Analysis of Managing Financial Resources in Health and Social Care

This report provides a detailed overview of financial resource management within the health and social care sector. It begins by defining cost and costing principles, emphasizing the importance of transparent, consistent, and accurate data. The report then explores the need for financial information in effective resource management, highlighting the role of financial reports in decision-making, planning, and auditing. It also discusses the regulatory requirements essential for managing financial resources, including the minimization of fraud, maintenance of a healthy environment, and ensuring equal opportunities. The report further examines the sources of income for health and social care organizations, differentiating between internal and external sources, and analyzes factors influencing the availability of financial resources. Various types of budget expenditure are outlined, alongside systems for managing financial resources and decision-making processes within healthcare organizations. The report also covers budget monitoring arrangements, the impact of finance on service delivery, and improvements through changes in financial systems. The assignment highlights how NHS manages financial resources, including the importance of regulatory bodies and the need for an effective managerial system. The report concludes with a discussion on the role of financial management in healthcare, emphasizing the importance of transparency, accuracy, and compliance with regulations.

Managing financial resources
in health and Social Care

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Principles of costing and business control systems...............................................................1
1.2 Need of information to manage financial resources.............................................................2
1.3 Regulatory requirements for managing financial resources..................................................3
TASK 2............................................................................................................................................4
2.1 Source of income which is encountered in health or social care..........................................4
2.2 Factors which is influencing availability of financial resources in social care organization6
2.3 Different types of budget expenditure in health and care organization................................7
TASK 3............................................................................................................................................7
3.1 Covered in PPT.....................................................................................................................7
3.2 Covered in PPT.....................................................................................................................7
TASK 4............................................................................................................................................7
1.4 System for managing financial resources.............................................................................7
2.4 Decision about expenditure within health care organization................................................8
3.3 Budget monitoring arrangements in health care association.................................................8
4.1 Requirement of information while making financial decision..............................................9
4.2 Relationship between service delivered, costs and expenditure...........................................9
4.3 Impact of finance on individual using social care services.................................................10
4.4 Improvement in health or social care service through changes in financial systems or
process.......................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Capital act as a backbone for every organization either small or large because entire
business activities are fully depend upon funds which is invested by entrepreneur with the help
of various sources. However, it has been observed that health and social care organizations need
maximum funds due to their roles or responsibilities towards development of entire society
(Epstein and Buhovac, 2014). NHS is one of the famous enterprise which plays a major role in
providing best or suitable care services to overall society in order to minimize issues related with
well being of individuals. Therefore, assignment is going to classified into different sections for
highlighting the significance of finance management in health care organization and need of an
effective system in this association. Moreover, shows some relevant facts or figures related with
accounting department in order to understand the need of information system in an association.
Along with this, budget, principles of cost control, necessity of regulatory bodies, various kinds
of expenditure, origin of acquiring funds and several other elements of finance are further
outlining in this project. Lastly, assignment is also throwing lights on appropriate actions which
is taken by NHS in managing fraudulent activities that is occurring at workplace.
TASK 1
1.1 Principles of costing and business control systems
Cost is defined as the resources which has to be sacrificed or must be sacrificed to attain
any particular objective or it is the amount of resources used for something which is measured in
terms of money. Costing may be defined as the classifying, recording, allocation and
appropriation of expenses for the determination of costs of product or services. The important
costing principles which are used in health and social care sector are:
 Casualty: The process of costing and its output should be able to show the casualty and
their relationship between activities that took place. Casualty cost should be traced
through the system (Abdelhak, Grostick and Hanken, 2014).
 Costing process should be transparent: The costing process should be transparent to
facilitate proper analysis and validation.
 Costing process should be consistent: Costing process should be done on regular basis
to maintain the records to avoid any inconvenience.
1

