Problem Analysis And Budget Impact

Problem Analysis And Budget Impactproblem Analysis And B

PROBLEM ANALYSIS AND BUDGET IMPACT 5 Problem Analysis and Budget Impact Tanyanika McMillian South University The hospitals face different healthcare financial problems which at times can make the delivery of quality care to the patients difficult. Healthcare is one of the major industries facing financial problems. According to Bazzoli et al. (2008), the deficiency in the quality of patient care deteriorated at the time when many hospitals were facing financial crisis. Therefore, the quality of attention given in the hospitals dependent on its financial stability. The purpose of the paper is to create an analysis of the patient care financial problem and to identify more financial problems based on the interviews carried on the management of hospital and the available literature review.

The primary purpose of the hospital is to provide care to the patient, a task which can be costly. Maintaining the health care staff can be expensive. The problems identified were compiled after interviewing more than 150 employees faced with financial challenges. The main basis of the problems in the health care industry as indicated by the chief financial officer and the senior accountant of the hospital is the lack of skilled labor and information to implement the budget (Bazzoli, Chen, Zhao, & Lindrooth, 2008). Few employees are involved in the budget-making of the hospitals.

Although budgeting is very instrumental to the success of any organization, lack of skilled labor to implement it poses a challenge to many hospitals. Many hospitals have insufficient workforce who have financial skills (McKeeargue, 2010). Managing the funds becomes a difficult task for the hospitals and it becomes difficult for the hospital to use the available financial resources to achieve quality care resulting in a healthy society. Report by the Berger (2008) identified another healthcare financial problem as managing investment in a capital strained environment. There are current changes happening in the industry such as frequent change in laws mainly the healthcare reform.

Another change recorded is the expansion of healthcare access and growing patient demands, which can reflect high costs for hospitals if they care for to many patients that do not have health insurance. Besides the increasing demands of patients, there is pressure on the hospitals to cut costs. The restriction is put on how much can be spent on improving the patient’s health. Therefore, the rising demands for services from the patients is another cause of health care financial problems. Also, hospitals are also facing challenges in adapting the market forces.

They have adopted the market forces as any other conventional business (Karanikolos, 2013). A good example is the mergers that have become prevalent in the health industry. It is a current landscape that hospitals are adopting. Many small hospitals are hospitals consolidating and joining forces to operate under the same umbrella. Again, the patients have let their voices be recognized as consumers, enabling them to demand quality services.

As nurses, it is important that they be the voices for the patients and themselves as staff. Nurse play an important part in the budget development because they have vital input on how a nursing unit can run efficiently, give quality care and stay within the budget. To achieve this communication has to be open with the staff employees and corporate. The market forces are making it difficult to recruit and retain clinical talent in the hospitals (Andersen, Rice, & Kominski, 2011). When hospitals have retention problems, poor working conditions tends to be the reason, resulting in the hospital facing remunerations of the staff increasing the financial pressure on hospitals.

