monitoring
of each department. Situation of deficit or loss entails that firm fails to make effectual use of

financial resources. In this, by making periodical evaluation of actual performance with the
budgeted figures owner of Silloth care home can easily identify the area which in turn requires
high control. Hence, it can be stated that by making assessment of cash flows manager of care
unit can take significant action for improvement. In addition to this, by conducting internal check
system business entity of Silloth residential and care home can identify the undesirable activities
more effectively and efficiently. In this, by evaluating or checking actual expenses in against to
the vouchers manager can easily identify the area that require high level monitoring and control
(Finkelman, 2015). In this way, through the means of internal check system financial shortfalls
can be reduced significantly.
3.2 Explaining the action that can be undertaken to suspect fraud
By conducting periodical audit fraud can easily be suspected by Silloth residential and
care home in an effectual way. Moreover, by using auditing system and process owner of care
unit can control fraudulent activities to a great extent. For instance: By evaluating the stock of
medicine in against to vouchers business entity of care home can identify the level of fraud
which demands for high control (Zingg and et.al., 2015). Hence, auditing is the best practice
which in turn helps in suspecting the level of fraud.
3.3 Evaluating the budget monitoring arrangements within the health and social care
organization
To monitor the budget related arrangements and evaluate the performance of each
department Silloth residential and care home undertakes variance analysis tool. Hence, by
making evaluation of planned output in against to the standard limit business entity can assess
the department which in turn fails to make enough use of financial resources. However, on the
critical note it can be presented that outcome of variance analysis places negative impact on
employee motivation and performance level (Chapuis and et.al., 2015). Besides this, outcome of
variance analysis is also used by finance manager to draw future plan. In this, sometimes such
arrangement places negative impact on overall plan.

TASK 4
4.1 Identifying the information which is required to make monetary decisions
For making monetary decision, Silloth residential and care home requires information
about the profitability, liquidity and solvency aspect. In this, regard, by making evaluation of
income and cash flow statement as well as balance sheet care unit can take appropriate monetary
decision. For example: Silloth care home is planning to start canteen with an objective to offer
fresh food and beverages. Hence, for such expansion plan owner of care home requires enough
amounts of funds. In this, by assessing the cash flow statement manager can identify the extent to
which financial resources it has and needs to raise further from other sources (Buchbinder and
Shanks, 2016). Hence, by evaluating such aspects care unit can take suitable decision regarding
the enhancement of fund.
4.2 Finding relationship between the services delivered, cost and expenses
From evaluation, it has been identified that significant relationship takes place between
the services delivered, cost and expenditure level. In order to offer high quality and satisfactorily
services to the patients care organization has to incur several expenses such as direct and indirect
etc. Hence, cost is determined by the manager by summing up all the expenses. On the basis of
this aspect, by dividing total cost from the number of patients cost per individual is assessed by
care institution. Along with this, level of services also has high level of impact on the cost as
well as expenditure (Martin, 2016). Moreover, to offer high quality services to patients care
home has to incur high expenses. This in turn place direct impact on the expenditure level and
thereby cost. All these aspects clear show that cost, expenses and quality aspects are highly
interrelated with each other.
4.3 Evaluating the impact of financial aspect on individual using health care services
Prices which are charged by care institutions have high level of impact on the decision
making aspect of individuals. In the recent times, patients and family members of high income
group people lay more emphasis on hygiene and quality aspect. To meet such objective of patient
care unit charges high prices. In this, middle income group people are not in position to afford
services offered by highly price care unit (Finkler and et.al., 2016). Hence, Silloth residential and
care home should charge different prices according to the service level and quality.

4.4 Suggesting ways to improve health care services
Care services provided by Silloth residential and care home can easily be improved
through the means of research and development activity. Moreover, research is the most
effectual activities which in turn helps care unit in assessing the best ways through which disease
related issues of individual can be managed. Along with this, it is recommended to Silloth care
home to undertake zero base budgeting technique or practices. By employing such technique
manager of care home can avoid inefficient activities in an effectual. Further, zero base budgets
facilitate optimum allocation of funds because it is highly based on the actual activities and
amount requires performing. Such budgeting technique is highly significant as compared to
traditional system (Bosch and et.al., 2016). In this way, by using such system firm can achieve
success in the strategic business environment and becomes able to exert control, over expenses.
In this way, by reducing the level of over spending Silloth care unit can fulfill aims and
objectives significantly.
CONCLUSION
From the above report, it has been concluded that manager of Silloth Nursing and
Residential Care Home can ensure optimum use of funds by using budgetary control. Besides
this, it can be revealed from the report that positive and high level of relationship takes place
between the three elements such as cost, expenses and services offered. Further, it has been
articulated that by conducting internal audit care organization can easily assess the fraud. Besides
this, it can be inferred that by approaching to the large sized business organization Silloth care
home can generate fund or enhance financial resources.

REFERENCES
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Bartlett Publishers.
Buchbinder, S. B. and Shanks, N. H., 2016. Introduction to health care management. Jones &
Bartlett Publishers.
Chapuis, C. and et.al., 2015. Automated drug dispensing systems in the intensive care unit: a
financial analysis. Critical Care. 19(1). p.318.
Finkelman, A., 2015. Leadership and management for nurses: Core competencies for quality
care. Pearson.
Finkler, S. A. and et.al., 2016. Financial management for public, health, and not-for-profit
organizations. CQ Press.
Fortier, C. and et.al., 2017. Strategies for the Clinical and Financial Management of Drug
Utilization. In Utilization Management in the Clinical Laboratory and Other Ancillary
Services (pp. 273-278). Springer International Publishing.
Lord, R. K. and et.al., 2013. ICU early physical rehabilitation programs: financial modeling of
cost savings. Critical care medicine. 41(3). pp.717-724.
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
Journal of Health-System Pharmacy. 74(4).

Mariotti, S. and Glackin, C., 2014. Entrepreneurship and small business management. Pearson
Higher Ed.
Martin, L. L., 2016. Financial management for human service administrators. Waveland Press.
Zingg, W. and et.al., 2015. Hospital organisation, management, and structure for prevention of
health-care-associated infection: a systematic review and expert consensus. The Lancet
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Online
Cost Benefit Analysis. 2017. [Online]. Available through:
<http://management.about.com/cs/money/a/CostBenefit.htm>. [Accessed on 11th April
2017].