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

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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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