Managing Financial Resources in Health & Social Care: CareTech PLC

This report provides an in-depth analysis of financial resource management within the health and social care sector, with a specific focus on CareTech Holdings PLC. It covers key principles of costing and business control systems, emphasizing consistency, materiality, data accuracy, stakeholder engagement, causality, objectivity, and transparency. The report also identifies diverse income sources, including government grants, revenue from services, and reserve funds. Furthermore, it addresses regulatory requirements such as those from the Care Quality Commission and HMRC, along with essential financial management systems like budgetary control, asset control, and payroll management. The report also highlights strategies for managing financial shortfalls, actions to take in suspected fraud cases, and the impact of financial considerations on service delivery and individual care, offering insights for improving financial processes within health and social care organizations. Desklib provides a platform for students to access this and other solved assignments.

Unit - 14 Managing Financial Resources
in Health and Social Care
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Table of Contents
EXECUTIVE SUMMARY..............................................................................................4
INTRODUCTION..........................................................................................................5
TASK 1..........................................................................................................................6
1.1 PRINCIPLES OF COSTING AND BUSINESS CONTROL SYSTEMS..............6
1.2 INFORMATION NEEDED TO MANAGE FINANCIAL RESOURCES................8
1.3 THE REGULATORY REQUIREMENTS FOR MANAGING FINANCIAL
RESOURCES...........................................................................................................9
1.4 SYSTEMS FOR MANAGING FINANCIAL RESOURCES IN A HEALTH OR
CARE ORGANISATION.........................................................................................10
TASK 2........................................................................................................................11
2.1 THE DIVERSE SOURCES OF INCOME THAT MAY BE ENCOUNTERED IN
HEALTH AND SOCIAL CARE................................................................................11
2.2 FACTORS THAT MAY INFLUENCE THE AVAILABILITY OF FINANCIAL
RESOURCES IN HEALTH AND SOCIAL CARE ORGANISATIONS....................12
2.3 DIFFERENT TYPES OF BUDGET EXPENDITURE IN HEALTH AND SOCIAL
CARE ORGANISATIONS.......................................................................................14
2.4 DECISIONS ABOUT EXPENDITURE ARE MADE WITHIN A HEALTH OR
SOCIAL CARE ORGANISATION...........................................................................15
TASK 3........................................................................................................................16
3.1 HOW FINANCIAL SHORTFALLS CAN BE MANAGED...................................16
3.2 THE ACTIONS TO BE TAKEN IN THE EVENT OF SUSPECTED FRAUD....17
3.3 BUDGET MONITORING ARRANGEMENTS IN A HEALTH OR SOCIAL CARE
ORGANISATION.....................................................................................................18
TASK 4........................................................................................................................19
4.1 INFORMATION REQUIRED TO MAKE FINANCIAL DECISIONS RELATING
TO A HEALTH AND SOCIAL CARE SERVICE.....................................................19
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4.2 THE RELATIONSHIP BETWEEN A HEALTH AND SOCIAL CARE SERVICE
DELIVERED, COSTS AND EXPENDITURE..........................................................20
4.3 HOW FINANCIAL CONSIDERATIONS IMPACT UPON AN INDIVIDUAL
USING THE HEALTH AND SOCIAL CARE SERVICE..........................................21
4.4 WAYS TO IMPROVE THE HEALTH AND SOCIAL CARE SERVICE
THROUGH CHANGES TO FINANCIAL SYSTEMS AND PROCESSES..............22
CONCLUSION............................................................................................................23
REFERENCES...........................................................................................................24
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EXECUTIVE SUMMARY
In this assignment, an understanding has been gathered on the systems that are
used in the Health and Social care to manage effectively the financial resources and
the role of planning which is also essential. The significance of the monitoring and
planning the budget expenditure has also been discussed that has helped the
managers of Care Tech Holdings PLC to a great extent. This report has thus helped
in generating the basic understanding and insights about the planning the budget in
a home and has helped in making relevant recommendations for the are Tech
Holdings Plc.