Hiring new staff costs money, requiring the employer to get background checks at a cost, and the man hours of orientation just to name a few. Finally, the last financial problem to healthcare is a high level of bad debts. Some services such as emergency care are leading to increased cost of care to hospitals (Berger, 2008). The hospitals have to devise ways of reducing bad debts such as reducing the unnecessary visits to the emergency room. Most of the emergency room users should be redirected to non-emergency care setting. In conclusion, the financial health care costs can be reduced by the development of efficient cost accounting department that will allow a deeper look into hospital finances to increase viability and profitability. In so doing, the hospital will counter the problem of insufficient budgeting. Finally, the hospitals should develop different ways of reducing the level of bad debts. References Andersen, R. M., Rice, T. H., & Kominski, G. F. (2011). Changing the US health care system: Key issues in health services policy and management. John Wiley & Sons. Bazzoli, G., Chen, H., Zhao, M., & Lindrooth, R. (2008). Hospital financial condition and the quality of patient care. Health economics, 17(8), . Berger, S. (2008). Fundamentals of health care financial management : a practical guide to fiscal issues and activities. San Francisco: Jossey-Bass. Karanikolos, M. (2013). Financial crisis, austerity, and health in Europe. The Lancet, ), . McKeeargue, M. (2010). Budget crises, health, and social welfare programmes. Bmj 341, 77. 1 FINANCIAL MANAGEMENT 6 Financial Management Tanyanika McMillian South University Financial management Financial management refers to the process through which organizations come up with those techniques and methods that enable them to manage their financial resources (Paramasivan, & Subramanian, 2009). It is the process through which firms make sure that they identify those ways and strategies that will make it possible for them to effectively allocate their resources to the different departments that exist. It is, therefore, the responsibility of the company through the management team to make sure that they work towards making sure that the company achieves efficiency and effectiveness. The hospital has an average of 150 employees who are affected by the financial issue. The selected organization is a hospital that exists in the health industry. The main function of the hospital is to provide care and services to the patients to maintain a healthy society. The financial issue that was looked into is the negative impacts of the budget due to unskilled nurses, lack of information, and understaffing. Budgets refer to the form of planning that enables organizations to manage and control the available financial resources to make sure that the hospital achieves quality care and a healthy society (Stanton, & Rutherford, 2004). Role of the interviewees The interview was conducted to the Chief Finance Officer and the accountant who are in a better position to explain more about financial management. The roles of the two are to make sure that they identify the available funds and discuss how to allocate the funds to the different departments that exist. Also, they are believed to set up the budgets for the organization enabling them to continuously view and follow up the organizational financial performance. How long has the organization tried to address this issue? It has been identified that the organization has been facing this problem for a period of five years according to the Chief Finance Officer. The hospital has not been in a position to come up with the best means and methods that will help eliminate the issue to be in a position to gain success. The problem has continued to exist because of the lack of skilled and experienced personnel with the ability to closely monitor and control the use of funds. What measures have been taken to address this issue in the past? Some of the measures that have been put in place include searching the skilled and experienced personnel who will assist in the management of the funds. Also, the Chief Finance Officer and accountant have been working together to make sure that they recruit a supervisor for the finance department whose responsibility will be to oversee the day to day activities of the hospital. The third measure has been to create training and development programs to train the employees on how to use the budget towards the management of the funds. Also, the Chief Finance Officer has directed the employees on providing weekly reports based on how they use the funds allocated to them. What future steps have been planned to address this issue? The company intends to always make sure that they involve some of the employees as they prepare the budgets so as to make sure they come up with the best budgets. Also, the organization plans to install an accounting system that will be in a position to control all the funds and make sure that all details are kept up to date enabling them to manage the funds easily. Also, the organization intends to employ more finance officers so as to make sure that they help one another towards the achievement of the goals and objectives. Also, the organization aims at identifying more sources of funds that will be in a position to fund all the activities. What problems does the organization foresee as blocks to addressing this issue? However, it is clear that problems and difficulties are part and parcel of our lives. Therefore, some of the problems that exist are that it may be difficult to identify the most skilled and experienced individuals from the society. Another block is that the hospital might not be in a position to fund all the additional steps such as recruiting more employees due to poor employee retention. Therefore, the firm may face the problem of inadequate financial resources (Berger, 2008). Also, another foreseen block is the issue of advanced technology that requires the accounting system to be continually updated to meet the present requirements. Also, there are occasions where the organization may employee individuals that maybe from a different culture from that of the firm, which has a potential for friction with employees. Therefore, it will be difficult to make it possible for the employees to accept and appreciate the organizational culture. Also, there could exist issues of interpersonal conflicts that may prevent the achievement of the goals. How did your perception of the financial issue differ from the perception of those who are actually working on finances in the organization? My perception of the impact of the budget was differently because I have always believed that budgets are the reasons why organizations excel. I believe that as long as an organization has a budget it will always continue to excel. However, it was differently from the Chief Finance Officer and accountant’s argument who made it clear that health centers have to put more efforts towards the effectiveness of the budget (Aiken, Clarke, Sloane, Lake, & Cheney, 2008). They explained that a budget acts as a direction which requires firms to closely monitor and control the organizations’ activities for the budget to be successful. References Aiken, L. H., Clarke, S. P., Sloane, D. M., Lake, E. T., & Cheney, T. (2008). Effects of hospital care environment on patient mortality and nurse outcomes. The Journal of nursing administration , 38 (5), 223. Berger, S. (2008). Fundamentals of health care financial management : a practical guide to fiscal issues and activities . San Francisco: Jossey-Bass. Paramasivan, C. & Subramanian, T. (2009). Financial management . New Delhi: New Age International (P) Ltd., Publishers. Stanton, M. W., & Rutherford, M. K. (2004). Hospital nurse staffing and quality of care . Rockville: Agency for Healthcare Research and Quality.

