Leadership and Finance for Effective Service Delivery Assessment Answer

Introduction

Healthcare organizations must make wise financial decisions in order to provide top-notch healthcare services over the long term given the extremely dynamic and complex environment in which they operate. In order to ensure that healthcare organizations have the financial data and financial planning, required to assure excellence in the delivery of long-term healthcare, financial managers play a critical role (Finkler et al., 2022). The purpose of this essay is to examine how financial managers may guarantee that healthcare organizations have the financial data and financial strategies required to provide top-notch healthcare services over the long term.

In terms of the identification of financial information, financial managers must determine the financial information that the healthcare organization needs in order to deliver healthcare with excellence over the long term. Making decisions that have an impact on the financial success of the healthcare organization requires accurate financial information. Financial statements, budgets, financial ratios, cost data, and price information are all needed by healthcare organizations (Grossi et al., 2020). Financial statements, such as the income statement, balance sheet, and cash flow statement, give details on the financial performance of the healthcare organization. While the balance sheet displays the healthcare organization's assets, liabilities, and equity, the income statement displays the organization's revenues and outlays. The cash inflows and outflows of the healthcare organization are displayed on the cash flow statement. Healthcare organizations must have budgets because they offer a framework for allocating resources and monitoring financial performance. The projected income and expenses for the future year are broken down in great detail in the budget (Cashin & Gatome-Munyua, 2022). The resources needed to accomplish the goals of the healthcare organization are also listed in the budget.

When assessing the financial success of a healthcare organization, financial ratios are essential. Ratios including return on investment, debt-to-equity ratio, and current ratio offer information on the financial health of the healthcare organization. Cost information is essential to healthcare organizations because it sheds light on how much it costs to deliver healthcare services. Cost information comprises the price of personnel, infrastructure, equipment, and medical supplies. For financial managers, setting rates and managing costs require an understanding of the expenses associated with providing healthcare services (Shim, 2022). In healthcare organizations, pricing information is also essential since it influences how much healthcare services cost. Healthcare service costs, reimbursement rates, and patient volume are all included in the pricing information. Setting prices that are both competitive and profitable requires a thorough understanding of pricing data.

Healthcare organizations require financial information because it enables management to make informed decisions regarding the organization's operations, investments, and financial status. This is true when evaluating the uses of financial information in healthcare organizations. Financial information can be used to evaluate an organization's performance, identify areas for development, and develop strategies to address these problems (Zelman et al., 2009). Financial data can be used to track the organization's financial health and build long-term financial sustainability initiatives. One of the primary uses of financial data in healthcare organizations is assessing the performance of the organization. Financial information may be used to assess the profitability, liquidity, and solvency of an organization (Cuenca et al., 2021). Profitability evaluates an organization's capacity for income generation, liquidity its capacity for short-term debt repayment, and solvency its capacity for long-term debt repayment. Financial managers can identify areas that need improvement and create plans to solve them by looking at these data. Healthcare organisations require financial data to assess their effectiveness, financial status, and long-term viability.

Financial managers are key in delivering the financial data required to make wise decisions. Financial managers also safeguard the financial security and long-term performance of healthcare organisations in the continuously evolving healthcare sector of today (Palepu et al., 2020). Careful attention to detail, strong analytical abilities, and the capacity to create and carry out efficient financial plans that are in line with the organizational strategic goals are requirements for effective financial management in the healthcare industry. Making ensuring that the organization has access to the accurate and timely financial information that can be used successfully is one of the most crucial duties for financial managers in the healthcare industry (Madura, 2020). Data about the company's income and outlays, cash flow, amount of debt, and other important financial parameters are all included in this report. Financial managers must set up reliable financial reporting systems that accurately and promptly record all pertinent financial data in order to do this (Finkler et al., 2022).