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INTRODUCTION
In this report in context to the financial report of CareTech Holdings Plc will be
undertaken of the year ending 2016 which will cover the aspects of the financial
resources management in the HSC sector. CareTech Holdings Plc renders high-
quality support and the health care for the individual with the complex needs that
aims to ensure the quality of life of the service users. It renders services like children
services, adult services, young people residential services and many more.
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TASK 1
1.1 PRINCIPLES OF COSTING AND BUSINESS CONTROL SYSTEMS
Costing is an essential system for an organisation that is the element for the control
system and helps in determining the costs of the production that will be determined
in context to the services and the products (White, 2010). According to NHS, there
are six costing principles that are undertaken and should be implemented by the
HSC organisations like that of CareTech Holdings Plc.
Consistency
Through the consistency principle, the expectation of the different stakeholders are
met effectively and the quality of services are also enhanced. This is a principle that
focuses on ensuring the consistency approach in every department and units of
organisations which will help in measuring the cost (White, 2010).
Materiality
According to this principle of costing in HSC, the organisations should accurately
record all the material procurements ad the cost related matters and activities so that
right cost can be calculated.
Data accuracy
According to the principle of data accuracy, CareTech shall calculate the right cost
by recording the different data properly and maintain effective recording system that
will include the time spent y the clinical staff, journal entries, ledgers, trial balance
and the staying period of patients as well. This will allow effective decision making
and will help in accurate data recording (Drummond, et al. 2015).
Stakeholder engagement
This is another principle of costing which is undertaken by Care Tech Holdings Plc
that estimates the cost of the non-financial department such as the non-clinical staff
and the clinical staff and includes them all in cost estimation.
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Causality and objectivity
This is the principle that aims to mitigate the subjectivity of the costing and is based
on the understanding of the causality by effective analysis of Causality that will help
in the reduction of causality (Drummond, et al. 2015).
Transparency
According to this principle, the costing is expressed in a transparent manner which
will allow easy auditing of the organisation when the costing is disclosed in a fair
manner.
The methods used by CareTech to control the cost are depicted as under:
Cost centred approach
This principle will be undertaken by the manager of CareTech that aims to focus on
the cost management under the budget of expenditure prepared so that it can
maintain its profitability and maintain the costs hikes (Cleverley, 2017).
Per patient cost computation
CareTech can undertake the per patient cost computation which will help it in setting
the fees of patients followed by the cost per patient estimation. The variable and the
fixed cost incurred by Care Tech will be divided by the number of patients being
appointed an organisation which will help in the computation of per patient cost
(Cascio, 2018).
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1.2 INFORMATION NEEDED TO MANAGE FINANCIAL RESOURCES
In order to manage the financial resources, there is a requirement for the information
in the HSC so that the payments to the staff and the payment for the equipment,
beds, medicines and other materials can be carried out (Cleverley, 2017). The
information needed is the balance sheet, income statement, cash flow statement,
profit and loss statement, data on the prices and costing and many more.
The profit and loss statement is the one that depicts the profits earned by the
organisation and involves all incomes and the expenses. According to the profit and
loss statement of CareTech Holdings Plc, it has depicted considerably good profit
before tax in 2016 of £22,535,000 as compared to £9,397,000 in 2015. This has
shown a growth in the profits. The revenue on other hand earned was £148,979,000
in 2016 against £124,271,000 in 2015 (Cascio, 2018).
Balance sheet statement is the statement of the financial position of CareTech
Holdings Plc which shows the position of the organisation from its assets and
liabilities. It has total assets of £378,301,000 in 2016 that were just £346,652,000 in
2015. The liabilities of CareTech are £226,635,000 in 2016 and equity holdings of
£151,667,000 in 2016. This shows the strong financial position of organisation
(Folland, e et al. 2016).
Another type of information that will be needed by HSC organisations like CareTech
Holding PLC will be the risks information that is associated with the identification and
assessment of the prospective risk involved such as ay negligence, the death of a
patient and other failure related to operations. The budgeting will be prepared and
effective auditing will be required that will help in assisting the management of the
financial resources in Care Tech Holdings Plc (CareTech Holdings PLC, 2016).
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1.3 THE REGULATORY REQUIREMENTS FOR MANAGING FINANCIAL
RESOURCES
There is an essential requirement for managing financial resources in Care Tech as
in the health and social care industry some regulations need to be followed such as
Care Quality Commission, Accounting Standards Board, Companies House and
many more.