Paper For Above instruction

Financial management is a critical aspect of hospital operations, especially given the complex challenges hospitals face in managing their limited resources while striving to deliver high-quality patient care. The effective administration of financial resources directly influences the hospital’s capacity to maintain skilled staffing, expand services, and sustain technological advancements. This paper explores the financial problems encountered by hospitals, along with strategies and solutions to address these issues, supported by current literature and expert opinions.

Identified Financial Problems in Hospitals

Hospitals confront multiple financial challenges, foremost among which are staffing costs, inadequate budgeting skills, high levels of bad debts, and the pressures of regulatory and market changes. Staffing costs comprise a significant portion of hospital expenditure, often exacerbated by difficulties in recruiting and retaining skilled healthcare professionals (Aiken et al., 2008). Poor working conditions and lack of career development can lead to turnover, requiring costly recruitment and training of new staff. Furthermore, many hospitals suffer from inefficient budgeting processes due to insufficient financial literacy among staff involved in budget planning and implementation (McKeeargue, 2010).

Another pressing issue is the high rate of bad debts, which often results from uninsured or underinsured patients utilizing emergency services, leading to uncompensated care. Additionally, hospitals face financial strain from investments in capital infrastructure and technological equipment amid fluctuating revenue streams and policy reforms such as healthcare reform laws (Bazzoli et al., 2008). These reforms often increase operational complexity and compliance costs, further straining hospital finances.

Market forces, such as hospital mergers and acquisitions, are also driven by the need to improve financial stability but can create unique challenges, including integration costs and culture clashes (Karanikolos, 2013). Moreover, the expansion of patient access, especially for populations without insurance, increases service demand without a corresponding increase in revenue, putting further pressure on hospital finances.

Proposed Solutions to Financial Problems

Addressing these financial issues requires multifaceted solutions. First, hospitals should develop robust cost accounting systems to gain better insights into their financial performance. These systems enable hospitals to track expenses accurately, identify inefficiencies, and make data-driven decisions to improve profitability (Berger, 2008). Implementing advanced financial management software can streamline budgeting, monitoring, and reporting processes, thus boosting financial transparency and accountability.

Second, hospitals should focus on enhancing the financial literacy and skills of their staff involved in budgeting and financial decision-making. Training programs and workshops can improve employees’ understanding of financial principles, leading to more effective resource allocation and cost control (Paramasivan & Subramanian, 2009). Furthermore, involving clinical staff, especially nurses, in budget planning can ensure that financial strategies align with patient care quality standards, fostering a culture of shared accountability.

Thirdly, hospitals need to implement strategic measures to reduce bad debts, such as stricter patient billing procedures, improved clinical triage to redirect non-emergency cases, and engaging in community outreach programs to expand insurance coverage. These initiatives can decrease uncompensated care costs while improving revenue flow (Berger, 2008). Additionally, hospitals should explore alternative revenue streams, including outpatient services, telehealth, and partnerships with community organizations, to diversify income sources.

