Report: Managing Financial Resources in a New HSC Care Home

This report examines the management of financial resources within a health and social care (HSC) setting, specifically focusing on a new care home in Hounslow. It begins by outlining costing principles and business control systems for monitoring financial information, including the importance of accurate record-keeping and budgetary control. The report then identifies the types of financial information needed, such as direct and indirect costs, and emphasizes the regulatory requirements related to budgeting. It explores systems for evaluating financial resources, highlighting the role of budgeting in assessing performance and identifying deviations. Further, the report discusses methods for monitoring care home expenditures, including verification of expenses, cash flow analysis, and periodic departmental assessments. It also addresses actions to take when fraud is suspected, emphasizing the need for transparent investigation and appropriate communication. Finally, the report suggests a budgeting monitoring system and analyzes the relationship between care home services, costs, and expenditure, as well as the impact of service quality and access on individuals, proposing ways to improve care home services.

Managing Financial Resources in
HSC

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Stating the principle of costing and the business control system to monitor the financial
information..................................................................................................................................1
1.2 Types of information needed to manage the financial resources..........................................2
1.3 Stating the regulatory requirements which care home needs to considered while managing
the financial resources.................................................................................................................3
1.4 System for evaluating the financial resources ......................................................................4
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................4
3.1 Ways to monitor the care home expenditures and shortfalls................................................4
3.2 Actions which care home needs to undertake when fraud is suspected................................5
3.3 Suggesting the budget monitoring system which would be best for the care home.............5
TASK 4............................................................................................................................................6
4.1 Identifying the information which is required to make the financial decisions for the care
home............................................................................................................................................6
4.2 Analyzing the relationship between the care homer service as well as costs and
expenditure..................................................................................................................................6
4.3 Impact of the quality and access to service upon the individual...........................................7
4.4 Suggesting the ways to improve the care home services .....................................................7
CONCLUSION................................................................................................................................8
.........................................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance is one of the main resources of an organization which facilitate effective
implementation of the strategies and policies. In each and every organization finance plays a
vital role in achieving success in the competitive business environment. In health and social care,
finance manager plays a vital role in framing effective policies and strategies to manage the
financial resources in an effective manner (Bowling, 2014). Better financial planning facilitates
smooth functioning and operations of health and social care organization. This project report is
based upon the case scenario of John and Jill who are planning to set up the new dynamic care
house in Hounslow. The present report will discuss the system which health and social care
organization can use to manage their financial resources. It will also shed light on the role of
planning and monitoring which helps in managing the health and social care budgets.
TASK 1
1.1 Stating the principle of costing and the business control system to monitor the financial
information
As per the case scenario John and Jill is setting up a new dynamic care home in
Hounslow council. Health and social care home needs to incur several cost in order to deliver the
quality and cost effective services to the patients. There are different types of department resides
in the health and social care which makes contribution in the cost of the organization. For
instance: Health and social care home also having the marketing, human resources, research and
development as well as customer service department. These four departments are the main part
which imposes cost in front of the organization (Swayne, Duncan and Ginter, 2012). Thus, to
manage the financial resources Health and social care home needs to be taken into consideration
the principle of costing which are enumerated below:
 Health and social care home are required to mention each and every income and
expenditure in the books of accounts.
 In addition to this, health and social care organization needs to record the expenses in the
books of accounts only when they are actually incurred by them. Organization does not
include the expenses on the basis of estimation.
 Further, cost personnel needs to undertake double entry system which provides assistance
to them in assessing the suitable cost for the care services.
1

Along with it, health and social care organization undertakes the budgetary system in
order to monitor the financial information and performance. Budget provides deeper insight
about the receipts which organization will generate over the period of time (Brignall and Modell,
2000). Whereas it also provides the information in relation to the expenses which care home will
make over the period of time. Thus, by comparing the actual financial performance with the
budget amount John and Jill can easily assess the deviation which occurred in the financial
performance of the care home.
Particulars Amount
Cash inflow
Revenue 170000
Miscellaneous income 50000
Total cash inflow 220000
Cash outflow
Purchase 80000
Sales promotional expenses 10000
Research and development expenses 15000
Salaries of the staff 20000
Other expenses 10000
Total cash outflow 135000
Surplus (Cash inflow- cash outflow) 85000
According to the above mentioned budget each department is required to perform their
activities as per the budgeted figures. Thus, by assessing the actual performance with the
budgeted figures care home can easily assess the extent to which each department have attained
success in managing the financial resources.
1.2 Types of information needed to manage the financial resources
In order to manage the financial resources in an effective manner health and social care
home is required to assess the different types of cost. Through this, health and social care home
2

