Cost Analysis in Healthcare Management: A Case Study of Silloth Nursing Care

The treatment and care of patients in a healthcare organization like Silloth nursing care requires investments that help implement these services efficiently. The organization needs to manage funds and financial sources effectively, considering costs and benefits. This includes training staff through e-learning and workshops, recruiting the right candidates, and ensuring sufficient staff ratios to provide quality services. To improve services, the organization can appoint an officer for monitoring and verification, conduct cost-benefit analyses, and adopt innovative plans to bring changes in current procedures.

MFRD

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Principles of costing and Business control systems....................................................................1
Information needed to manage financial resources.....................................................................2
Regulatory requirements for managing financial resources........................................................3
Evaluation of systems for managing financial resources in health and social care organisations
.....................................................................................................................................................3
TASK 2............................................................................................................................................4
Essay...........................................................................................................................................4
TASK 3............................................................................................................................................6
3.1 Ways to manage financial shortfalls.....................................................................................6
3.2 Actions to be taken for suspected fraud................................................................................7
3.3 Evaluation of budget monitoring arrangements....................................................................8
TASK 4............................................................................................................................................8
4.1 Information required to make financial decisions.................................................................8
4.2 Relationship between care services, cost and expenditure....................................................9
4.3 Impact of financial considerations........................................................................................9
4.4 Ways to improve services through changes in financial systems.......................................10
CONCLUSION..............................................................................................................................10
.......................................................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The markets are unpredictable that presents a number of different scenarios for business.
This necessitates for firm to make an advance planning for managing finances so that
unpredictable nature of market can be met in right way. In this purpose, the major need is related
with management of financial sources because it is the foremost need for conducting all types of
business activities. The managers of various business firms make decisions and planning so that
right allocation of available funds can be done (Finance and Network, 2013). The present report
is based on management of financial resources and various decisions that are made by the
concerned authorities. The report is focussed on several activities that are undertaken by Silloth
Nursing home for planning the financial management and decisions that are taken accordingly.
Further, the said nursing home delivers its services in health care. It is a charity organisation that
has various aims and objectives (Vieira and Teixeira, 2010). Apart from this, they have raised
funds through different sources that has aided in proper running of nursing home. Further, the
report has talked about the budgets and various expenditures that are made by this organisation
and how they managed it in right way.
TASK 1
Essay
Principles of costing and Business control systems
The principles of costing is related with exercising a control over the cost of business
where a practice is identified which can aid in decreasing expenditures of company. Resultantly,
it will give more profits to organisation. This cost controlling activity initiates with budgeting
process where owner of company makes a comparison of obtained results with budget made by
them. When the result obtained by them fluctuates more than planned budget, they start making
plans accordingly. This entire planning and comparison gives an overview of the organisation as
per the present position so that they can make decisions related to various plans that can be
continued with and for that areas which need some action (Hood, 2013). The cost incurred by
company include all those factors which they have made in relation to arranging various goods
and services. The companies have different direct and indirect costs. In context of Silloth nursing
home the directs costs are made up of those activities that are identified directly like cost
incurred on staff, establishment, patients care etc. While indirect cost includes unidentifiable
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costs like purchase of goods and services, preparation of payroll, etc. The said entity can use the
principle of costing that can help in exercising adequate control on business activities. This will
help patients to get right treatment. Along with this, the company will be able to raise proper
funds through various sources. The business control system is related with making arrangements
for appropriate monitoring of activities and performances so that actual results can be compared
with planned results (Brignall and Modell, 2011). This gives a clear picture of organisation that
can make a base for taking various decisions.
Information needed to manage financial resources
The said company will want to know that whether they are running in profits or loss
through different costs which they are managing for various goods and services, this can be done
with the help of cash inflows of the organisation. This will provide information regarding various
expenditures that have been made by firm for a particular time period. Apart from this, there are
various financial statements that are maintained by organisations which supplies management
department with significant informations. The balance sheet of cited nursing home will show the
actual position of company in market. This is the statement that are made on yearly basis. In
addition to this, cash flow statements are maintained by Silloth nursing home that helps in
analysing the movement of cash in and out of the organisation. Through this statement, the
managers make decisions regarding adequate availability of cash with company so that they can
meet up their fixed and variable expenditures (Guthrie, Olson and Humphrey, 2010).
