Evaluating Resource Planning, Management, and Funding in Healthcare

This report provides an overview of planning and managing resources within healthcare settings, emphasizing the critical role of effective resource allocation for optimal patient care. It explores various funding sources available to hospitals, including retained earnings, debt capital, and equity capital, detailing the advantages and limitations of each. Retained earnings offer operational freedom and long-term financial stability, while debt capital provides tax advantages but requires financial discipline and a good credit score. Equity capital avoids interest payments but dilutes ownership. The report also touches on the relationship between resource planning and organizational performance, noting the importance of balancing structured planning with flexibility to foster individual and team effectiveness. Ultimately, the report underscores the significance of strategic resource management in ensuring the financial health and operational efficiency of healthcare organizations. Desklib is a valuable resource for students seeking similar solved assignments and study tools.

Planning & Managing
Resources

Table of Contents
Question 2........................................................................................................................................3
REFERENCES................................................................................................................................1

Question 2
Sources of funds is the term used to refer to the actual origin of the funds that are used by
a business. These sources are essential to a business as it helps in its growth and development.
These are also known as contributing resources towards the ongoing development and
continuation of company’s programs, projects, etc. funds may be required by an organization for
short, medium or long term needs.
Planning for resources is the main area over which the management of the hospital should
focus so that it can be able to provide right care to its customers (North and et.al., 2022). The
resources of the company are limited so there should be effective management of resource in
order to have sufficient resource available for each activity of the hospital. Financial risk is the
that is associated with the fact that the invested amount can be lost the business.
The relationship between the resource planning and management of resources and the
performance of individuals and team within the organization is negative. This can be explained
as more the hospital will plan and manage its resources more will be the rigidity related to their
use and therefore the performance of teams, individuals, and the overall organization will fall.
Further in absence of management the situation will be of extreme adversity so it is essential to
plan for the resources in optimal level (Yusopa and et.al., 2020). The factors that influence the
decision making process in managing funding by healthcare setting are cost involved, financial
stability of the hospital, and the legalities applicable. There are three sources of funding that can
be used by the hospital for meeting its long, medium and short term requirements.
Retained Earnings
The most primitive source of raising funds used by an organization is maximization of its
profits by making an increase in its selling price and earning more amount of money for the same
products and services that are produced by the incurrence of same costs. Then the company
decides what is to be done with the earnings it managed to earn. There are two options available
to a company it can distribute the earnings as dividends to its shareholders or it can also retain
that amount in the company (Ruan and et.al., 2018). A company may not distribute all its
earnings of a financial year in form of dividends among its shareholders. Alternatively, it can
retain its earnings into the organization itself, this is known as retained earnings. Company’s aim
behind doing so is to save some funds that can be used in future. It is also known as ploughing

back of funds or self –financing. Net profits earned, dividend policy of the firm and its age are
some of the factors that define the amount of earnings that organization will retain.
There are various benefits that an hospital can have by retained earnings. It is permanent
source of funds that is available for the improvements of the quality of care that it provides.
There is absence of any kind of explicit cost as compared to other two sources of finance. There
is no need to pay interest, dividends or any floatation costs. So it will fit the budgetary
restrictions of the hospital. Operational freedom is provided by retained earnings, also this is the
most flexible source of funding. In long term the capacity of the business enterprise to absorb its
unexpected losses increases. Further in long term the retained earnings by organizations increase
the market price of the equity shares.
Debt Capital
The capital that hospitals raise in form of taking loans from the banks, etc. is known as
debt capital. Debt capital is raised by the company for meeting its requirements for working
capital or for the purpose of making capital expenditures. Hence debt capital source of funding is
used by companies for both its short and long term capital requirements. Funds are raised by
purchase made by both individual and financial institutes for the debt instruments of the
company. When individuals or financial institutions lend money to the corporates they become
creditors of the company. In return of the borrowed money company becomes liable to pay for
the principal as well as interest amount to the creditors (Weiss and et.al., 2020). Creditors
receives promise that they will be paid principal and interest amount by the company. There are
certain advantages that a company can have by raising fund through debt capital financing. To
begin with the company can have funds and still retain its control over the ownership and
functioning of the company. The lender from whom the company gets its funds have no
interference in how the company should or will manage its business. All the decision making
authority lies with the management of the company there is no part or role of such financial
institutes or individuals in the decisions of the company. Further the relationship of the company
with the financial institute or lender ends with the repayment of the principal amount to them.
Other benefit that company can have with raising the funds through debt capital source of
funding gives tax advantage to the company. The interest that is paid to the lender is tax
deductible. Hence the overall tax obligation of the company reduces. Further it is easier to plan
for the funds. Company knows in advance what principal amount is to be paid along with the

