essay

Mekdes Asaminew

Rebecca Robinson Bragg

Management of Health Care

04/09/2019

Chosen Topic:

Role of a CFO in Hospital Financial Management

Financial Issues Outlined in the Case

There are many financial issues that have been outlined in the case. One of the issues that have been described is that Trinity Mother Frances Health System is lacking competent financial management following the retirement of their long-serving CFO. This has crippled financial management practice at the hospital and resulted in their recruiting an interim CFO. Despite their choice of an interim CFO, the hospital still requires a permanent CFO to foresee all the financial management practices of the hospital. In their pursuit of a permanent CFO, they have engaged Warbird CFO consulting to help in the process of appointing a competent CFO for the hospital.

Due to the lack of a permanent Chief Finance Officer, the hospital wanted to deploy a competent financial officer to execute financial management which was carried out by the former CFO. However, the hospital seems to have lost financial track and did not have sound financial planning practices. The hospital worked together with Warbird consulting so that they were able to recruit a permanent CFO who would end financial management strain experienced by the hospital.

The roles of the CFO had been overlooked such as making essential investments such as entry into the bond market which restricted the financial outlay of the hospital (Seargeant, 2018). The hospital lacked an audit department which resulted in inappropriate cash management. The consulting company helped the hospital establish an internal audit department that would foresee inappropriate financial management practices and by so doing improve the overall financial wellness of the hospital. Moreover, the hospital lacked an investment portfolio that would generate extra finances for the operations of the hospital, and Warbird Consulting helped in the entering bond market at lower risk and at the same time guarantee higher returns on the investment.

The perspective of Financial Challenge

Financial management departments of a hospital are responsible for all the financial obligations and planning. The department is also responsible for maintaining g expenditure within the budget to avoid the need for extra funds through borrowing which can have serious repercussions to the operations of the hospitals. It has an obligation to see that the money is available to meet the hospital expenses and keeping contingency funds to meet emergencies. If the financial management depart lacks the appropriate management personnel, it can end up misusing hospital funds which can affect the operations of the hospital negatively. Trinity Mother Frances Hospital has to consult before it employs a new CFO given the critical role they play in enhancing activities of the hospital run smoothly (Seargeant, 2018). Employing inappropriately qualified CFO will result in mismanagement of hospital funds which will affect the operations of the hospital negatively.

Relevance to Financial Management

Proper financial management in hospitals is critical in evaluating and planning the financial needs of the hospital. The hospital has to make an appropriate investment decision so that risk is minimized and enable the hospital to reap a maximum return from their investment. Moreover, sound financial management should ensure that the working capital is well managed. This is done by finding the difference between the current hospital assets and current liabilities to ensure the hospital activities run effectively (Finkler, 2018). Besides, the finance management team should make long term investment decisions that involve proper strategy formulation to invest in the underlying opportunity such as buying new hospital equipment and the implication of such a decision.

References

Finkler, S. A. (2018). Financial management for public, health, and not-for-profit organizations. CQ Press.

Seargeant, D. &. (2018). Four strategies to unlock performance management constraints: Hospitals and health systems are confronted with unprecedented challenges in managing performance in the current business environment, yet all too many organizations have limited understanding of. Healthcare Financial Management, 72(4), 56-62.