 High quality and accurate data base: The data base should be of high quality and
should be accurate enough which can reduce losses to some extent.
 Costing charge changes with the effect of abnormal costs: Abnormal costs include the
cost incurred at the time of fire, riot, theft or accident. If any Mis-happpening occur in the
premises of hospital, then the hospital will undergo extra charges to overcome that loss.
Abnormal cost greatly affects the financial management of the hospital.
Business control system help the organisation to protect their company from abnormal costs,
uninformed decisions or irrelevant behaviour. At the time of building a business, its important to
give the authority to others to ensure whether the tasks are completing on time or not. The
managers and leaders assign work to their employees and ensure that the tasks is completed on
time, whether the tasks are producing the desired output. Same is the case in hospital and social
sector, the supervisors assign the works and watch the progress of the work as well as of the
employees (Schaltegger and Wagner, 2017).
There are three type of control systems which can help in controlling the situation in a better
way:
 Visual control: It include dash boards, scorecards, checklists, budgets etc. These help in
ensuring whether the works are completing in a right way or not, if not then they raise the
flags to improve the tasks.
 Procedural control: These include two unrelated parties internally related involved in
the flow of money. It establishes a known pathway for securing a consistent result.
 Embedded controls: These include automated data backups, standardised contracts and
financial controls. These all works automatically to protect the business from making
poor decisions.
These were some of the systems which are used to maintain any business and prevent it form any
failures.
1.2 Need of information to manage financial resources
Financial resources are those which uses the money in the form of liquid securities, cash
and credit. It help the organization to make them financially strong and help them to establish
their business (Finkler and et. al., 2016). In health and social care sector, financial support is
must. Information of financial resources helps the organisation with the costs inflow and outflow
of the organisation, profit and losses and their financial reports. This help to make better cost
2

effective decisions which will benefit the organisation. Proper planning of the resources will
prevent unnecessary losses in present as well as in future also. The financial report should be
transparent and accurate so that the organisation can make effective decisions which will be
better for the organisation. Transparent and reliable data provide the firm with clear pictures
about the profit/ loss, sources of finances, usage of debts, organisation earnings, area of
improvement in managing the finances of the firm. The organisation should be efficient enough
to manage their financial resources effectively. They should know where they have to invest,
when the firm is having profit/loss. From past expenditure the decision maker can make proper
decisions in future. Improper management can lead to reduce the goodwill of the company. The
managers or leaders should keep on reviewing the financial report at some intervals which
ensures proper management of resources and also see whether there is regular updation or not.
This will require information on the basis, the managers will make decisions and will organise
the expenditure of the firm in right directions. Proper management of records and expenditure
will help the company at the time of auditing because auditing is done by personnels which are
not form the same organisation.
Along with this, an effective report will satisfy the auditors and will also increase the
standard and reputation of the organisation. Sometime the structure of finance in heath care
sector depend upon socio-economic and political conditions. It converts into certain social goals
in health care delivery and finance such as efficiency, affordability and equity. The main
objective to manage resources is that the firm can manage their expenditure in available time and
money (Benn, Dunphy and Griffiths, 2014).
1.3 Regulatory requirements for managing financial resources
Finance management is very much indispensable for NHS because this organization is
dealing in almost entire nation in order to overcome problems related with health hazards. Their
main objective is to create a society which is free from well being issues by conducting various
awareness or effective programmes. Thus, they need high level of income and proper
management system for managing whole financial resources which aids an association while
running their business entity. Therefore, it is essential for health care enterprise to follow
regulatory norms, beliefs, rules and regulation in order to manage things in an appropriate
manner. Beside this several factors are identifies which shows the significance or need of
regulatory while managing financial resources which is described as follows:-
3

 Minimization of frauds:- As per this factor it has been analysed that regulatory
frameworks are playing a very crucial role in removing wrongful activities by
implementing strictness at workplace. Moreover they need to make plans or policies for
implementing external or internal audit in order to identify hidden frauds. Maintenance of healthy environment:- One more thing which shows that NHS required
support of advisory bodies is that it helps in maintaining peaceful surrounding of an
association by clearing invisible or visible components in most effective manner.
However, it is essential for an organization because healthy environment maximize the
chances of employee retention that is beneficial for heath care sector. Equal opportunities:- In the eye of regulatory bodies every individual are equal and right
to grab same level of development chances. Therefore, NHS is following norms designed
by social care organization (Ball, Grubnic and Birchall, 2014).
 Proper management:- According to this element an organization needed an effective
managerial system for minimizing various issues or controversies at workplace. Along
with this it helps in overcoming financial barriers with the help of skilled labours.
Hence, at last it has been determined that above factors shows the need of regulatory
bodies in managing financial resources in order to minimize chances of loss.
TASK 2
2.1 Source of income which is encountered in health or social care
Health or social care sector requires maximum amount of funds for offering best or
suitable services to several consumers which is gaining social care services. In fact, NHS is
offering almost millions of needy people in order to maintain a society free from any well being
issues (Health Information Exchange: The Benefits, 2013). However, it is essential for an
enterprise to reserve maximum amount of funds in order to serve clients in an effective manner
by offering best services at workplace. Thus, various sources of income that is used by NHS to
acquire fund is describing as follows:- Internal sources:- According to this element an organization may generate maximum
income within an association with the use of several components such as; personal
savings, sale on assets, retained profit and so on. It means NHS use their own sources to
gain more or more revenue in order to run their business operations in a most effective
4

