Managing financial resource in Health and Social Care
Table of Contents
TASK-3 Understand the importance of monitoring budget expenditure in health and social care organizations 6
TASK-4 Understand how systems and processes for managing financial resources influence health and social care services. 8
The aim of present report is to help the users to understand the concept of financial management in health and social care context. Emphasis of the present report would be on cost and ways through which it can be managed so as to enhance overall profitability of the business in health and social care (W. Bryans, 2007). Present paper would also review the systems which can be efficiently used in the organizational context for cost reduction. This confirms that the organizational resources can be managed with high efficiency in order to control cost and obtain high returns in the business.
TASK-1 Understand how systems are used to manage financial resources in health and social care
Program for the day
Program developed for the day would include below mentioned activities:
§ Investigating principle of costing
§ Collecting critical information required for managing financial resources
§ Discussion over role of planning in healthcare
§ Decision to be made over way expenditure should be done
1.1 The principles of costing in the Bridge projects and similar projects, including: an explanation of a cost center the use of budget as control system
For the present context of Bridge project and other similar projects there are several costing principle and business control methods which can be deployed. These costing principles would help in examination of the current cost of the project along with the budgeted cost. Cost control would ensure that projects are undertaken in a controlled environment wherein company is spending its financial resources with planned budget (M Martin, 2010). Costing methods deployed in the project should be such that they control the overall expenditure of the project. Procurement for the bridge project should take place using the bidding methods as this would help in deploying more legal guideline for the procurement of resources in health and social care. Procurement is an important costing element and procurement should be done with high degree of transparency, due diligence and integrity as this would help in order to manage the expenditure in an efficient manner and overall budget of the cost would be managed under given boundaries.
1.2 An identification of the specific information the team leaders will need to allow them to manage their financial resources efficiently and control their budgets. This would include a list of specific categories of cost
There would be need of various financial and non-financial resources from team leader in order to manage the financial resources and control their budget. Availability of this information would help the team leaders in order to allocate various costs, manage cost and take decisions so that the project offers high return on investment for the organization.
Accurate and transparent accounting information
Accurate and transparent accounting information would enhance the confidence of users in the project. This will also support in making accurate decisions improving overall welfare for the organization. For management also, accurate and transparent accounting information would develop a clear picture regarding profitability, liquidity and efficient in order to manage their financial resources.
Information pertaining to risk management
A project leader should know about the financial and business risk which relates with the project and can have their impact on the profitability of the project undertaken by the organization (D. Watson and A Head, 2012). It is of high importance for the organization as risk can vary the profitability organization gain through project hence goodwill of the company would be affected through this.
Forecast (short term and long term)
Project managers need to make short term and loan term forecast for the plan they intend to achieve. Forecast made in the project would help in formulation of the strategy and budget which project manager forms for the project.
Audit report information
This information needs to be managed critically by the organization for efficient resource management. This information confirms that the organization is properly managing its financial resources (M Martin, 2010). Financial management style of the organization is decided through this information and proper resource allocation can be done in the bridge project through this. External stakeholders also access this information in order to provide financial assistance or credit for the project.
Specific categories of budget for the present project would include below mentioned:
· Cost of staffing
· Consumable cost
· Long term building expenditure
· Marketing cost
· Fixed asset cost
· Safety cost
· Training and development cost
· Cost for interest payment
TASK-2 Understand the role of planning in the management of health and social care budgets
2.1 Discuss for the benefit of the seven managers attending the meeting the diverse sources of income that may be pulled together to provide funding for going it Alone, being careful to pay attention to the precariousness of this income. You give examples linked to each source of income
Going it Alone project is purely funded through Youthscape and funds are being arranged through several sources as given under:
Funds can be raised through voluntary organizations in form of donations for the finance and healthcare projects. These funds would be helpful in order to develop as the source of income and can be used to pay operating expense for the project (B Mick and C John, 2003).
Local and national government
National and local government can allocate funds for the present project so as to make provision for the healthcare services. Such financial resources can be used in order to finance different healthcare projects which are specifically for basic health care services.
