Financial Management in a Healthcare Organization
Introduction: Topic and Case
The case of my report is that of a country-wide recognized medical organization that also happens to be an Academic Medical Centre (AMC) that is in the southeastern area of the United States. This organization consists of a medical school and several health facilities, with a workforce of one thousand one hundred medical practitioners. The topic of discussion, in this case, is how monetary constraints can impact AMCs. In this case, my client suffered a seventy million U.S. dollar loss as a result of an improper implementation of their patient accounting system, an unfavorable expenditure criterion, and ineffective reimbursement policies,
Financial Issues Involved
After recording a seventy million U.S. dollar loss, my client hired an interim Chief Financial Officer (CFO) from Warbird Consulting Partners to find the underlying causes. The patient accounting system used by my client was very inefficient. It could only meet 53 percent of the facility’s needs. This incompetence in their accounting system proved to be dire, as health facilities heavily rely on data collected to inform their financial decisions (Ayatollahi et al., 2016). The facility did not meet the needs for the operation of their accounting systems, causing them to make poorly informed decisions that contributed to the loss blindly. They spent their finances based on inaccurate data. The interim CFO also discovered that the hospital was engaged in many out of pocket transactions within the hospital, whose implication is a lower reimbursement by the patient’s medical insurance cover (Deng and Pan, 2019). This circumstance was as a result of the stiff competition it was facing regarding the medical services provided in the facility.
Perspectives of the Financial Challenges
There are four major perspectives that every profit organization looks at; the financial, customer, internal process, and the learning and growth perspectives (Raab et al., 2016). The financial perspective focuses on how to save on costs and enlarge the profit margins gained by a company. The customer perspective ensures that the customer service and experience is satisfactory to them. The internal process perspective bridges the customer to the company’s financial status, making sure that there is proper uptaking of measures to accomplish the objectives set for each. The learning and growth perspective looks into methods that ensure that the skill and competence level at the managerial, employee and electronic levels is at purr with the standard of the health facility.
The interim CFO sought to satisfy most, if not all, of the issues that he had found to have been the cause of the declining financial status of the company. To meet the financial needs of my client, he changed the management team from being a one-member responsibility to be a team of seven members headed by a vice president. In this manner, the analytics and negotiations were sure to be more informed. To ensure that the patient accounting system meets my client’s standard, he organized for the retraining of seven hundred employees, this being in line with the fourth perspective. The interim CFO also came up with better patient transfer and appointment methods that would ensure the optimization of the health facility’s benefits from reimbursements. He also suggested tactics that would encourage more referrals to the AMC.
Relevance to the Financial Management
The AMC had come up with methods to encourage more referrals to the AMC, skilled personnel operating the patient accounting system, a team to make the best negotiations and deliberations before making any financial decision, and policies to ensure the best possible patient service and experience. My client saw a significant improvement in the company’s business dealings. From such a massive loss, the next financial statement revealed a total of fifty-nine million U.S. Dollars in profits. The financial management of the hospital has undoubtedly improved to its level best.
References
Ayatollahi, H., Nazemi, Z., & Haghani, H. (2016). Patient Accounting Systems: Are They Fit with the Users’ Requirements?. Healthcare informatics research, 22(1), 3-10.
Deng, C., & Pan, J. (2019). Hospital competition and the expenses for treatments of acute and non-acute common diseases: evidence from China. BMC health services research, 19(1), 739.
Raab, G., Ajami, R. A., & Goddard, G. J. (2016). Company Success: Customer Relationship Management and the Balanced Scorecard. In Customer Relationship Management (pp. 117-126). Routledge.