Healthcare sector regulator monitor
According to this regulation, this will help in authorizing, regulating and monitoring
the entities that fall under the NHS foundation trust purview. This regulatory
requirement s the one that issues licence to the organisations, that want to establish
themselves in the health and social care and it lays its emphasis on the safety and
security of the patients, support services to them and the price determination of the
patient’s treatment that have financial difficulties (Muennig and Bounthavong, 2016).
GAAP
This is an accounting regulatory requirement standard that helps in assisting the
entities of HSC to keep their records and reports in a standard manner and
encourages the accounting systems to be transparent and a fair one (Abdelhak, et
al. 2014).
Care quality commission
This requirement is the one that aims to inspect if it meets the national standards
and then render the findings to the people so that they can be made aware of the
degree of services and then select the better choices in HSC services (Laudon and
Laudon, 2016).
Her Majesty’s Revenue and Customs (HMRC)
According to this regulation, a system can be effective only when this regulation is
followed. According to HMRC regulation, any HSC organisation that does not follow
this regulation can be taken to court and can be sued. Similarly, CareTech holdings
Plc should comply with the HMRC tax regulations and the other requirements
(Muennig and Bounthavong, 2016).
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1.4 SYSTEMS FOR MANAGING FINANCIAL RESOURCES IN A HEALTH OR
CARE ORGANISATION
In HSC sector there are different methods for the systematic management of the
financial resources which will be evaluated in context to the CareTech so that
effective management can be ensured. Some of the systems that are required
include the budgetary control system; assets control systems, treasury management,
investment control system and the payroll and personal control system (Abdelhak, et
al. 2014).
Payroll and personal control system
This system helps CareTech holding Plc to have effective control over the
employment of its staff and the employees so that the ghost workers and other errors
in the organisation can be prevented (Jibrin, et al. 2015). The salary and the
expenses of the organisation are approved by this control system such as Pay as
You Earn is one such system (Laudon and Laudon, 2016).
Asset control system
This is one such system that will render effective control over the fixed assets f the
organisation by maintaining the register of assets including the tangible, intangible
and the fixed assets (Gitman, et al. 2015).
Recording system
Through this system, the It infrastructure and the software are being utilised by the
organisation so that the business transaction can be maintained by employing
Microsoft excel so that the data can be recorded and maintained easily in an
understandable form. This system also ensures the budgeting and the finding
ineffective manner (McNeil, et al. 2015).
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TASK 2
2.1 THE DIVERSE SOURCES OF INCOME THAT MAY BE ENCOUNTERED IN
HEALTH AND SOCIAL CARE
Income is that economic benefit that is earned by the company or any organisation
and which can be converted to the monetary value. Care Etch Holding Plc is that
entity that utilises its income for the benefit of the organisation and it may come from
different sources and in different forms of sources. The various source of the income
for CareTech Holding Plc includes the grant from the government, saving, reserve
fund, bank loan and many more (McNeil, et al. 2015).
Revenue
Talking about the revenue of CareTech from the Profit and loss account statement it
accounted to £148,979,000 in 2016 and which was the result of the services that it
renders such as adult learning difficulties, young people residential services and
mental health and the foster care. These services are the one that helps CareTech in
generating the income in the form of revenue (CareTech Holdings PLC, 2016).
Reserve fund
It is another source f the income for CareTech Holdings Plc as it is that part of
income that is kept for the future contingencies so that unexpected costs can be
easily met. CareTech has reserve funds in the form of the retained earning that and
the merger reserve. The merger reserve of CareTech Holdings amounted to
£9,023,000 and the retained earnings of £66,645,000 in 2016 (CareTech Holdings
PLC, 2016).
Apart from these sources, there are also present internal and external sources of the
income that will be received by it from the sales of services to the public and from the
renting out of the spare rooms that can help in generating the rental income. It is also
a part of the NHS so another source of income for it is the NHS that received funds
from the local clinical group in HSC. According to the data of 2016 CareTech
Holdings has a bank deposit of carrying the amount of £4,308,000 in 2016 (McNeil,
et al. 2015).
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