way. However, health or social care services uses this technique for ignoring taking
support from others and succeeded in establishing their goodwill at marketplace.
 External:- Funds are also raised by gaining support from several extrinsic sources which
might be for long term and short term. For example; long term are- debentures, retained
earnings, mortgage, organizational capital, investment by third party, ordinary shares and
so on. Short term are; debt factoring, hire buyer, trade credits, controlling on stock or
hence forth (Singer and et. al., 2011).
(Source:- Health Information Exchange: The Benefits, 2013)
Apart from all these above origin of acquiring funds there are some other sources are also
identified which is used by NHS such as; funds from governing bodies, rent received from leased
property and several one. Hence, it is understood that an organization is using thousands of
sources for generating income in order to run their business operations in most appropriate
5
Illustration 1: Health Information Exchange: The Benefits

manner by fulfilling the demand of needy people. As a result their major motive is to offer best
services for creating a healthy society by implementing various useful programmes or sessions.
2.2 Factors which is influencing availability of financial resources in social care organization
NHS is expanding across international boundaries for serving domestic as well as foreign
clients in order to remove health issues or societal problems. In fact NHS expanded across
number of areas or regions due to which their financial resources get affected in both way
positive as well as negative. Beside this an association is engaging in several activities which
aids in managing overall society by facilitating them with basic requirements. Thus, some of the
necessary factors that have a major impact on a financial resources of an enterprise is going to
explain underneath:- Reputation of company:- Image is consider as one of the necessary factors for overall
corporate world because positive goodwill at marketplace capture the minds of several
investors and contractors. As a result they get succeeded in acquiring maximum fund for
management of an association in an appropriate manner. Thus, image of NHS act as a
key to success because it aids in seeking attention of millions of clients which provide
better option to a company for maximizing their productivity by serving numerous of
needy people. Norms of governing bodies:- Governing bodies of a nation is responsible for designing
an effective or suitable norms, values, rules and regulations which is followed by NHS
while providing necessary services to their desired clients. However, main objective of
regulatory team is to assist an association towards corrective path by implementing
effective norms on entire company in order to manage things in most appropriate way.
Meanwhile an enterprise need to make plans by considering necessary norms and legal
formalities for minimizing chances of losses or fraudulent activities (Bagnoli and Megali,
2011). Economic situations:- Fluctuation in currency rate have a major impact on a company
performance or recent contracts of an association. Moreover, inflation or deflation
increase the chances of income shortage of society. As a result most of the poor people
get failed in acquiring basic needs due to low revenue. Thus, changes in European
economy affects the success of health or care organization because it influence their
current or future contracts. Therefore it is essential to make appropriate plans or policies
6

for managing economical changes as it have a major impact on company financial
resources.
 Employees:- Workers are seen as a indispensable asset for overall organization in NHS
as well as act as a key to success because almost entire business activities are managed or
regulated by them only. Thus, employees are major factor for company and society
development as labours are liable to offer best or appropriate services to their clients.
Hence, it is determined that an organization need to consider above factors or elements
while managing financial resources because they have a major impact on a service which is
offered by NHS.
2.3 Different types of budget expenditure in health and care organization
NHS is serving entire society due to which they need a large amount of capital for
overcoming several issues faced by services users. In fact an effective budget or expenditure is
requires for health care organization to run a business entity in an appropriate manner. Therefore
various types of budget expenditure is describing as follows:- Operational budget:- It is designed while beginning of a year which consist of necessary
expenditure that is used in day to day operations (Wilson and Post, 2013). Cash flow:- This is the spending that is being allotted for the inflows that happen on the
everyday premise.
 Capital Budget – It is essentially the financial backing allotted for the wage spent or got
for particular activities that are doled out to NHS for the well-being and social care of the
general population who are the administration clients of NHS.
TASK 3
3.1 Covered in PPT
3.2 Covered in PPT
TASK 4
1.4 System for managing financial resources
There are different financial resource which help in running of any organisation. Without
effective financial resource system non of the organisation will not able run its business. NHS is
a type of industry which deals with health care sector. This industry focus on to arrangement of
7

