Health Financial Management Report: Revenue, Expenditure, and Funding

This report delves into the core aspects of health financial management, starting with the understanding of revenue sources, which include borrowings, fees, and commonwealth funds. It explores how revenue is generated through clinical and administrative functions, emphasizing the importance of accurate execution. The report then examines healthcare expenditure, encompassing all funds spent on services and products, and breaks down spending based on the primary purpose of developing health services. It discusses funding models, such as activity-based funding and funding reform, highlighting their roles in performance management and resource allocation. The report also explains the role of casemix classes in arranging patient types, associated costs, and treatments. The AR-DRG arrangement is also discussed, describing the classification of patients based on diseases and demographic data, ultimately aiding in resource management. Overall, the report provides a comprehensive overview of the financial dynamics within healthcare systems.

Running Head: HEALTH FINANCIAL MANAGEMENT
Health Financial Management
Students Name
Institution

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The income received by the government from various sources is known as revenue. As provided
by the law, health structures revenue is obtained from borrowings, fees or commonwealth. The
general clinical and administrative functions that lead to the capturing, collection and
management of costs for the patient services contribute to the revenue. The procedure works
predictably if the process of collecting revenue by health systems is correctly executed.
However, challenges at the initial stage may have a tremendous negative impact. On the
contrary, health structure expenditure is the total spent funds on various products or services
(Duckett & Willcox, 2015).
Health spending includes the health-related and health expenditures. Health structure spending
may be explained based on the predominant or primary purpose of developing health services
notwithstanding the significant activity or function of the entity paying or providing for the
concerned health services. Health structure expenditure may consist of the yearly appropriations
which make way for the distribution of funds annually to the health systems (Yuen, 2018).
Another way of funding health facilities is through Activity-based funding whereby, providers of
services are given funds depending on the amount and type of services rendered and also the
population of complex patients they have served. Funding reform is a recent technique to
performance, funding, and purchasing of health care services in NSW. Funding to local health
Districts is to be allocated through combined financing depending on the activity of the patient
and block funding grants. Local health systems should collect better data that is to be used at the
state and local level to manage and monitor budgets and performance.
Managers of health services work together with clinicians and local communities to make sure
that the developed funding model performs effectively. Moreover, ABF management tool
enables in assessing and planning performance, and the effecting of clinical requirements as the

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healthcare management may distribute funds basing on the precise levels of patient services not
just where and how taxpayer money will be allocated (Angus & Valentijn, 2018).
Casemix classes offer the concerned healthcare industry a compatible technique of arranging
kind of patients, associated costs and treatment. Casemix is the mixing of types of patients a
hospital has treated or another hospital. Casemix arrangements aid in defining the relationship
between costs and health care activities to fashion clinically essential patients which elaborates
the imbalance in the use of resources. The AR-DRG arrangement technique is applied to classify
critical patients admitted. Every patient admitted to the healthcare facility have different diseases
and for an approach was conducted during registration and coded ICD-10-AM/ACHI/ACS. An
expert clinical coding staff conducts coding. The encrypted data together with patient’s
demographic information which include age, patient’s duration of stay and sex help in an
allocation of critical patients to be admitted to the AR-DRG group. The DRG undertaking is
conducted either by the hospital, clinical coder or recognized health authority (Wang, Kung,
Wang, & Cegielski, 2018).

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References
Angus, L., & Valentijn, P. P. (2018). From micro to macro: assessing the implementation of
integrated care in Australia. Australian journal of primary health, 59-65.
Duckett, S., & Willcox, S. (2015). The Australian Health Care System. Melbourne: Oxford
University Press.
Wang, Y., Kung, L., Wang, W. Y., & Cegielski, C. G. (2018). An integrated big data analytics-
enabled transformation model: Application to health care. Information & Management,
64-79.
Yuen, P. P. (2018). The Economics of Long-Term Care: Key Concepts and Major Financing and
Delivery Models. In Sustainable Health and Long-Term Care Solutions for an Aging
Population, 1-8.