The creation of a budget is a crucial component of financial planning in the healthcare industry. A budget is a thorough plan that describes how much money an organization expects to make and spend over a specific time period, usually a year. A thorough examination of previous financial data and knowledge of the organization's strategic goals and priorities are both necessary when creating a budget. To create a budget that supports and fits with these objectives, financial managers must collaborate closely with other organizational leaders (Moro Visconti & Morea 2019). Financial managers must also make sure that the company has a robust program in place for managing financial risk. This program must have guidelines and practices for reducing monetary risks including unanticipated adjustments in reimbursement rates or legal requirements. Financial managers must also create backup plans for unforeseen financial catastrophes like a sharp surge in expenses or a decline in revenue. Financial managers need to be adept in explaining the organization's financial strategy and plan to other stakeholders (Finkler et al., 2022). Executives, directors, and departmental heads are included in this. Effective communication is critical to ensuring that everyone in the organization understands the financial health of the organization and is aligned around common financial goals.

Healthcare organizations can identify areas of underperformance and develop strategies to address them with the use of financial statements. Financial information is also essential in developing and implementing business plans and making investment decisions (Palepu et al., 2020). Finaorganizationstion can also help healthcare organizations manage costs, improve efficiency, and optimize their operations. By tracking and analyzing financial data, healthcare organizations can identify areas where costs can be reduced, streamline operations, and improve overall efficiency. For example, financial' data can be used by the organizations to assess the cost-effectiveness of clinical procedures and treatments, identify ways to improve supply chain management, and optimize staffing levels (Finkler et al., 2022). Financial information can also be used in healthcare organizations for monitoring the financial position of the organization (Palepu et al., 2020). The financial statements are required to be reviewed by financial managers on a regular basis for ensuring the stability of the financial position of the organizations. The financial managers should also monitor the key performance indicators such as profit margins, revenues, and expenses for the identification of the trends that can indicate potential financial issues. Financial managers can also form strategies for ensuring long-term financial sustainability in the organizations by monitoring the financial position of the companies.

In terms of the assessment or evaluation of the qualitative features of useful financial information, some of the qualitative features must be possessed by the financial managers with the financial information. These qualitative features are faithful representation, comparability, relevance, verifiability, and timeliness (Golochalova & Tsurcanu, 2020). To make sure that financial information is trustworthy and unbiased, it should be provided honestly and publicly. Standardized accounting procedures should be used by financial managers to guarantee that the data is accurate and simple for stakeholders to understand. Financial data have to be similar across various organizations, industries, and time periods. Financial managers can use this to compare their organization's financial performance to others and decide how to improve. The needs of the healthcare organization and its stakeholders should be met through financial information (Golochalova & Tsurcanu, 2020). The information should be in line with the organization's strategic goals and priorities, according to financial managers. To ensure that it is reliable and dependable, financial information should be verifiable and auditable (Azar et al., 2019). In order for stakeholders to make informed decisions, financial information needs to be timely and regularly delivered. Financial managers need to make sure that financial reports are generated promptly and provided to stakeholders as required.

Table 1: Qualitative Characteristics (Golochalova & Tsurcanu, 2020)

In terms of the above-discussed and demonstrated qualitative characteristics, financial managers are required to ensure that these characteristics must be possessed by the financial information that they provide to healthcare organizations. Financial managers should also create thorough financial strategies that are in line with the organization's strategic goals and priorities in order to guarantee excellence in the delivery of long-term healthcare (Finkler et al., 2022). The effectiveness of the organization's finances, changes in the healthcare sector, and other pertinent elements should all be taken into consideration while reviewing and updating these plans. To make sure that financial strategies are incorporated into more comprehensive strategic plans and initiatives, financial managers should collaborate closely with other organizational leaders. In addition, it is necessary for the financial managers to ensure that the financial reports are relevant to the operations and investments of the organization. The project managers should also ensure that financial reports are reliable by the verification of the accuracy of every piece of information presented. Financial managers are also responsible for presenting comparable financial reports so that the organization can compare its financial performance over time or against other organizations (Finkler et al., 2022). Moreover, financial managers should ensure that the financial reports are understandable to enable the users to comprehend the information presented to them.