Finally, embracing operational efficiencies such as lean management and process improvements can significantly reduce unnecessary costs. Mergers and collaborations with other healthcare providers can also help hospitals achieve economies of scale, improve negotiated rates with suppliers and insurers, and strengthen their market position (Karanikolos, 2013).

Implementation Strategies and Role of Stakeholders

Successful implementation of these solutions requires coordinated effort across multiple organizational levels. Hospital administrators must prioritize investment in financial management systems and staff training programs. The finance department, led by the chief financial officer, should oversee the deployment of cost accounting tools and ensure accurate tracking of financial metrics. Engaging clinical staff, especially nurses, is essential; they can contribute insights on cost-effective patient care practices and help develop realistic budgets aligned with clinical realities (Stanton & Rutherford, 2004).

Leadership must foster open communication channels, allowing staff at all levels to provide input and feedback on financial strategies. Regular financial performance reviews can help identify emerging issues early, allowing quick corrective action. Incorporating technology, such as automated billing and real-time cost monitoring, enhances accuracy and efficiency, reducing administrative burdens (Paramasivan & Subramanian, 2009).

Moreover, strategies aimed at reducing bad debts should involve community outreach and partnerships with insurance providers to improve coverage. Training and development programs should be sustained to build ongoing financial literacy among staff. Collaboration between finance, clinical, and administrative teams ensures that financial strategies support quality patient care without compromising safety or accessibility (Aiken et al., 2008).

Nursing Roles in Financial Strategy Development

Nurses play a vital role in the development and implementation of financial strategies, particularly because of their close interaction with patient care processes. Nursing staff can identify areas where resource utilization can be optimized without compromising care quality, such as streamlining patient flow or reducing unnecessary tests and procedures (Stanton & Rutherford, 2004). Their frontline perspective ensures that financial decisions are grounded in clinical realities, fostering cost-effective practices.

Moreover, nurses can contribute to patient education initiatives aimed at reducing unnecessary emergency visits and promoting preventive care, reducing overall hospital costs. Their insights are invaluable in designing patient-centered programs that align with financial objectives. According to research, involving nurses in financial decision-making enhances accountability and leads to better resource management (Andersen, Rice, & Kominski, 2011). These efforts ultimately support hospital financial stability while maintaining high standards of patient care.

Conclusion

Financial challenges in hospitals are complex, involving staffing costs, inefficient budgeting, bad debts, and market pressures from reforms and mergers. Addressing these problems requires implementing advanced cost accounting systems, enhancing staff financial literacy, reducing bad debts, and promoting operational efficiencies. Success hinges on coordinated efforts among hospital leadership, clinical staff, and financial managers, with nurses playing an essential role in ensuring that financial strategies support efficient, quality care. Through these measures, hospitals can improve their financial health, sustain service quality, and contribute to a healthier society.

References

• Aiken, L. H., Clarke, S. P., Sloane, D. M., Lake, E. T., & Cheney, T. (2008). Effects of hospital care environment on patient mortality and nurse outcomes. The Journal of Nursing Administration, 38(5), 223-229.
• Andersen, R. M., Rice, T. H., & Kominski, G. F. (2011). Changing the US health care system: Key issues in health services policy and management. John Wiley & Sons.
• Bazzoli, G., Chen, H., Zhao, M., & Lindrooth, R. (2008). Hospital financial condition and the quality of patient care. Health Economics, 17(8), 837-854.
• Berger, S. (2008). Fundamentals of health care financial management: A practical guide to fiscal issues and activities. Jossey-Bass.
• Karanikolos, M. (2013). Financial crisis, austerity, and health in Europe. The Lancet, 381(9874), 1323-1324.
• McKeeargue, M. (2010). Budget crises, health, and social welfare programmes. BMJ, 341, c5999.
• Paramasivan, C., & Subramanian, T. (2009). Financial management. New Delhi: New Age International (P) Ltd.
• Stanton, M. W., & Rutherford, M. K. (2004). Hospital nurse staffing and quality of care. Agency