Financial Resources Management in Health and Social Care Sector

This report delves into the intricacies of managing financial resources within the healthcare sector, using the Mid-Staffordshire case as a foundation. It begins by outlining the principles of costing and business control systems, emphasizing their importance in financial management. The report then explores the information required to effectively manage financial resources, including cash flow, budgeting, and regulatory requirements. It examines diverse income sources, such as government budgets and prescription charges, and analyzes factors influencing financial resource availability. The report further discusses different types of budget expenditures and evaluates systems for managing financial resources, along with decision-making processes. It also assesses budget monitoring arrangements and the impact of financial considerations on individuals and services, concluding with recommendations for improvement. The report provides a detailed analysis of the financial aspects involved in running a healthcare organization.

MANAGING FINANCIAL
RESOURCES

TABLE OF CONTENTS
MANAGING FINANCIAL RESOURCES....................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Principles of costing and business control system,................................................................1
1.2 Information needed to hospital to manage its financial resources.........................................2
1.3 Regulatory requirements for managing financial resources..................................................3
TASK 2............................................................................................................................................4
2.1 Diverse sources of income encountered in health and social care.........................................4
2.2 Factors influencing the availability of financial resources in social and health care
organisation..................................................................................................................................4
2.3 Different types of budgets expenditure in health and social care organisation.....................5
TASK 3............................................................................................................................................7
TASK 4............................................................................................................................................7
1.4 Evaluation of the system for managing financial resources in health or care organisation...7
2.4 Evaluation of how decisions about expenditure are made within a health or social care
organisation..................................................................................................................................7
3.3 Evaluation of budget monitoring arrangements....................................................................8
4.1 Identify information required to make financial decisions....................................................8
4.2 Relationship between a health and social care service delivered, costs and expenditure....9
4.3 Evaluation of how financial considerations impact upon an individual................................9
4.4 Ways to improve the health and social care service through changes to financial systems
and processes...............................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial resource management refers to the planning, organising, directing and
controlling of all the financial activities that take place within business organisation such as
utilization of resources and its procurement. Mid-Staffordshire is the foundation trust which is
succeeding two hospitals in Staffordshire, England. This trust was established in 1993.
Therefore, in the following report principles of costing, business control system and various
regulatory systems are measured that are required for managing financial resources is interpreted
(Brooks and et.al, 2012). In addition to these factors that affects the availability of financial
resources in health and social care is mentioned. Along with this, some of the actions that can be
taken by the company in order to overcome various suspected frauds. At last, in this report,
systems have been evaluated and various budgets are monitored with an aim to evaluate the
arrangements in health and social care.
TASK 1
1.1 Principles of costing and business control system,
As per the given scenario, some of the principles of costing have been identified in health
and social care center. Principles of costing are as follows:
Cost of the company is always related to itsorigin: Cost and origin have direct
relationship. Both of them are equally proportionate with each other. Cost that can be incurred by
Mid- Staffordshire depends on the nature of the allocation and analysis of figures and resources.
Past cost are included at the time of calculating new costs: Another principle of costing
says that no cost that is related to past will not be included at the time of calculating new future
cost. As per this principle, if past cost has future considerations, then achieving that future cost
can create problem for the company (Siano, Kitchenand Confetto, 2010).
In costing Abnormal cost incurred by the company is not charged: The abnormal cost that
can be beard by the company due to theft or fire will not be included in future cost. Only the
normal cost that is related with the manufacturing should be charged by the company at cost
centers.
Business control system

Business control system is the concept that is considered by the company at the time of
managing the internal and external environment of the entity. In addition to this, it is also used
by the company to make an internal environment corruption free and discourages embezzlement
activities that are taken into considerations by management and staff (Teruya and Pourajali,
2009).In addition to this, it is used by the company in order to undertake the recruitment
procedure with an aim to select thehighly competent staff. In order to properly implement the
business control system, Mid Staffordshire takes into considerations various policies. These
policies assist the company to provide training to employees with an aim to achieve integrity.
In short, it can be said that costing and business control system help the company in
conducting cost benefits analysis, monitoring financial information, calculating profit and break
even analysis, controlling cost andincome (Strebel, 2011).
1.2 Information needed to hospital to manage its financial resources
There are variety of information that are required by the social and health care industry in
order to manage all its financial resources in an effective manner. Mid-Staffordshire requires
information that is related to the management of cash flow and working capital. Wants of an
organisation depend on its operational activities, managerial and financial activities (Theeke and
Mitchell, 2008). Various organisational activities that take place within an organisation help the
company in determining the allotment of financial resources:
 Budgets that are prepared by the organisation includes several things through which
financial aspects can be managed. In order to achieve the information that is associated to
the finance includes various crises that are related to insolvency advices and cash flow.