In addition to this, it is also necessary to monitor that goals of organisation are met by set
plans and procedures. For this, regular monitoring of performance is crucial which forms a
significant part in information need of company to manage financial sources. The requisite
information can be furnished by checking market share of organisation, its cash flows,
profitability and position in market. In addition to this, the said firm will also have to know the
major sources of income. On this basis, managers must check the services provided by its
employees to patients. This will give information about their satisfaction level which makes a
position of firm in market. Apart from this, the information regarding capital expenditures,
individual expenses that are made by organisation on serving patients, in purchase of required
equipments for their care and treatments, etc. must be observed so that right information can be
used in allocation of funds and management (Brigham and Ehrhardt, 2013).
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Regulatory requirements for managing financial resources
It is obvious that every company's foremost requirement for running its business is to
make registration of firm by complying all the legal formalities laid by government. The Silloth
nursing home must comply all the norms and policies under Health and social care act 2012.The
major aim of regulatory frameworks is to make organisations responsible for various activities
compulsorily. In context of mentioned organisation, the regulatory frameworks will aid in
maintaining accountability, effectiveness in systematic procedures, proper consumer protection
etc. The health and social care act, 2012 has set up various codes of practices that helps in
managing financial resources which includes Part 3 of Regulation of health and social care
services and Part 8 of National Institute for health and care excellence (Chandra, 2011). In
addition to there are some organisations that have various duties where they perform their duties
for various requirements. In this, HMRC is a company which is authorised for monitoring
various works related to taxes in UK. IFRS and GAAP are other regulatory bodies who aid in
promotion of corporate governance and reporting so that investments can be encouraged. The
Audit commission performs their duties by appointing various auditors so that they can provide
protection to money of public. They monitor internal control system in health care firms and
make advisory work for reviewing budget of such companies. Thus, the Silloth nursing home
must be aware of all these regulatory frameworks so that they can manage their work
accordingly and can avoid various risks that can result from non compliances (Madura, 2011).
Evaluation of systems for managing financial resources in health and social care organisations
For systematic working in management of financial resources, the major role will be
played by accountant and other professionals of finance department. For this, they will follow a
set procedure and will get their work done as per the particular method. Without following some
concrete techniques, Silloth nursing home will not be able to supply proper clinical care to
patients. The government, directors of organisation, and other regulators work together in
management of financial resources so that various activities of firm can be run uninterruptedly.
For this, the cited organisation follows a particular process where they plan for budget and
execute within firm, prepare system for reporting, reimbursements, pricing and performance
evaluation and auditing. The budgets are set by its directors and financial managers by ensuring
that planned budget is in line with organisational objectives. Further, they make proper
provisions for maintenance of various financial statements and books (Finnerty, 2013). It is the
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responsibility of manager that all statements and books are recorded properly and submitted to
appropriate department. For managing all these books and financial records, the firm has various
software like Oracle finibce, Quickbooks, Peachtree etc. In addition to this, the cited organisation
has an option of payment system like line-item budget where care user will transfer funds to care
provider for all the services like medicines for a particular time. Similarly, the cost and
management system will help in valuation of stocks, assets, pricing of goods and services, etc.
This will enable the said entity to measure quality of service through different techniques
(Crosby and Henneberry, 2016).
TASK 2
Essay
Sources of income in health and social care
In context of health and social care organisations, there are diverse sources of income for
the Silloth nursing care. The major sources that can be adopted by stated care home are some
fund raising events in which some goods and services can be sold at a particular rate. Another
source of fund can come from various projects in which the organisation has made investments.
While the major source can be donations, subscriptions, sponsorships etc. In the case, it is
revealed that volunteers of mentioned entity have raised funds from their hard work of about
£3,571 for electric profiling beds and special tilt chairs. In addition to this, the said organisation
have some other options as well to arrange for funds. The government grants is a good
alternative where it is given for some particular objective. But in these types of assistance,
government provides funding which is based on one-off system which is not continuous. These
are given for fostering the employment opportunities (Eckerd, 2015). In this objective, funds can
be gained through any charitable organisations and personal incomes as well. While the best way
to raise fund is through donations in which money can be obtained without any additional
condition. The cited organisation can also gain income for its provided services or some third
party payer insurance. Thus, all these sources can be used by mentioned organisation for raising
funds.