requires to identify the areas of expenses upon which organization needs to exert control. There
are various types of information which John and Jill is required to manage their financial
resources. They requires information regarding the salaries of the employees, operational cost,
money expended by the care home in the research and development as well as training program.
In addition to this, care home also undertake promotional campaign in order to develop
awareness among the service users (Walshe and Rundall, 2001). By taking into consideration all
these information care home is able to manage their financial resources in an effective manner.
Thus, health and social care home requires to information regarding the different types of cost
which are as follows:
 Direct costs: They are also known as prime cost which is directly accountable or
responsible to the production object. In the health and social care direct cost includes
salaries of the nurses, doctors, expenses of ambulance, medicine expenses as well as staff
training expenditures.
 Indirect costs: It may be defined as those which are not directly accountable to the
particular cost object. These costs either may be fixed or variable in nature such as
electricity expenses, equipment costs as well as bed charges etc.
Thus, by identifying the different types of cost organization are able to undertake
effective measures. Through this, care home is able to make optimum use of their financial
resources to the large extent.
1.3 Stating the regulatory requirements which care home needs to considered while managing the
financial resources
As per the regulatory requirement and legal code of practices health and social care needs
to taken into consideration the appropriate budgetary system. Financial resources are the
essential elements of the business. Thus, finance manager of care home needs to frame
competent strategies and policies which help them in making proper utilization of financial
resources. In this regard, budgeting is the best tool which facilitates better use of the financial
resources (Kutzin, 2001). In accordance with the legal codes of practices care home requires to
frame the budget for the concerned financial year. It contains all the expenses which care home
will incur during the financial year.
Expenses include the marketing, customer services as well as expenses in relation to the
human resource department. In addition this, budget also included the receipts which care home
3

will generate during the accounting year. Thereafter, it is the responsibility of John and Jill to
circulate the budget at all levels of the department. It enables the personnel who reside at
different level to perform their activities and functions by taking into consideration the budgeted
figures. Besides this, it also prevents confusion in the mind of the personnel and that facilitates
proper management of the financial resources.
1.4 System for evaluating the financial resources
Finance team has advised to John and Jill that budgeting is the best system which
provides assistance to care home in evaluating the financial resources. Budgeting is the
estimation of the income and expenses which care home will generate or incur over the period of
time. Thus, by comparing the actual figures with the budgeted figures care home can easily
assess the deviation which occurred in the financial performance of an organization. In the health
and social care home, organization needs to make huge investment in the research and
development activity to find the best ways to diagnose the disease. Thus, budgetary control
system is the best way which helps in evaluating the financial strategies and policies of the
organization (Saxena and et.al, 2007). By identifying the deviation care home in able to
undertake effective measure within the suitable time frame. Through this, health and social care
can manage their financial resource more efficiently.
TASK 2
Enclosed in Power Point Presentation.
TASK 3
3.1 Ways to monitor the care home expenditures and shortfalls
There are several ways are through which John and Jill can monitor the care home
expenditure. Identification of the deviation is vital to manage the shortfalls which occurred in
care home expenditure. Thus, John and Jill can monitor the care home expenditure by making
verification of the expenses with the data which are recorded in the spread sheet of the care
home. Thus, by taking into consideration the vouchers or bills John and Jill can easily verify the
expenses which are actually incurred by an organization. It is the most effective way through
which care home can detect the mistakes which are prevailed in books of accounts (Eichler and
et.al, 2004). In addition to this, vouchers, bills and spread sheets also enables care home to
4