interest amount payments that has to be made to the lender every month. Knowing in advance
what has to be paid to the credit makes it easier for the planner to plan for the amount payables.
Debt capital used for working capital or capital expenditure requirements by the
businesses also have certain limitations related to it. firstly, the requirements that are needed to
arrange funds using this source of finance are high. Company must have good credit score in
order to raise fund through this source of finance. Further there should be an element of
discipline in the entire process. Financial discipline is needed for making timely payments.
Timely payment making means paying up of amounts as and when they become due. Also the
interest payments to the debt finance givers by the company are charge over the profits of the
company. It means that interest is required to be paid by the companies when in the years when
their businesses experience no profit or even losses. Thus it becomes highly important for the
companies to utilize the borrowed sum of money wisely so that it can be at a safer side. Any
company’s capital structure is made up of two main components that are debt and equity. Interest
payments against the debt is charge on profits while payments of dividends to the equity
shareholders is not a charge over profits. higher the presence of debt component in a capital
structure higher the risk attached to the company (Cvetanović, Nedić and Ristić, 2019). Having
large amounts owed from debt financing higher will the amount of interest payments, it will be
highly problematic for the companies to meet its interest obligations in the years of no profit
earnings or losses.
Equity Capital
The third source of funding used by the companies to raise funds is through issue of
shares. Companies sells their ownership in the form of issuing shares in order to arrange the
required amount of capital needed for the purpose of growth of the business. The persons who
invest their resources in the company by the act of purchasing shares of the company becomes
shareholders of that company. Is there are entities in the contacts of company’s executives or top
management who are willing to invest in the projects by the company as and when required
private equity financing is an alternate available to the companies. Unlike debt capital funding
there is no requirement for the company to pay interest amounts to the shareholders of the
organization. So it is advantageous to raise funds through this source as there is less burden over
the company regarding the interest payment requirements. In the initial stage of the business it is
usual that the company does not earn profits so this type of funding gives flexibility in such

situations to company. Further it is not required for a firm to have good existing credit rating in
order to raise funds through this particular source. This form is used by companies to raise funds
for long term. As the investors become shareholders that are owners of the company business can
be benefitted from the knowledge and expertise of such shareholders through informal
relationships or partnerships.
Drawbacks that relates to this source are that the ownership of the company gets diluted
so there remains less control with the existing owners of the company over the management of
the company (Villani and et.al., 2018). Further the shareholders may expect higher amount of
returns from the profits earned by the business. Also the potentiality that the conflict will arise
increases with increasing number of shareholders. Reason for this is that more the number of
persons involved greater will be the opinions and ideas so the chances that the ideas of some will
contradict with that of others is high.

REFERENCES
Books and Journals
Cvetanović, S., Nedić, V. and Ristić, L., 2019. Sources of funding for activities in research and
development in the selected European countries. Ekonomika. 65(4). pp.31-40.
North, M. A. and et.al., 2022. Tracing primary sources of funding for, and patterns of authorship
in, climate change research in Africa. Environmental Science & Policy. 127. pp.196-208.
Ruan, Q. Z. and et.al., 2018. Identifying sources of funding that contribute to scholastic
productivity in academic plastic surgeons. Annals of plastic surgery. 80(4). pp.S214-
S218.
Villani, J. and et.al., 2018. Sources of funding for research in evidence reviews that inform
recommendations of the US Preventive Services Task Force. JAMA. 319(20). pp.2132-
2133.
Weiss, P. and et.al., 2020. Funding sources and effects of limited funding in pediatric
pulmonology fellowship programs. Pediatric Pulmonology. 55(1). pp.221-225.
Yusopa, R. and et.al., 2020. Sources of funding for private tahfiz institutions in Kuala
Selangor. International Journal of Innovation, Creativity and Change. 10(12). pp.21-35.
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