 In addition to this, Mid-Staffordshire hospital also requires the retrieval of full costs, bad
debts, cash flow forecasting, and allocation of assets (Elearn, 2013).
 Along with this, Mid-Staffordshire hospital is also required to have the information about
the fund that is received from the customers, charity received by the government and
non-government enterprises and so on.
 Company is required to prepare future development plans in order to estimate the cost
and revenue that is required by the company.
 Hospital is also required to plan purchase of fixed assets along with its cost.
 In addition to this, Mid-Staffordshire hospital is required to analyse the repayment of loan
that was taken before and other financial facilities. Therefore, these are some of the
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information which is required by the company to manage the financial resources
available with the company in the future time period (Gibson, 2008). In regard to this,
management of social and health care need to analyse various information like bank
overdraft that can be obtained by the company, short term investments and cash that Mid-
Staffordshire holds in future.
1.3 Regulatory requirements for managing financial resources
There are different types of regulatory requirements that can be faced by mid-
Staffordshire hospital at the time of management of resources and are as follows:
1. Monitor: Monitoring is acting as a regulatory mechanism inhealth and social care centres
at England. This body considers the responsibility of monitoring, authorising and
regulating various financial trust. Main roles of this trust are to analyse the quality of
care that can be considered by the company (Khamees, Al-Fayoumiand Al-Thuneibat,
2010). In addition to this, monitoring also indicated the health and safety of the patient
that provide patient’s protection inrespect to anti-competitive behaviour which are
against the interest of the patients.
2. The Care Act, 2014: In order to analyse thestatutory role of the general Inspector of
hospital, chief inspector of adult Social care and general practice the care act, 2014 was
established. According to this act, the very social and health care centres are liable for
the punishment if they try to supply or publish any hazardous and harmful products
(Grieve, 2013).
3. The Health and Social Care Act, 2012: Formation of this act was proving to be
beneficial for the whole system of the national health services. This act is mainly
responsible for the development of the role of monitor as a sector regulator. In regard to
this, a new trust named health watch England was developed for the welfare of the
patients. This act has also introduced various provisions about the national health
services commission board and clinical commissioning groups.
4. Care Quality Commission: It is the regulatory authority that is working in UK and is
handling all the activities related to health and social care.
Therefore, formation of above mention acts and commission help the country to avoid the
situation that occur with Victoria Climbie, a 18 year old girl, who died with 128 injuries given by
her Aunt. Similarly there is another related case of Baby P that takes place in 2007 (Gibson,
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2008). In this case, a 17 year old boy died due to the carelessness of the doctors. They were not
able to find out the injury of a boy even after the completion of 48 hours which in turn results in
the death of a child.
TASK 2
2.1 Diverse sources of income encountered in health and social care
Some of the sources through which Mid-Stafford shire can raise its finance are as
follows:- Budgets from the government: Government of England prepares budgets for NHS every
year. A certain amount is fixed by the government for use. Latest confined budgets are
£100.6billion. Every nation which is following under European Union is free to decide
how much capital they want to spend (Guilding, 2007). This is one of trustworthy sources
of finance through which Mid-Staffordshire can raise its capital because it comes from
the legal bodies. Central taxation UK: This is one of the important sources through which large amount of
income can be raised from health and social care enterprises. The tax that is paid by the
citizen of the country is utilized as financial resources for the development of these firms.
This is one of the stable sources because taxes are paid by the citizens on a regular basis. Prescription charges: By collecting the prescription charges, Mid-Stafford Shire can
raise its capital. At present in England, every patient is paying the prescription charges of
£8.20 at the time of meeting the doctor. They collect these charges on the drugs and
medicines that are suggested by them (Khamees, Al-Fayoumi and Al-Thuneibat, 2010).
 Other sources: In regard to the above mentioned regular options, there are many more
methods that can be used by the company to finance. Mid-Staffordshire can charge
further income from the persons who are utilizing the car parking facility and telephonic
services. In addition to this, company can also charge for seeing overseas patients and
customers.
2.2 Factors influencing the availability of financial resources in social and health care
organisation
Private finance: - This is the source that has been used by the government over past 2
decades in order to develop health and social facilities. It is the method of raising capital from
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private sources not from public. These private finance imitative includes government that is
borrowing from private sector for the development of hospital and other care centres (Helfert,
2004).
Government policies and funding priorities: - The present long term economic plan
reflects the value of a nation. Government of the nation has the responsibility to pass out an
affordable level of debts to the next generation. In addition to this government should make an
efforts to eliminate the deficit in a balanced and sensible manner (Atrilland McLaney, 2007).