Factors influencing the availability of financial sources
There are some factors that can influence the availability of finance like types of goods
and services which are provided by the organisation. Here, it is important to note that care
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services that are provided by nursing homes are sometimes paid while other times it may not.
Therefore, the manager formulate some strategies and policies for proper running of nursing
home. Further, the size of organisation also impact availability of financial sources as it will
decide the eligibility of firm to get funds from government. The funding priority of enterprise is
also a factor that may impact its availability of finance as it depends on frameworks that are
formulated by health care systems in UK. Government and private firms plan their expenditures
as per the economic condition of country. Hence, it will be a deciding factor for health and social
care homes to acquire funds from them (Kaplan and Atkinson, 2015). Apart from this, the aims
and objectives of various companies use to vary from each other. On this basis, there
arrangement of funds will also differ. In case any changes or modifications occur in policies of
government, it will impact the source of finance for organisation. In this, it is also evident that
the as per the geographical location, their accessibility of funds may differ. It is essential that the
company uses all its available resources and utilise in a proper way. Lack of awareness in this
may impact availability of funds for them.
Different types of budget expenditures
The Budgets are a quantitative plan in which course of actions are determined for various
incomes and their allocations in business. The budgets are made for a particular time period in
which firms attempt to exercise control over various processes and their outcomes related to cost.
The budgets help as a guideline for managers according to which they arrange various activities
and their allocation of funds (Smith, 2014). It is necessary that budgets are made with a proper
planning as incorrect budgets may lead to crisis in the company. While a sound budget helps in
proper financial planning along with appropriate estimation of risks related to business. There are
various types of budgets in which major ones are operational budget, cash flow budget and
capital budget. The operational budget includes all routine expenses and revenues related to
business. In this, those revenues are considered which are generated through sale of good and
services. While expenses are those in which different costs related to selling of goods are
involved. The concerned managers use to compare these on regular intervals and make various
adjustments accordingly.
The cash flow budgets are made to analyse assorted inflow and outflows of cash on
regular basis. Here, the managers make planning for company's funds according to which they
adjust the budget so that they can make payments as well as generate revenues (Smith, 2014).
5

They attempt to point out various expenses that may need adjustments for shortfalls. The last one
is capital budget which is made for making plans for investments on capital projects. The
management of different assets impacts on financial capacity of company for which, it is
necessary to make budgetary plans so that it can result in expected cash inflow.
Process of making decisions about expenditures in health and social care
The decision about expenditures are made on the basis of budgets which are made after
deep study and thoughtful processes. It is apparent that budgets cannot be made without proper
planning and study, therefore, one has to make decisions after considering various factors
impacting its construction (Finance and Network, 2013). For this, the concerned authorities have
to follow a process in which the prominent step is to conduct environmental analysis. This can be
accomplished through SWOT and PESTLE analysis of business and different projects. In present
context, the Silloth nursing care can take into account all these analysis which will help in giving
information regarding projects and their viability for firm. In addition to this, after making these
analysis, the next step will be to set priorities. This procedure focuses on crucial spendings which
are necessary to focus on so that any essential activity cannot be missed. In this entire procedure
the next stage of eliminating emotionalism is also a significant step where fund allocation done
by organisation will frame a guideline in which they will manage the control on their
expenditures. This can restrict them to have an overspending and disturb the entire budget
planning. In further stage, the manager will make a proper balance for all spendings. For this,
manager can make a provision for formulating smaller budgets that can provide right guidelines
for making expenditures. This will ensure right allocation of funds for each and every activity in
balanced way (Vieira and Teixeira, 2010). The next step is to make a review of actual and
targeted income of company. This allows the manager to make balanced and right decisions
which are of use for focussing on money acquired by organisation. Finally, the concerned parties
must focus on short and long term plans so that they can make right allocations for all small and
big projects and investments related to it.
