Unit 1 IP Healthcare Organization Financial Fundamentals (2-3pgs)
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Jul 3, 2022 3:32 PM PDT REPORT DATE
Jul 3, 2022 3:32 PM PDT
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Summary
Healthcare Organization Financial Fundamentals
Maria Thomas
Colorado Technical University
Fiscal Management in Healthcare Services – HCM410
Dr. Jennifer Miller
July 3, 2022
2
Healthcare Organization Financial Fundamentals
Healthcare budgeting is essential in understanding how to allocate capital among
different departments, where funds are spent well, and where they are not well spent. A
healthcare budget enables facilities to provide efficient and effective patient care. To increase
hospital revenue, the executive management team in Krona Hospital wants its budget to
emphasize different fields in the hospital. The various areas that are budgeted to receive a rise in
revenue in Krona hospital include inpatient services by 15%, outpatient services by 15%,
pharmaceutical by 5%, home health and hospital services by 15%, and an increase in payroll and
benefits of 10%.
Krona hospital will first realize an increase in outpatient and inpatient revenue through
payment of their services. Making sure that every service offered is paid for and that there are no
errors and mistakes made when billing patients will minimize losses in the hospital (Jeurissen et
al., 2021). The hospital will need to focus on improving its profitability through actions such as
improving patient satisfaction, having a better understanding of the revenue cycle, and reducing
readmission cases.
When the hospital boosts its customer satisfaction, those customers who were initially
satisfied with their service will therefore come repeatedly when they need hospital services in the
future, which will mean an increase in hospital revenue (Jeurissen et al., 2021). Consequently,
readmission cases to hospitals seeking to expand outpatient and inpatient services are very costly
since they are subject to penalization by medical centers and facilities for Medicaid (Jeurissen et
al., 2021). Therefore, Krona will experience an increase in revenue by reducing these cases. In
addition, the hospital will realize an increase in revenue from investing in an ambulance and
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offering emergency services that have special charges. In addition, the provision of specialty
medication will uplift the hospital's revenue by expanding outpatient prescription services.
Forecasted need to increase payroll and benefits
There is a need to have a forecast for an increase in the case of benefits and payroll due to
the continuous change in trends of nurse practitioners' requirements and services and changes in
technology in the field of medicine. In addition, there is a forecast to increase payroll and
benefits since as the hospital grows to have many inpatients and outpatients, there will be a need
to increase work force, which will therefore mean an increase in funds used to pay staff.
Leadership in the budgeting process
When performing an analysis of financial data in a hospital setting, budgeting is essential
because healthcare facilities set aside resources to correspond with and achieve the goals that
have been determined. The hospital's Chief Executive Officer (CEO) is a member of the team
that oversees the hospital's budgeting process. The CEO makes decisions regarding the hospital's
long-term and short-term strategic plans. As a result, it is up to the CEO to supervise the budget
and the management of risks, in addition to giving his approval on these issues (Zor, Linder &
Endenich, 2019). A hospital's chief financial officer is also one of the most important leaders in
developing the hospital's budget, and he is in charge of the health and financial group. He is
responsible for ensuring that specific financial programs will continue into the near future.
In addition, the Health Information Officer is an important leader who participates in the
process of budgeting. He is responsible for providing the budget for the required information
technology system and areas for enhancement. In addition to their duties as key players in
budgeting, human resource managers are responsible for providing an overview of the funds that
will be allocated for workforce engagement, the planning of employee wellness, and hiring new
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employees (Zor, Linder & Endenich, 2019). The staff members are also responsible for
producing, sending, and storing data such as patient records and ensuring that their respective
departments remain within budget.
Reference
Jeurissen, P. P., Kruse, F. M., Busse, R., Himmelstein, D. U., Mossialos, E., & Woolhandler, S.
(2021). For-profit hospitals have thrived because of generous public reimbursement
schemes, not greater efficiency: a multi-country case study. International Journal of
Health Services, 51(1), 67-89.
Zor, U., Linder, S., & Endenich, C. (2019). CEO characteristics and budgeting practices in
emerging market SMEs. Journal of Small Business Management, 57(2), 658-678.
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1 Rutgers University, New Brunswick on 2022-06-30
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2 colorado-technical-university on 2019-10-10
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