Financial management is importantto the organization because it provides information about accounting andfinance that help the healthcare organization in achieving its goals. Financialmanagement overlooks various administrative duties such as, planning,organizing, and controlling, etc.
that help the management team of the organizationmake decisions and work towards accomplishing the organization’s purposes. Themajor objectives of the financial management of a healthcare organization areto generate income, to respond to regulations, to facilitate relationships withthird-party payers, to influence the method and amount of payment, to monitorphysicians, and to project tax status (Nowicki). All of theseobjectives and responsibilities of financial management not only assist theorganization in achieving its purposes, but also influence the organization’soverall success. The purpose of healthcaremanagement is to achieve the organizational purposes (Nowicki). The owner of anorganization establishes the organizational purpose and in a healthcareorganization the not-for-profit organization’s purpose is to offer healthcareservices to the community, the for-profit organization’s purpose is to make aprofit.
The healthcare management team works towards achieving theorganizational purposes by effectively communicating them with the employees,owners, and customers etc. Healthcare financial management on the other hand isresponsible for providing information to the healthcare managers thataccomplish the organization’s purposes. Financial management report and advisethe healthcare management team. The major objectives of healthcarefinancial management are to generate reasonable net income, net income is thedifference between the organizations revenues and expenses (Nowicki). In order for theorganization to be running smoothly, the organization must have a positive netincome. The second objective is to respond to regulation. The government regulateshealth care, to protect the sick, elderly, etc.
and the healthcare financialmanagement is responsible for responding to the rules in an effective manner (Nowicki). The third is toease relationships with third party payers. Forth is to influence methods andamount of payment with third-party payers. The fifth objective is to monitorphysicians (Nowicki). Physicians highlyinfluence the amount of spending in a healthcare organization, hence financialmanagement makes sure that they are in check and are not a liability to thehealthcare organization. The sixth and the last objective is to project taxstatus.
The healthcare financial management protects the organization’s taxstatus by reducing tax liability and their tax-exempt status (Nowicki). Healthcare managers represent autilitarian view of ethics (Nowicki). For example, thephrase “the greatest good for the greatest number”.
This view lets managersforgo the use of resources for one patient, to preserve the resources for otherpatients in case of limited availability of resources. On the other hand,clinicians have a more deontological view of ethics. Their decision making isbased on their duties to the patients, and not the ends-based decision makingof the managers (Nowicki). Financial managers should beconcerned with quality initiatives because failure to deliver the best qualityof care can be harmful to the patient and also result in lawsuits and colossal financialloss to the organization.
Quality initiatives provides a way to keep everythingin check, such as how the resources are being used and help financial managers makethe necessary changes to improve resource distribution. The financial management providesaccounting and finance information to the managers who then make decisionsaccordingly (Nowicki). As healthcarechanges in the future, the financial management and the management functions,such as, planning, organizing, staffing, directing and controlling will beimportant for the healthcare organization to make decisions and accomplish itspurposes.