TASK 3
3.1 Ways to manage financial shortfalls
There are different ways to manage inadequacy of finance in firm where the managers of
Silloth nursing home can arrange its activities by investing on those projects that have the ability
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to create more dividends. The managers can also contact their suppliers to give extension in date
of payments so that company can make sale of good and services in that duration. This will help
in making money during this time so that financial shortfall can be met. Another method is to
make requests to their patients for making payments through bank credit cards (Hood, 2013). In
this facility, the organisation can easily and quickly convert the vouchers sent to banks into cash.
In addition to this, they have another alternative of selling off the assets that are of less use for
company. This includes selling off different equipments or vehicles that are obsolete.
3.2 Actions to be taken for suspected fraud
The fraud can be defined as any act that is performed intentionally which results in giving
loss to one of the party over other's inappropriate gain. This can be done by an individual for
gaining undue advantage through undertaking money, property or any services with the help of
illegal means. The frauds may be of several types which presents following acts:
 Making fraud through false representation of facts
 Fraud by concealing any material facts from other party (Brignall and Modell, 2011).
 Fraud by making unethical use of power and position
Apart from these, the organisations like Silloth nursing care that are indulged in health
and social care services can also make frauds by stating false sales and wrong valuation of
assets. The firms can also give fraud financial reports in which they can conceal fair reporting of
financial statements. Therefore, it is necessary that management authorities identify risks as soon
as possible so that right action can be taken to restrict it. The top level management can take
various actions after identifying frauds against any party. Some of the actions that can be taken
by concerned authority are:
 Make a proper report with all details concerning fraud (Guthrie, Olso and Humphrey,
2010).
 Communicating about suspicious act to an appropriate person who is authorised and
experienced in such cases.
 Note each and every detail of the fraud and examine the source appropriately from where
information about fraud is acquired.
 Dealing the matter in proper way to handle the matter in right way.
 Proper reporting of all matter to concerned authority with all details and evidences.
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3.3 Evaluation of budget monitoring arrangements
The budget monitoring arrangements are done with the help of cost control measures. In
this, various areas in which costs are incurred by company are identified and categorised
(Brigham and Ehrhardt, 2013). All these planned arrangements and limits are compared with
actual ones which help in assessing the real picture of company's position. For this purpose,
mentioned entity can have cost control centre which is responsible for monitoring various
expenditures of company along with proper control on costs. Here, the major work of these
centres will be to make a comparison of actual results with the planned results. This may show
variances in the revenues obtained and the planned revenues made by mangers. Here, the cost
control centre will make report on budgeted figures and actual figures received by organisation
along with the reason due to which the deviations have occurred in the result. The cost control
centre can arrange a meeting regarding this discrepancy with all relevant parties in it. Here, the
reasons can be discussed along with finding proper solution for this. It may result into making
different changes in the budget plan so that requirements can be met. This also entails that a
sound budget must be realistic that can actuate performance of company and foster the
employees (Chandra, 2011). Apart from this, the top level authorities must make a provision for
regular scrutiny of budget with right supervision.
TASK 4
4.1 Information required to make financial decisions
The financial decisions can be made by the company through assessing performance of
organisation throughout the year. In this, the income statement will help in furnishing important
information which can reveal ability of business in selling its services. The profit and loss
account of enterprise will reveal the gross profit and net profit margin. This will supply the
useful information to the investors and internal parties to make further decision in all those areas
where improvements and adjustments are needed. Calculation of some important ratios are also
helpful in this objective that will imply the ability of organisation to pay for various liabilities
(Madura, 2011). Apart from all these, the decisions regarding tactical and strategic importance
for company can be accomplished through information provided by following:
 Sources of funds
 Purchases of company, revenues and expenditures made by organisation
8

 techniques used for selling products and services
 Suitability of location of company
 proper allocation measures adopted by company and budgets
All these information will help in taking important decisions regarding the financial
nature to all concerned authorities.
4.2 Relationship between care services, cost and expenditure
The services charged by Silloth nursing care and various expenditures that are incurred
by the company for providing different services have a close relationship. The reason is, all
services that are provided by stated enterprise are charged which generates revenue for the firm
(Finnerty, 2013). On this basis, the quality of services provided by them also use to differ. There
are some additional factors as well which also contributes in delivery of superior services. This
include prope care of patients, costs involved in purchasing different equipments that are used
for their treatment and care, maintenance of cleanliness and other arrangements within
workplace etc. All these measures include an investment that helps in appropriate
implementation of all these services. This necessitates to manage funds and different financial
sources in company. For this , they can make a cost-benefit analysis which will give information
regarding costs that can be incurred in purchase of required equipments, in imparting training to
staff and paying wages and salaries to the employees. Thus, it will make a difference in services
provide and the expenditures incurred in all these (Crosby and Henneberry, 2016).