This in turn will help the government in spending more on the development of NHS sector and to
reduce the amount of income tax for 30 million working persons. In addition to this capital can
also be available from private banks which in turn will help company to get high and long term
loans.
Agency objectives and policies:- The department of social and health care in UK alter the
enterprises to provide various services according to the set priorities. All these department are
required to work in a coordination with the government in order to achieve the success. The
Secretary of State for health plays a main role in assuring that whole health industry works
together to order to fulfil the requirements of the patients (Chapman, 2011).
2.3 Different types of budgets expenditure in health and social care organisation
January February March April May June
Receipts
Cash from this month's sales 10000 10000 10000 15000 15000 15000
Cash from this month's sales 0 2000 2000 2000 3000 3000
total cash received 10000 12000 12000 17000 18000 18000
Payments
Premises -60000 0 0 0 0 0
Equipment -10000 0 0 0 0 0
Vehicle -10000 0 0 0 0 0
Salary -2500 -2500 -2500 -2500 -2500 -2500
Garment Purchases -4500 -4500 -4500 -6500 -6500 -6500
Drawings -1200 -1200 -1200 -1200 -1200 -1200
Advertising -1500 -1500 -1500 -1500 -1500 -1500
Other expenses 0 -2400 -2400 -2400 -2400 -2400
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Total cash outflows during
the month -89700 -9700 -9700 14100 14100
-
14100
Net Cash -79700 -2300 -2300 2900 3900 3900
Opening Balance 130000 50300 48000 45700 42800 38900
Closing Balance 50300 48000 45700 42800 38900 35000
Different types of expenditure that are required to be incurred by the health and social
care organisation in order to prepare master and administration budgets are as follows:- Fixed assets:- Fixed assets includes machinery, property, land, building and many more.
The Mid-Staffordshire is required to maintain the healthy infrastructure for the customers
along with the best services. Thus, the cost that is incurred by the company on the
infrastructure creates difficulties to maintain various operations within the organisation
(Doherty, 2000). Interest on loan:- It is the cost that is beard by the company at the time of borrowing
money. It is marked as an expense at the time of preparation of the budget. Thus, it is
very important for the firm to record the same in an appropriate manner. Training of staff:- Training a staff in social and health care centres is very important.
Every individual who is working in these industry are to take a high level of training
before entering into a practical world (Financial Decision Making and the Techniques
Used in Financial Analysis, 2010). Conducting of this type of training requires a large
amount of capital. Staffing:- This is one of the most beneficial expenditure that is beard by the company at
the time of managing manpower. An organisation is required to incur the cost that is
related with the recruitment, selection, staffing and training & development of the
individuals. In addition to this selection of highly skilled employees is necessary for
providing quality services to the patients. Therefore, recruiting highly skilled employees
will increase the cost of the company (Financial Planning, 2013).
 Marketing:- In order to create awareness in the mind of the customers about the services
provided by NHS company is required to undertake various promotion methods and to
build the public relation. This is the cost that is unavoidable by the Mid-Staffordshire in
order to gain development.
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TASK 3
Enclosed in ppt
TASK 4
1.4 Evaluation of the system for managing financial resources in health or care organisation
In order to manage all its financial resources Mid-Stafford shire has taken into
considerations the following systems. Detail about these systems are described below.
Financial Management system:- This system is normally composed of various tools and
process that in turn will help the organisation to control allocation of resources in an effective
manner. This system also assist the company in tracking the expenditure that are beard by the
organisation (Introduction to capital Budgeting, 2013). In addition to this this system also aid
the Mid-Stafford shire to utilise the financial report that are prepared by the firm and then
comparing the data with the budget prepare and analysing the cost.
Open Accounts:- It is the widely used system for managing financial resources. This
system has the capability to remove the burden of finance department within an organisation. In
addition to this preparation of these accounts offers large amount of information to the
management across various level that take place within an organisation in an effective manner
(Elearn, 2013). Along with this it also reduces the costs of the various activities and enhance the
financial visibility.
International Financial Reporting Standards:- IFRS is known as a common global
language for succeeding business affairs. This in turn help the company in managing and
comparing the various accounts of the company situated in international boundaries (Strebel,
2011).
2.4 Evaluationof how decisions about expenditure are made within a health or social care
organisation
Some of the factors that can be taken into considerations are at the time taking various
decisions are:-
Availability of finance:- This is one of the basic factor that is checked by the company
before making an decisions. This factor has a great impact at the time of taking various
decisions. In this case cost benefit analysis can prove to be very effective method (Gibson,
2008).
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Location:- Location also affects the decision and expenditure of the company. Selection
of right place for rendering the health and social care services is very important. Location should
be eco-friendly and free from pollution.
