Healthcare Finance Report: NHS Financial Performance Analysis

This report provides a comprehensive financial analysis of the National Healthcare Services (NHS) in the UK. It begins with an overview of the NHS, its services, and the challenges faced by its staff. The report then delves into the financial aspects, including the revenue cycle, major sources of income, and primary expenses. A detailed examination of the NHS's financial statements, including assets, liabilities, and equity, is presented to assess liquidity and solvency. The report also analyzes the net cash and cash equivalents and identifies variable and fixed costs. Finally, it explores the NHS's budgeting plans, focusing on strategies to improve productivity, reduce costs, and optimize resource allocation by freeing up hospital beds and reducing temporary staffing expenses. The report provides a clear understanding of the NHS's financial health and management strategies.

Running Head: HEALTHCARE FINANCE
HEALTHCARE FINANCE
Name of the student
Name of the University
Author’s Note

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Table of Contents
Part A.........................................................................................................................................2
Answer to (1)..........................................................................................................................2
Answer to (2)..........................................................................................................................2
Answer to (3)..........................................................................................................................3
PART B......................................................................................................................................3
Answer to (2) & (3)................................................................................................................3
Answer to (4), (5) & (6).........................................................................................................4
Answer to (7) & (8)................................................................................................................4
Referencing:...............................................................................................................................6

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Part A
Answer to (1)
NHS, National Healthcare Services, is one of the UK’s most efficient publically funded
healthcare organisation. NHS provides services to its citizens not on the basis of their income
but on the basis of their needs. The organisation has observed various ups and downs in the
last seven decades of the economic cycle. Services provided by NHS are as follows:
1. Secretary/department for health are responsible for proper strategic communication
with their clients. It involves gathering funds and allocating them in order to serve
more people and increase efficiency of the organisation. It ensures social care delivery
through premeditated health authorities.
2. Acute trusts of NHS is responsible for deciding strategies in order to develop
hospitals and improve the quality of the services. It ensures that the professionals are
skilled and properly trained.
3. Mental Health Trust of NHS focuses on providing psychological therapies and
counselling. It provides family support and health screening to its clients.
Answer to (2)
According to reports, staffs at NHS usually feel stressed. The major reason for this being
the type of job they are accounted with. CS healthcare or Civil Service Healthcare Society
Limited makes sure that the staffs or employees at NHS work with no worry about their
health and provide a private health insurance to their workers. The investment in this
insurance is as little as £13.82 per month with fundamental advantages of private cover (NHS
England, "NHS England » Funding And Efficiency", 2020) These are reimbursed in form of
free treatments to the patients or the insurance holders.

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Answer to (3)
Good revenue cycle or Healthcare Revenue Cycle is the one which begins when the
patients book an appointment to claim medical service and the last stage of the revenue cycle
ends at the time when all the claims and payments are paid by the patient. If the National
Healthcare Services practice a good revenue cycle helps in maintaining patient’s care and
simplifies the process of billing and managing accounts. It provides administrative data about
the patient such as patient’s name, insurance policy provider and other information, which
helps to keep a good track record for future.
PART B
Chosen healthcare organisation is National Healthcare Services (NHS) for this part of the
question.
Answer to (2) & (3)
Major sources of revenue for the national healthcare services group is from the sale of
goods and services such as training and education to the staffs, prescription fees, dental fees
and many more. These amounted to £1,993,191,000 in the financial year 2019 and from other
operating activities the group generated revenue of £111,091,000 in the same financial year
(England.Nhs.Uk, 2020). Primary expenses of the group were in the following-
1. Employee’s cost: paying its staffs is NHS primary expense which increased from
£1,843,109,000 in the financial year 2018 to £1,949,413,000 in the year 2019
2. Cost of purchase of goods and services amounted to £112,496,829,000 in the financial
year 2019 from £108,641,524,000 in the year 2018 (England.Nhs.Uk, 2020).
Net Income of the NHS Group:
Net Income of the group = Income / revenue generated – expenses incurred

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Particulars Amount (£000) Amount (£000)
Total Income 2,104,210
Less: Total expenditure (114,969,443)
Less: Finance expenses (644)
Less/add: other gains or (losses) (33)
Net income (112,865,910)
Answer to (4), (5) & (6)
As per the annual report provided by National Healthcare services in 2019, it can be
seen that the current assets were £1,220,702,000, while the current liabilities were
£10,733,932,000. The current liabilities of the National Healthcare services is higher than the
current assets. Hence, it can be concluded that the liquidity position of the group is not well.
The non-current assets of NHS were £443,386,000 and the non-current liabilities were
£46,421,000. Therefore, the solvency position of the company is bad as the company’s total
assets are less than its current liabilities. The total equity of National Healthcare services is
£9,116,265,000. The net cash and cash equivalents at the end of the year were £ 196,694,000
(England.Nhs.Uk, 2020). This cash and cash equivalents are very low compared to the debt
of National Healthcare services but it is positive. Variable costs of the company is its current
trade payables, which is to the commercial banks and other financial institutes and other
provisions whereas fixed costs of the group are its payables to its capitals, services, accruals
and many more.
Answer to (7) & (8)
National Healthcare Services budgeting plans are as follows:

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1. To free up 2000 to 3000 beds in its hospitals. It is observed that people who are fit
enough to leave and continue their lives are still lying to avail the social care and
services provided by the organisation. NHS is developing improvement trajectories in
order to freeing up the spaces to provide services to needy ones.
2. It focuses on reducing avoidable demand and meeting them appropriately. This is the
most effective strategy to increase the overall productivity of the organisation.
3. It plans to reduce the temporary staffing cost to improve the productivity of the group.
A magnificent improvement is seen in reducing the cost as compare to last year. This
was achieved by implementing salary on hourly bases. Similar actions are taken in
order to cut down the consumption of expensive interim executives.

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Referencing:
England, NHS. "NHS England » Funding And Efficiency". England.Nhs.Uk. Last modified
2020. Accessed February 17, 2020.
"What Is The NHS And How Does It Work?". Netdoctor. Last modified 2020. Accessed
February 17, 2020.
England.Nhs.Uk. Last modified 2020. Accessed February 17, 2020.