4.3 Impact of financial considerations
The service users are largely impacted by the financial considerations. In this, the said
organisation makes investment on employees to train them through various means like e-learning
and workshops. Thus, their training will impact the service users which must be done in proper
way. The patients will get superiors services when the staff of organisation will be well trained in
their work. If they have adopted wrong method of training or do not train them in proper way,
the service users can be impacted in wrong way. Apart from this, the organisation also make
provisions for recruitment processes. If the cost is incurred by organisation in right way, this will
help in making right selection of suitable and eligible candidates. The improper selection of
candidates, can result into various risks related to care of patients (Eckerd, 2015). In addition to
this, it is also necessary to provide right number of staff in the organisation so that firm can
9

supply quality service to all patients. Lack of sufficient staff ratio could track to institutional ill-
treatment and the deficiency of accessibility of needed services.
4.4 Ways to improve services through changes in financial systems
For this, the company can appoint an officer that can perform the work of verifying the
results and proper monitoring on all the measures. For this, they can make a supervision and
have a conversation with patients so that they can know the current situation and satisfaction
level of patients with services provided to them (Kaplan and Atkinson, 2015). They can make
more efforts to arrange for finance and raise funds that can be invested by the organisation on
various areas of firm. This will aid in making their service more superior and useful for the
patients. The organisation can also make some innovative plans that can bring changes in current
procedures of the system. The firm can adopt more transparency in their work so that they can
assure more credibility in their performance. Apart from this, the staff must be paid as per their
performance so that they can also perform with higher efficiency level in the organisation
(Smith, 2014).
CONCLUSION
The present report is based on management of financial sources and decision-making. In
the report, Silloth nursing care is selected for discussion purpose which entails various decisions
that are taken in managing funds in health and social care services. The report concludes that
different sources have their importance in organisation. Apart from this, the several measures can
be used by mentioned entity to ensure proper use of funds and their allocations as per the
budgetary plan. This aids in identifying different fraud cases that may occur within organisation.
Finally, measures have been suggested to make improvements through innovative techniques so
that better results can be obtained.
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REFERENCES
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management in the ‘new public sector’. Management accounting research.11(3), pp.281-
306.
Chandra, P., 2011. Financial management. Tata McGraw-Hill Education.
Crosby, N. and Henneberry, J., 2016. Financialisation, the valuation of investment property and
the urban built environment in the UK. Urban Studies. 53(7). pp.1424-1441.
Eckerd, A., 2015. Two approaches to nonprofit financial ratios and the implications for
managerial incentives. Nonprofit and Voluntary Sector Quarterly. 44(3). pp. 437-456.
Finance, E.H. and Network, C., 2013. The Eurosystem Household Finance and Consumption
Survey-Results from the First Wave (No. 2). European Central Bank.
Finnerty, J.D., 2013. Project financing: Asset-based financial engineering. John Wiley & Sons.
Guthrie, J., Olson, O. and Humphrey, C., 2010. Debating developments in new public financial
management: the limits of global theorising and some new ways forward. Financial
Accountability & Management.15(3‐4), pp.209-228.
Hood, C., 2013. The “New Public Management” in the 1980s: variations on a theme.
Accounting, organizations and society.20(2), pp.93-109.
Kaplan, R. S. and Atkinson, A. A., 2015. Advanced management accounting. PHI Learning.
Madura, J., 2011. International financial management. Cengage Learning.
Smith, L. G., 2014. Impact assessment and sustainable resource management. Routledge.
Smith, W. K., 2014. Dynamic decision making: A model of senior leaders managing strategic
paradoxes. Academy of Management Journal. 57(6). pp.1592-1623.
Vieira, P.C. and Teixeira, A.A., 2010. Are finance, management, and marketing autonomous
fields of scientific research? An analysis based on journal citations. Scientometrics. 85(3),
pp.627-646.