In terms of real-world examples, financial management in healthcare organizations is critical for ensuring long-term healthcare delivery. Several real-world examples illustrate the importance of financial management in healthcare organizations as mentioned in the sections below.

Sentara Healthcare is a Virginia-based healthcare provider. A centralized revenue cycle management system was adopted by the company, which enhanced billing procedures and decreased denials. The solution improves revenue cycle management by enabling the organization to track claims and payments in real-time (Melville & Kohli, 2021). California is home to the healthcare system known as St. Joseph Health System. The company implemented a cost-cutting plan in 2013 that generated yearly savings of $35 million (Compton-Phillips, 2019). The program includes decreasing worker levels, standardizing clinical practices, and enhancing supply chain management. A new electronic medical record system was also adopted by the organization, improving clinical documentation and lowering errors. A hospital system connected to the University of California, Los Angeles is called UCLA Health System (Saccardo et al., 2023). The organization put in place a financial planning and forecasting system that assisted the organization in seeing possible monetary issues and creating solutions. Additionally, the system allowed for real-time monitoring and analysis of financial data, which helped the organization make better decisions.

Maryland is home to the healthcare facility Johns Hopkins Medicine. The company launched a program to cut down on needless hospital readmissions, which improved patient outcomes and cut expenses. The program included enhancing care transitions, offering more thorough discharge instructions, and enhancing team communication (Dang et al., 2021). A teaching hospital called Houston Methodist Hospital is situated in Texas. Real-time tracking and analysis of financial data were made possible by the hospital's implementation of a financial management system. The technology-enhanced decision-making and assisted the company in foreseeing future financial concerns before they materialized.

Table 2: Real-world examples of healthcare organizations

Conclusion

In conclusion, financial managers play a critical role in ensuring the financial health and long-term success of healthcare organizations. Financial managers must gain a thorough understanding of the healthcare sector and the unique difficulties that their organizations face in order to accomplish this goal. To be effective in this role, financial managers must establish robust financial reporting systems, analyze financial data effectively, develop and execute strong financial plans, and communicate financial information effectively to other stakeholders in the organization. By doing so, they can help healthcare organizations deliver excellent care to their patients while maintaining financial stability and long-term success.

References

Azar, N., Zakaria, Z., & Sulaiman, N. A. (2019). The Quality of Accounting Information: Relevance or Value-Relevance? Asian Journal of Accounting Perspectives, 12(1), 1-21. http://jummec.um.edu.my/index.php/AJAP/article/view/16885

Cashin, C., & Gatome-Munyua, A. (2022). The strategic health purchasing progress tracking framework: A practical approach to describing, assessing, and improving strategic purchasing for universal health coverage. Health Systems & Reform, 8(2), e2051794. https://www.tandfonline.com/doi/abs/10.1080/23288604.2022.2051794

Compton-Phillips, A. (2019). Spreading at scale: a practical leadership model for change. NEJM Catalyst Innovations in Care Delivery, 1(1). https://catalyst.nejm.org/doi/abs/10.1056/CAT.19.1083

Cuenca, V., Urbina, M., Córdova, A., & Cuenca, E. (2021). Use and impact of Big Data in organizations. In Artificial Intelligence, Computer, and Software Engineering Advances: Proceedings of the CIT 2020, 2, 147-161. Springer International Publishing. https://link.springer.com/chapter/10.1007/978-3-030-68083-1_12

Dang, D., Dearholt, S. L., Bissett, K., Ascenzi, J., & Whalen, M. (2021). Johns Hopkins evidence-based practice for nurses and healthcare professionals: Model and guidelines. Sigma Theta Tau. https://books.google.com/books?hl=en&lr=&id=m4k4EAAAQBAJ&oi=fnd&pg=PP1&dq=Johns+Hopkins+Medicine.++improves+patient+outcomes&ots=pUQsCJx6xd&sig=6Fsc8pSSZp2NsFypXraKjQtOPCI

