Financial Processes in Healthcare Setting - Essay Example

The rigorous resources that circulate in the healthcare sector dictate the intensity with which financial processes are to be applied. In that regard, the healthcare sector consists of several financial processes upon which financial resources are balanced against other resources in the healthcare fraternity. One major financial process in the sector is the determination of a break-even point. The process named above is usually used in the medical sector to compromise between improving healthcare services and resource allocation in new programs. New programs are conceptualized with the purpose of providing appropriate intervention insofar as medical services are concerned. On the same wavelength, the same programs are supposed to ensure the allocation of resources is achieved with precision in a manner that they are not wasted (Woolf, 2005). The break-even point enables programs to achieve efficiency in service delivery and also provide resources based on priorities. Another important financial process inherent in healthcare facilities is the calculation of cash flow. Cash flow is a vital process as it measures a facility's liquidity. In that regard, medical facilities are required to have working liquid cash upon which fast-moving activities are financed, such as supplies. In essence, the cash flow process enables medical institutions to manage liquid cash throughout their working cycle (Healthcare Finance News, n.d). Last but not least is the budget variance analysis. The process mentioned above is usually used in medical facilities to determine the level at which budget expectations are achieved. Following budget expectations is vital not only for public-funded organizations but also for private medical facilities (Healthcare Budget Variance, n.d.). Budget variance analysis determines the success of a medical program in the sense that it measures the difference between budget figures and actual results. By utilizing budget analysis, therefore, healthcare financial heads can correct financial performance. Thus, the conceptualized program becomes effective as per the original budget.

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References

Healthcare Budget Variance. (n.d.). Brainmass.Com. Retrieved July 7, 2020, from https://brainmass.com/business/budgets/healthcare-budget-variance-629355#:~:text=Budgeting%20is%20an%20important%20activity%20within%20every%20healthcare%20organization.&text=This%20is%20important%20because%20variance

Why days cash on hand so important for hospitals? (n.d.). Healthcare Finance News. https://www.healthcarefinancenews.com/news/why-days-cash-hand-so-important-hospitals

Woolf, S. H. (2005). The Break-Even Point: When Medical Advances Are Less Important Than Improving the Fidelity With Which They Are Delivered. The Annals of Family Medicine, 3(6), 545–552. https://doi.org/10.1370/afm.406