funds from different resource. For proper management of financial resources NHS needs to be
cost efficient and effective cost system, implementation of various of various steps in reducing
the waste which increase the cost productivity for heath care sector. There are various system
which aids to manage by NHS . Organisation uses different system like budgeting, information
technology system audit system, financial accounting system, training system, and payment
system (Lee and Kwak, 2012). These system plays different roles in managing financial
activities. The function of these system are given below:
Information technology: it is concerned about processing, sharing, storage of different
department.
Budgeting: It help organisation to proper distribution of funds in various departments it also
motivate the employee of NHS to attain goals and objectives of organisation.
Audit system: This is the type of computer program which is design for collection of data,
checks the procedure of implementation of funds (Kramar, 2014). It also includes about the
scrutinize to all internal financial and non financial activities for preparation of reports. NHS
give additional training to staff who concerned with auditing system. It also help to evaluate the
risk of health care sector, which leads to take corrective measures to improve financial records.
These financial resource helps to determine the growth of business of NHS.
2.4 Decision about expenditure within health care organization
Decisions related to expenditure on health care should be done properly and effectively.
Analysis of data related to expenditure should be the primary concern for health managers.
National Health Services (NHS) provide good health care to all. NHS has better funding
efficiency than other public services because of its efficient work done by the team of NHS.
Financial management of NHS has improved over the year. Funding has been allocated to front-
line services so that it can cover the poor financial control. NHS is continuously working on
making their expenditure structure strong with the help of experts and professional leaders
3.3 Budget monitoring arrangements in health care association
Monitoring of budget is very important so that the organisation knows whether there
expenditure are done on valid things or not. The main purpose of budget monitoring is to
evaluate the results against approved budgets to guide current and future decision making. It also
provide relevant information to the managers so that they can make more effective budgets for
8

the organisation (Matos and Silvestre, 2013). It is important to monitor the budgets on regularly
basis to check whether the objectives are fulfilled or not. Forecasting help in managing the gaps
between the budget estimates and actual results to respond quickly to the changes in external and
internal environment. The facts and figures in the internal budget should be accurate and precise.
Regular maintenance of the budget performance helps the managers in giving the feedback to the
superiors and it also help to adapt to the new variation in the budget. The monitoring allows to
keep tract of capital expenditure and development projects. Managers should prepare cost
effective budgets so that it will be easy for the managers to manage their funds available to the
organisation. Supervisors should check that all the departments of the organisation are
maintaining and monitoring their budgets on regular basis. Appropriate corrective actions should
be taken to resolve any differences in the budgets.
4.1 Requirement of information while making financial decision
There are various resources which help in making effective financial decision which positively
impact the organisation in determining the growth of organisation. Financial decision aids to
improve performance of organisation and helps to improve financial condition of organisation.
NHS uses different tools which uses in making financial decision such as assets liabilities,
Equity, budget, Expenses, income and so on (Preuss andWalker, 2011). Therefore necessity of
information at workplace while making financial decision is describing as follows:-
 It give exact financial condition of NHS health care sector.
 It determine the growth of business which aids to make proper decision
 It evaluate level of profit or losses which helps to analyses to improve the performance
of business.
4.2 Relationship between service delivered, costs and expenditure
It has been analysed that costs, expenditure and services have a very strong relations
between each other in health care sector in order to perform various organizational activities. For
example; if a patient is suffering from cancer then they must required effective services,
numerous tests related with disease, medicines to minimize the problem and needed several
exercises or awareness programmes. Hence, to execute all these necessary activities service
provider will provide necessary services, sufficient cost or expenditure is also requires for tests
or medicines. Therefore, an effective relationship between these components are maintained in
9

order to attain goals or objectives of NHS by serving a patient in more efficient way (Mosler,
2012).
4.3 Impact of finance on individual using social care services
Finance have a greater impact on a individual while acquiring services from health or
care organization. It means number of factors need to be considered by a person during using
services is describing as follows:-
 Cost
 Options of services priority
 Analysing several alternatives at minimum cost.
 Income level of user
 Indirect prices involved in service.
 Quality which is obtaining by user.
4.4 Improvement in health or social care service through changes in financial systems or process
NHS is focussing on their effective financial system or process in order to enhance their
service provided to several users at workplace. In fact, it is beneficial for individual as well as
whole organization (Perrini Russo, Tencati and Vurro, 2011). Therefore, advantageous of
improvement in finance system of social care enterprise is describing as follows:-
 Minimize the chances of losses.
 Aids in assisting employees towards corrective path in order to attain their organizational
objectives.
 Accurate forecasting of future expenses.
 Improve the level of service.
 Key to success or development.
CONCLUSION
From the above mentioned assignment it has been analysed that management of financial
system at health care organization is indispensable for their success or development as it aids in
overcoming several barriers of service offering. However, NHS is an association which is used in
this report for understanding the need of accounting system at workplace by analysing various
facts or figures. Therefore, main objective of this report is to throw lights on requirement of
accurate information or necessary facts or figures which is used by an enterprise while decision
10