Finkler, S. A., Calabrese, T. D., & Smith, D. L. (2022). Financial management for public, health, and not-for-profit organizations. CQ Press. https://books.google.com/books?hl=en&lr=&id=ZR5dEAAAQBAJ&oi=fnd&pg=PT13&dq=financial+managers+can+ensure+the+long+term+success+of+healthcare+organizations+&ots=1QPANG3ISK&sig=qUEByqYGSPCWNDpQItZvGoAcr4g

Golochalova, I., & Tsurcanu, V. (2020). Measurement of Financial Statements Information in the Context of Harmonization of the Accounting Systems. Journal of Finance and Accounting, 8(1), 48-58. https://www.researchgate.net/profile/Irina-Golochalova/publication/342890946_Measurement_of_Financial_Statements_Information_in_the_Context_of_Harmonization_of_the_Accounting_Systems/links/63827e55c2cb154d292d62b7/Measurement-of-Financial-Statements-Information-in-the-Context-of-Harmonization-of-the-Accounting-Systems.pdf?_sg%5B0%5D=started_experiment_milestone&origin=journalDetail&_rtd=e30%3D

Grossi, G., Kallio, K. M., Sargiacomo, M., & Skoog, M. (2020). Accounting, performance management systems, and accountability changes in knowledge-intensive public organizations: a literature review and research agenda. Accounting, Auditing & Accountability Journal, 33(1), 256-280. https://www.emerald.com/insight/content/doi/10.1108/AAAJ-02-2019-3869/full/html

Madura, J. (2020). International financial management. Cengage Learning. https://books.google.com/books?hl=en&lr=&id=Z3TLDwAAQBAJ&oi=fnd&pg=PP1&dq=role+of+financial+managers+in+handling+financial+infomration&ots=IEOVsmvQQT&sig=dLqasA-HKt5Ub4awZlyry0pfMjM

Melville, N. P., & Kohli, R. (2021). Models for API Value Generation. MIS Quarterly Executive, 20(2). https://search.ebscohost.com/login.aspx?direct=true&profile=ehost&scope=site&authtype=crawler&jrnl=15401960&AN=151036158&h=cDBfsEX7iLqb0IRbABppni2GkdYI%2BrFLjrDHPkBNY7LTm2u4%2FAB8jiH5Ukr5o9ZSmrHH2VdQX4juJYrcwC3nEQ%3D%3D&crl=c

Moro Visconti, R., & Morea, D. (2019). Big data for the sustainability of healthcare project financing. Sustainability, 11(13), 3748. https://www.mdpi.com/493686

Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and valuation: Using financial statements. Cengage AU. https://books.google.com/books?hl=en&lr=&id=IDT6DwAAQBAJ&oi=fnd&pg=PR13&dq=Financial+managers+play+a+vital+role+in+financial+information++in+organizations+&ots=uJika0qi8Y&sig=sRYtS5Vmx5OtYNDDyczQ0ynV1-4

Saccardo, S., Dai, H., Han, M., Vangala, S., Hoo, J., & Fujimoto, J. (2023). Field Tested: Assessing the Transferability of Behavioral Interventions. https://www.researchsquare.com/article/rs-2757992/latest

Shim, J. K. (2022). Financial management. Professor of Finance and Accounting Queens College City University of New York. http://portal.belesparadisecollege.edu.et:8080/library/bitstream/123456789/64/1/%28Schaum%27s_Outline_Series___%29Jae_Shim%2C_Joel_Siegel-Schaum%27s_Outline_of_Financial_Management-McGraw-Hill%282007%29.pdf

Zelman, W. N., McCue, M. J., Millikan, A. R., & Glick, N. D. (2009). Financial management of health care organizations: an introduction to fundamental tools, concepts, and applications. John Wiley & Sons. https://books.google.com/books?hl=en&lr=&id=0cMeWz6aQC0C&oi=fnd&pg=PR1&dq=uses+of+financial+information+in+healthcare+organizations&ots=tONloTZ2XP&sig=Y40NeaPVgmDIRdO0LTJRQBB0TU0 

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