Private health insurance
This source of income for the project can be developed by allowing the patients to obtain medical services and payment is being made by the medical companies (M Steven & B Sheffrin, 2003). This income source is very crucial as insurance company pays for the services provided by the company.
2.2 Next the benefit of the seven managers, you analyze the factors that may influence the availability of finance for this project, emphasizing the difficulty involved in maintaining ongoing funding at the level it is needed if the houses are to stay open. Give practical examples to support your points.
Some of the key factors which may have influence over the availability of finance for the current project are given as under:
Sensitivity in the political context would also affect the overall income which would be gained by the current project (Department of Health, 2011). Higher level of instability in the political domain would affect the overall operations for the current project and therefore overall amount of income collected for the current project would be quite less as compared to the situation when political stability is high.
Allocation from central government
With increasing allocation of the financial resources there would be higher degree of income available for the current project. Hence due to high income it is imperative to offer high quality services.
Ability to negotiate with the regional allocation of funds
When the project has sufficient ability to negotiate for the regional allocation of funds then there would be high availability of funds. Inability of the project to negotiate at the regional fund allocation impact over the total income derived from the current project.
2.3 Bearing in mind that the objectives of your meeting is to educate these project managers on the realities of funding in the care sector so now, you review three different types of budget, relating each of them to the situation of Youthscape and Going it alone. You review:
I. Cost centers using “Bridge projects” as an example
II. Project management which is where Going it alone fits in
III. Outsourcing contracts which is how Youthscape was able to develop its fostering and adoption division
There can be numerous types of budget expenditure which can be formed in the health and social care setting. Cost structure includes staff cost, interest cost, marketing cost, fixed asset cost and training cost etc.
Operating expenditure budget
Operating expenditure budget is an important type of budget which can be used in the Going it alone project. This type of budgeting is important in order to ensure that the different stakeholders in the organization attain sufficient reward which can motivate them.
Capital expenditure budget
In this type of budgeting for the Going it Alone project, company would incur significant expenses for attaining the fixed assets such as the motor vehicles, building and health equipments etc (M Jones and A Atwal, 2009). Such assets would be important in order to enhance overall quality delivered through project. Such budget would help in order to ensure that required assets are purchased and allocated to different department in order to reduce overall cost and enhance the return gained though the current project.
Marketing expenditure budget
A budget needs to be prepared for the Going it Alone project in order to decide on the financial expense made for the marketing process. This would allow making proper budget for the marketing of activities so that there is no over budgeting through the marketing expenses in the project.
Health and safety expenditure budget
Expense incurred in the project on health and safety of the employees need also budgeted so that overall financial position of the company can be controlled. This would ensure that health and safety expense is appropriately spent in the project for the appropriate use of funds.
2.4 As the last item on the agenda for your meeting, you evaluate the way that decisions about expenditure are likely to be made within Youthscape making sure to consider both internal and external influences
Decision on financial matter of a project should be taken based on the availability of finance as this would tell what a company should buy and what not. Availability of the financial resource for the organization would enhance the ability of the project to gain healthcare resources and limited funds would restrict the ability of organization to acquire appropriate resources. Funds available in the project are distributed as per the priority of the project so that most important expenses are made so as to offer good healthcare services with little amount of resources.
Demand on service
Expenditure decision would be made on the demand of service provided through the project in context. Services having high degree of demand would be having requirement of higher amount of financial resources (R Klein, 2006). Hence quality health care services can be ensured with the appropriate health care equipments in place.
Central government guidance
Expenditure made in the project are also influenced by the guideline issued by central government in order to ensure that the project meet required principle from the perspective of regulatory bodies. According to the guideline of central government capital expenditure should be such that it enhances the level of healthcare.
TASK-3 Understand the importance of monitoring budget expenditure in health and social care organizations
3.1 In the first section of your hand out, you explain how these managers can manage budget shortfalls and in doing this you give practical examples linked to their projects
Project managers needs to track the budget and expenses regularly so that there are no instance of budget shortfall or deficit. This can be done by developing a comprehensive plan from the start of the project so that such incidences are not encountered during the project execution. Shortfall in the budget should be supplemented through the additional allocation made through the local or central government. This would help the organization to make purchase of the capital expenditure within given budget to the project manager. Shortfall of the budget for a particular project can also be managed through obtaining finance through local sources for the activities which has not been accounted in the budget (A Edwards, 2012). For example, for the present project Going it alone it is important that project manager develop a comprehensive budget at the start of the project and all expenses take place as per this plan but at the same time in case there are some urgencies in the budget which need to be handle in the project such as over expense on the human resource. Then such shortfall can be covered up through taking additional finance through local and national government so that such shortfalls in the budget are met.
