Introduction The role of financial management in health services primary role is to secure the financing need to meet an organization operating objectives. The role of the financial manager is to plan for, acquire, and utilize capital to maximize the efficiency and value of the organization. Four Elements “The four elements of financial management are: planning, controlling, organizing and directing, and decision making (Hearle, 2009) p. g 56. ” The elements are based on the purpose of each task.
Planning identifies the steps that must be taken to accomplish the organizations objectives. Controlling makes sure each are of the organization is following the plans established. Decision making allows the financial manager to make decisions among available alternatives, and Organizing and Directing allows the financial manager to effectively carry out established plan by utilizing the organization resources. Planning “The purpose of financial planning is to identify objectives and then identify steps required to meet the objectives (Hearle, 2009) p.g 56. ”
The financial is responsible for identifying the steps and ensuring that the objectives are met. Controlling One way of ensuring each area of the organization are following the plans established are studying and comparing earlier reports. “The comparison will show financial manager where the organization will need attention due to being ineffective (Hearle, 2009) p. g 57. ” “The purpose of controlling is to ensure plans are being followed (Hearle, 2009) p. g 57. ” Organizing and Directing.
“While organizing, the financial manager will decide how to use resources available by the organization that will most effectively carry out plans that have already been established by the organization (Hearle, 2009) p. g 57. ” The financial manager will work daily to keep the results running efficiently. “The purpose of organizing and directing is to ensure effective resource use and daily supervision (Hearle, 2009) p. g 57. ” Decision making “Decision making is parallel to controlling, planning, and organizing. Decision making relies on analysis and evaluations (Hearle, 2009) p.
g 58. ” The purpose of decision making is to make informed choices. GAAP “Generally accepted accounting principles (GAAP) are uniform standards and guidelines to financial accounting and reporting (Kaufman, 2007) p. g 16. ” GAAP sets te guidelines for classification criteria for financial reporting. “GAAP consist of three sets of rules: basic accounting principles and guidelines, detailed rules and standards issued by the Financial Accounting Standards Board (FASB), and the generally accepted industry practices (Kaufman, 2007) p. g 16.
” If a organization distributes its financial statements to the public, it is required to follow GAAP in preparation of their financial statements. “If an organizations stock is publicly traded, federal law requires the organization financial statements to be audited by independent public accountants and the independent accounts must certify the related notes and financial statements have been prepared in accordance to GAAP (Kaufman, 2007) p. g 16. ” Ethics The goal of compliance and conduct plans is to ensure that employees report behavior that is inconsistent with the ethics code of the organization.
“An organizations culture can have an impact on employees’ behavioral control (Sandrick, 2008) p. g 98. ” An individual’s ethical values and morals will assist with following moral obligations and code of conduct established by the organization. Ethical Issues “All health care organizations face organizational ethics challenges. The challenges include bottom line pressure, competitive pressure, and social goals. Hospitals consume millions on supplies, drugs, and services (Sandrick, 2008) p. g 99.
” The system used for purchasing these items is vulnerable to kickbacks, favoritism, fraud or theft. The relationships between doctors and hospitals can be quite complex. “Moreover, hospitals face ethical challenges relating to management of the human resource function, including conflict of interest, familial relationships between staff members, equal treatment of hiring, firing, and promoting employees, sexual harassment, and prejudice and discrimination (Sandrick, 2008) p. g 100. ” Hospitals also face pressure to contain cost and make beds available.
The pressure to free beds is driven by the increase in access to care. “The pressure can also be driven by the need to get paying patients in beds currently occupied by patients with limited resources and income (Sandrick, 2008) p. g 100. ” Just as an organization must possess a communication system, human resource department, and finance function; it must possess an ethics infrastructure to support and promote ethical decision making. Conclusion In conclusion, financial management is a key component in the success of any organization.
In short, health care provides care and treatment but is still a business with the need to increase their revenue, which will allow the organization to continue to operate.. Reference Hearle, K. 2009. “Strategies for Accurate Community Benefit Reporting. ” Healthcare Financial Management (February): 56–61. Kaufman, K. 2007. “Taking Care of Your Organization’s Financial Health. ” Healthcare Executive 22 (1): 15–16, 18–20. Sandrick, K. M. 2008. “Super CFO: Hospital Financial Leaders Soar to New Leadership Heights. ” Healthcare Financial Management (June): 98–103.