Government policies: - Government should develop various policies and norms in such a
way that it provides various goodness to the customers and service providers.
3.3 Evaluation of budget monitoring arrangements
The process of budget monitoring appraise the capability of the organisation who is
responsible for meeting up the financial goals as per the budget prepared. Monitoring budget
help the company in analyse the effectiveness of the financial activities that take place within
and outside the business organisation (Khamees, Al-Fayoumiand Al-Thuneibat, 2010). This
budget is approved by the Financial Advisory group of UK. In addition to this internal and
external audit perform by the organisation help them to monitor budget arrangements. Internal
audit is done by analysing the internal working conditions and external audit is done in regard to
the various laws and rules.
4.1 Identify information required to make financial decisions
The process of managing all the finance resources depends on the management of the
financial activities and analyses of the future needs that take place within an organisation. Some
of the financial documents that are required to be prepared by Mid-Stafford shire in order to
evaluate the system for managing is financial resources are as follows. This organization is
required to prepare cash flow statements, income statements, balance sheet, cost sheet, break
even analysis, annual report and International Financial Reporting Standards (Brooks and et. al,
2012). Detail of the statements that are required to be prepare are as follows:-
Financial statements:- These statements are prepared by the company in order to
manager all its activities with an aim to achieve the desired objectives. Preparation of these
statements help the company to find out its actual financial position and its flow of cash.
Budgets:- Budgets are prepared by the organisation in order to take various necessary
decisions related to finance. These budgets demonstration the prediction of income and expenses
that can take place within the business organisation (Chapman, 2011). Different types of budgets
are prepared by different organisation, some of them are cash budget, master budget, purchase
budget, sales budget, and administration budgets and so on.
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Management accounts:- These accounts are used by the manager of the company with an
aim to take various necessary decisions for the benefits of the company. These accounts include
data related to strategic, risk and performance management (Doherty, 2000).
4.2 Relationship between a health and social care service delivered, costs and expenditure
Bidding process: - This is one process of the high standards and ethical value. Complete
clearness is required by health and social care service sectors before passing on the tenders of the
services. Those individual who are undertaking this process is required to make sure that nothing
goes wrong.
Transparency with stakeholder:- At the time of delivering various services, maintenance
of transparency with the stakeholder is very necessary. Patients should be clear about the
services that are provided by the company (Guilding, 2007).
4.3 Evaluation of how financial considerations impact upon an individual
There are variety of factors that affects the mind of the patient at the time of availing
various facilitates. Some of the factors are lack of human resource, sudden changes in the level
of services, issues related to the price and so on. In addition to this various problem at staffing
level can also affects the preference of the customers. Availability of these factors can create bad
impression on the mind of the customers which in turn may affects the health and social care
organisations (Teruyaand Pourajali, 2009).
4.4 Ways to improve the health and social care service through changes to financial systems and
processes.
Cost and unit computation per head should be made fir brining control. In addition to this
identification of cost at various level will help the company to provide up to date information
related to the costing to the customers. Along with this reassessment of expenditure can be made
in order to evaluate the expenses from the beginning (Siano, Kitchenand Confetto, 2010). This in
turn will give the brief idea to the company about the defects and faults that has been made
before.
CONCLUSION
From the following report it can be concluded that development of social and health care
services in increased number will lead to the development of various resources. In addition to
this external audit will act as a reflector to the company in analysing its financial position with in
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the market. At last, it can be concluded that IFRS helps in comparing and understanding the
different accounts of the company across geographical boundaries.
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REFERENCES
Journals and Books
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Prentice Hall.
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sons.
Chapman, J. R., 2011. Simple Tools and Techniques for Enterprise Risk Management. John
Wiley & Sons.
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Practicing IT Project Manager. John Wiley & Sons.
Doherty, N., 2000. Integrated Risk Management: Techniques and Strategies for Managing
Corporate Risk: Techniques and Strategies for Managing Corporate Risk. McGraw Hill
Professional.
Elearn, 2013. Financial Management Revised Edition. Routledge publication.
Gibson, C., 2008. Financial Reporting and Analysis: Using Financial Accounting Information,
11th edition, p. 260.
Grieve, I.,2013. Microsoft Dynamics GP 2013 Financial Management. Packt Publishing Ltd.
Guilding, J., 2007. Financial Management for Hospitality Decision Makers. Routledge.
Helfert, A. E., 2004. Techniques of Financial Analysis. Tata McGraw-Hill Education.
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the Jordanian industrial corporations. International Journal of Commerce and Management.
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Communications: An International Journal. 15(1). pp.68 – 82.
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Governance. 11(5). 603–610.
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