3.2 Explain again with examples, the actions that managers can take if they suspect fraud on the part either their staff on their suppliers
Managers can take a number of actions while in suspect for the fraud on the part of their staff, supplier or any other stakeholder of the project. These are given as under:
Investigation and fraud detection
For any project, investigation regarding fraud needs to be conducted and this would also include assigning the responsibility on the various stakeholders for the fraud. Before conducting the investigation for the fraud, total amount of financial losses incurred by the organization should be known and the way it has happened. Valid evidence need to be obtained before taking legal action against the stakeholders for the fraud. Occurrence of fraud in the project can be investigated by exploring the financial records of the organization or detection of the behavior of people working in a particular project.
Once the problem within the project team has been identified i.e. fraud has been investigated and assigned within the project team of the organization then legal advice need to be taken from the professional advisors so that legal action against the person conducting fraud can be taken. Overall investigation can be done for the identification of the fraudster and remedial action can be taken against the person identified as fraudster (C Webster, 2002). In case the fraud is material then there can be legal department of the organization can report the case to the legal enforcement agencies. For the immaterial cases company can take action against the persons who are involved in the fraud so as to reduce number of frauds or legal cases involving the organization. Involvement in the legal cases for the organization would result into high amount of funds and time from the legal department of the organization. Hence in immaterial cases there would not be any legal action by the fraud committee of the organization would take action against the involved person.
3.3 Suggest and evaluate the methods/systems that your managers can use to monitor and control their budgets.
For any organization monitoring and control of the budget would be of prime importance so as to ensure that the funds are being deployed for the correct purposed which has been planned by the organization. Internal and external audits can be conducted by the organization in order to ensure appropriate fund utilization in the organizational context. Internal audit for the organization is done on continuous basis and help organization to know whether they are maintaining their books as per the regulatory requirements relating to specific country. These books prepared internally have the ability to provide the fair picture of the overall financial health of the organization (C. Ham, 2004). External auditors are also deployed by the organization in order to check and monitor the books of accounts for the organization as per the relevant accounting regulations so that there are no unfair accounting practices being followed in the organization for accounting for financial records. External auditor would be having two main objectives i.e. to reveal the misuse of finance in the organization and to highlight any type of intentional mistake made by the staff team for their personal benefit. These intentional mistakes and misuse of the funds in the organizational context has the capacity to affect the overall performance of the organization.
TASK-4 Understand how systems and processes for managing financial resources influence health and social care services
4.1 Identify with examples the information needed by Youthscape to enable it to make decisions relating to the type and level of service offered by Familaid
An organization can make use of the management accounting information in order to find out where financial proprieties are taking place in the organizational context. This can also be explored through the analysis of the actual and project budget developed by the organization against the result obtained till date as this would showcase the difference between the original results received by the company showing financial proprieties. In case comparison between actual and result obtained is made and the negative variance attained is quite high then the company can ascertain that there is possibility that some financial fraud has taken place in the organizational context (M Martin, 2010). For example, Youthscape can make a yearly budget and there can be quarterly financial audits which can be conducted and in case there is high degree of negative variance between result obtained by Youthscape and the planned budget then the service level and type of services offered by Familaid can be suspected. There can be possibility of financial fraud in such instance and internal audit can be carried out in order to explore the actual reality of the financial fraud. Internal and external audit carried out in the organizational context can be helpful so as to ensure the financial fraud which is suspected by the management. Further these audits would be able to realize the quantum of overall financial fraud and the stakeholders involved in the fraud.