monitor the expenses which are incurred by them. By identifying the shortfalls John and Jill are
able to frame effective strategies and policies to control and the expenses.
Along with it, by assessing the cash flow care home can also monitor their expenses and
thereby increase their profitability aspects. Cash flow contains all the receipts and expenditures
of an organization. Through this, care home can compare their expenditures with the inflow
which are generated by them during the year. In addition to this, they are also able to compare
their expenses in relation to the previous year. It is another most effective way which enables
care home to monitor their expenses (Drummond, 2005). Besides this, care home also requires to
make periodical assessment of their expenses which are incurred by the different department.
Through this, John and Jill are able to make control upon the unnecessary expenditure.
3.2 Actions which care home needs to undertake when fraud is suspected
John and Jill can detect the fraud through auditing which take place within an
organization. Auditing consists of the official inspection or verification of the accounts,
transactions and other business records. It helps care home in getting the fair view of the
financial performance of an organization. For instance: Through auditing it has been identified
that accountant has recorded higher petrol expenses as compared to the actual expenses (Costello
and et.al, 2009). During auditing, voucher of the petrol expenses does not match the actual
expenses which are made by the personnel. It clearly represents that fraud is made by the
accountant in the books of accounts.
When fraud is suspected then care home needs to make balanced and transparent
investigation in relation to such aspect. In addition to this, care home also requires to give chance
to the person who made such fraud. On the basis of his justification John and Jill needs to make
decision in relation to the punishment (Mechanic, 2012). Thereafter, health and social care home
needs to communicate and document the judgment which are taken by the organization in
relation to the fraud. For instance: John and Jill have decided to terminate the personnel from the
job. By communicating such kind of actions or decisions care home can prevent further fraud
within the care home.
3.3 Suggesting the budget monitoring system which would be best for the care home
On the basis of the benefits of the budgeting monitoring system it is advised to John and
Jill that this system proves to be more fruitful for the care home. Moreover, budget reflects the
activities which care home will undertake in the financial terms. By preparing the budget for the
5

week, month or year care home is able to perform the business activities as per the budgeted
figures. In addition to this, budgeting system also facilitates monitoring of the business activities
which are performed by the staff personnel (Glendinning, 2012). Budget contains the expenses
such as ambulance expenses, staff expenses, research and development expenditure etc. Along
with it, it also contains the income which organization will generate over the period of time.
Thus, by comparing the actual figures with the budgeted figures care home can easily assess the
deficiencies which occurred in the performance.
TASK 4
4.1 Identifying the information which is required to make the financial decisions for the care
home
There are several types of information which John and Jill need to collect before making
long term investment and financial decisions. Finance manager of an organization plays a vital
role in making financial decision. Income statement, cash flow statement and balance sheet are
the main sources of financial information. These sources help organization in making further
expansion and purchasing decisions. For instance: John and Jill are planning to expand the health
care wards which enable them to serve the large number of patients. Before expanding the care
departments finance manager requires to assess the availability of the cash of finance. By making
assessment of the cash flow statement finance manager can easily identify the cash which are
available within an organization.
Through this, finance manager can easily identify the money which they need to raise for
the expansion of the business operations and functions. This aspect enables John and Jill to make
appropriate financial decisions by making assessment of the financial statements of an
organization. Moreover, financial statements provide deeper insight to the finance manager about
the debt and equity aspects (Kavosi and et.al, 2012). Through this, care home can easily assess
the source which helps them in balancing the financial structure of an organization.
4.2 Analyzing the relationship between the care homer service as well as costs and expenditure
There is the high level of relationship between the care home services as well as costs and
expenditure of an organization. Care home deliver several services to their customers such as
health care services, nursing and residential services to the care users and their family members.
In order to deliver such services care home is also required to make several expenditures which
6

enables them to deliver quality and satisfactorily services to their customers. It includes staff
salaries, training and drugs expenses, electricity expenses as well as other maintenance
expenditures (Pollock and et.al, 2012). Such expenditures are directly associated with the cost
which is charged by the care for the services which are delivered by them.
Thus, Jon and Jill undertake cost-benefit analysis before making any kind of expenses.
Cost-benefit analysis may be defined as a technique which helps John and Jill in adopting the
best approach or practices. Through this, care home is able to get benefits in terms of labor, time
and cost savings etc (Cost Benefit Analysis, 2015). It is the most suitable approach which enables
care home to analyze the benefits which are directly associated with the cost incurred by John
and Jill. This aspect shows that costs and expenditures are closely related with each other.
Besides this, care home adopts penetration pricing policies for the services which are delivered
by them. During the initial stage, John and Jill wishes to offer the services at very low prices to
attract the large number of users (Enthoven, 2014). Through this, care home is able to attain
success and positioned itself in the competitive business arena more effectively and efficiently.
4.3 Impact of the quality and access to service upon the individual
Financial considerations are the main factors which closely affects the decision making of
the care users. In the preset era, patients and their family members give more priority to health of
their loved one. Now, health and social care organization undertakes hi-tech instruments which
help them in dealing with the diseases of the patients more effectively and efficiently. Thus,
service delivery mode is the main aspect which place high level of impact upon the individual.
Along with the financial considerations, quality and accessibility to the services are also the main
factors which closely impact the care decisions of the individual.
Quality of the services plays a vital role in influencing the services users and their family
members. Quality and hygiene are the main aspect aspects in the health care services. In addition
to this, care home services needs to be easily accessible in term of convenience. Now a day’s
people give more preference to the accessibility aspect (Bowling, 2014). Thus, John and Jill need
to consider all these aspects in their care home which plans to set up in Hounslow. Such aspects
provide assistance to the organization to deliver the services as per the needs and wants of the
patients. Through this, care home is able to build and sustain district image in the target market
mind.
7