4.2 Explain with examples how it is possible for project leader to analyze the relationship between number of annual family visits made by Familaid support workers, the cost incurred in delivering the services and annual expenditure of the project
In order to charge consumers fairly it is important that an accurate relationship is established between the care service delivered to the consumers and the cost incurred in delivering services to them. Based on the cost incurred by the company on care services a markup would be charged over and above the cost to decide on price. For example, in case there is cost incurred for 50 Pound in order to deliver the care service then organization would charge 55 pound to the customer making 10% profitability for the organization. Cost incurred by the organization would be made transparently by revealing that various expense heads to the stakeholders and way in which financial cost has been spent by the stakeholders in various financial resources (H Groppelli & A Angelico, 2000). The expenditure made in the healthcare setting should be in compliance with the legal framework governing the way expenditure should be made in the healthcare organizations. Bidding is one of the key processes which can be used in order to buy equipments in the healthcare setting and the best bidder for the equipments is awarded with the order to supply the goods. This would ensure that the organization is following legal framework for the purchase of goods and there is transparency in spending made for the healthcare equipments. Usage of financial resources in the organizational context should be done appropriately as those involved in the financial matters have responsibility to track the expenditure of financial resources in the organization. This would reduce the possibility of the financial frauds in the organization as those involved in the financial reporting for the organization would be held accountable for the financial losses made by the organization.
4.3 Evaluate the impact of financial considerations on those individual service users described here.
Financial considerations made by the organization would be having high impact on the servicer users described here and this is given as under:
Impact on mode of service quality
Increasing level of financial resources in the organizational context would enhance the overall service level delivered by the organization. This would ensure that with availability of the financial resources there is high level of healthcare services being delivered to the consumers in healthcare setting (H Groppelli & A Angelico, 2000). With lower financial consideration there would be lack of equipments in the organizational context and this would impact upon the service delivered to the service users.
Staffing level changes
With availability of finance in the organizational context, it would be viable for the management to provide goods salary to the skilled manpower deployed (M Steven & B Sheffrin, 2003). This skilled manpower would be able to deliver high quality services to the users and when management is not able to provide good salaries to the employees then level of service delivered would also decline. Hence with lower financial consideration number of staff and skill set of staff would decline.
Impact of financial consideration would also be there on the consumable availability as when financial resources are available then consumables would be available and when there is lack of financial resources then consumables would not be available.
4.4 Consider with examples:
I. Available options for additional funds
Additional funds can be available for the organization from several different sources such as the bank funds, taking grant from local or national government or through the charity organizations etc. Further additional funds can also be availed through charging higher to the consumers for the premium level services delivered to them (A Edwards, 2012). Local or national level grant can be one of the major examples for availing additional amount of funds for any organization and that would be based on the service level delivered to the users and overall benefits which users are getting through the delivered healthcare services from the organization.
II. The evidence project leaders might provide to support an increase in funding
Project leaders can provide support in order to increase the funding for the organization as they would be able to assess the overall requirement for funds and make application for grant from the government or to the charity organizations (J Day and L Wigens, 2006). Project leaders would be having adequate knowledge about the resources which can be used further to avail additional funds for the organization and timely action in order to avail such funds. For example, some project leaders might have worked with the charity organizations in their previous work assignments and such relationship can be proved helpful for the organization for availing funds through such sources.
III. The financial information to be presented to your funding sources
There would be range of financial information which would be required to present to the funding source so as to ensure that the funding availed would be used purely for the purpose of benefiting healthcare users. Also audit information would be shared with the funding sources so as to reveal that there is no possibility of financial fraud in the organization and budgeted and actual financial plans of the organization are on target. In addition to this expense type and reason for funding can be justified through additional expenses and benefits which would be provided to the service users through enhanced level of expenditure made in the healthcare. Information required would be different for different sources e.g. government would be looking specifically for the information regarding the benefits which service users are getting and improvement which would be made in the service delivered by the organization while banks may look for the return on investment which would be earned by the organization by making investment in such projects.
It is important for any organization to make appropriate use of its finance so that cost of the operations can be controlled to gain higher degree of return through the particular healthcare project. Cost allocation and their tracking in timely manner would be highly important for the organization operating in healthcare segment. Higher cost needs to be allocated to the items of higher priority so that goals of the organization are achieved with high efficiency.
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