4.4 Suggesting the ways to improve the care home services
Health and social care home needs to undertake several ways which helps them in
improving the care home services. John and Jill require offering the standard services to their all
customers at the very cost effective rates. For this, care organization needs to make assessment
of their expenditures. Through this, organization is able to find to areas of expenses upon which
they requires to exert control (Swayne, Duncan and Ginter, 2012). It enables organization to
reduce the per patient cost and there by offers care services at reasonable rates. In addition to
this, it also helps John and Jill in increasing the revenue of an organization.
Along with it, care home needs to undertake research and development activity to assess
the new technologies. Through this, care home is able to deal with the diseases of the patients in
an effective manner. It is one of the most effective way which helps and social care home in
delivering the quality care services to the patients (Brignall and Modell, 2000). Besides this, by
taking feedback from the service users and their family members care home become able to
make improvement in the services in an appropriate manner.
CONCLUSION
From this project report it has been concluded that John and Jill is required to undertake
the budgetary control system to manage their financial resources. Besides this, it can be inferred
that care home needs to maintain the regulatory requirements by preparing the budget for the
year. Through this, care home is able to make proper use of the financial resources by reducing
the wastage of money. Further, it can be concluded that high interrelationship exist between the
care home services as well as costs and expenditures. It can be articulated that John and Jill
needs to make focus upon the quality and accessibility aspect along with the financial
consideration. Through this, John and Jill are able to make contribution in the organizational
growth and development.
8

REFERENCES
Books and Journals
Bowling, A., 2014. Research methods in health: investigating health and health services.
McGraw-Hill Education (UK).
Brignall, S. and Modell, S., 2000. An institutional perspective on performance measurement and
management in the ‘new public sector’. Management accounting research. 11(3). pp.281-
306.
Costello, A. and et. al., 2009. Managing the health effects of climate change: lancet and
University College London Institute for Global Health Commission. The Lancet.
373(9676). pp.1693-1733.
Dixon, A., Figueras, J. and Kutzin, J. eds., 2002. Funding health care: options for Europe.
Drummond, M.F., 2005. Methods for the economic evaluation of health care programmes.
Oxford university press.
Eichler, H.G. and et.al., 2004. Use of Cost‐Effectiveness Analysis in Health‐Care Resource
Allocation Decision‐Making: How Are Cost‐Effectiveness Thresholds Expected to
Emerge?. Value in health. 7(5). pp.518-528.
Enthoven, A.C., 2014. Theory and practice of managed competition in health care finance.
Elsevier.
Glendinning, C., 2012. Home care in England: markets in the context of under‐funding. Health
& social care in the community. 20(3). pp.292-299.
Kavosi, Z. and et.al., 2012. Inequality in household catastrophic health care expenditure in a
low-income society of Iran. Health policy and planning. 27(7). pp.613-623.
Kutzin, J., 2001. A descriptive framework for country-level analysis of health care financing
arrangements. Health policy. 56(3). pp.171-204.
Mechanic, D., 2012. Seizing opportunities under the Affordable Care Act for transforming the
mental and behavioral health system. Health Affairs. 31(2). pp.376-382.
Pollock, A.M. and et.al., 2012. How the Health and Social Care Bill 2011 would end entitlement
to comprehensive health care in England. The Lancet. 379(9814). pp.387-389.
Saxena, S.b and et.al., 2007. Resources for mental health: scarcity, inequity, and inefficiency.
The lancet. 370(9590). pp.878-889.
Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care
organizations. John Wiley & Sons.
9

Walshe, K. and Rundall, T.G., 2001. Evidence-based management: from theory to practice in
health care. The Milbank Quarterly. 79(3). pp.429.
Online
Cost Benefit Analysis. 2015. [Online]. Available through:
<http://management.about.com/cs/money/a/CostBenefit.htm>. [Accessed on 2nd January
2016].
10