A briefing paper had to be presented explaining the practices and process involved in the management of financial resources related to health and social care setting:
- Explain the system used to manage financial resource in health and social care setting
- Determine the role of planning in managing health & social care budget.
- Explain the importance of monitoring financial plan in NHS
- Demonstrate the system for management of financial resources influence health care services
Finance is an important component which helps in effective performance of different functions of organisation working in any sector. It is the duty of the manager to understand about the principles and techniques of accounting which helps in effective management of financial resources. Financial resources means the money which is available to them in form of cash and liquid securities which help in performance of day to day operations. Securing such resources helps in effective and efficient operations to attain success. Management of financial resources also hold an important position in health care sector. In this regard, manager of organisation needs to monitor different budgets and documents like profit and loss account, balance sheet, etc. Airedale Airedale NHS provides clinical services in the UK (Ahnquist, Wamala and Lindstrom, 2012).
In the present report, principles of costing and business control systems as well as information which helps in management of financial resources, regulatory requirements, different kind of sources of income and factors which have influence upon availability of financial resources and different types of budget expenditures will be discussed. Also, management of financial shortfalls, budget monitoring arrangements and information which helps to make effective decision-making, impact of financial considerations upon individual using health and care services and ways to improve health and social care service will be studied here.
1.1 Principles of costing and business control systems
Costs: It is the value of money which is paid for acquiring something new which helps in effective performance of operations. Different items which are needed to consider includes efforts, risk associated, time consumed and material required as well as different resources. Cost which is related to prior period is not considered. For example: Airedale Airedale NHSacquires equipment then cost includes production and delivering charges of such equipment.
Income: It is considered as the money received by Airedale Airedale NHSin respect of services which are provided to their patients. It is further used to operate day to day activities effectively.
Cost benefit analysis: It helps in evaluation of the decisions taken by management. The benefits which are received from business activities are added and all costs which are incurred in this regard are subtracted.
Expenditure: In context of Airedale NHS, expenditure means money spent on acquiring medical equipment. Money is spent in the form of cash or cash equivalents. It can be of two types i.e. revenue and capital expenditure. Revenue expenditure is incurred by care home regarding operations of day to day functions. On the other hand, capital expenditure is incurred on purchase of fixed assets and machineries.
Cost centre: It is considered as a business control system. It is a separate department in Airedale Airedale NHS which is responsible for the costs incurred. They do not take care about the activities regarding generation of profit through use of their assets. It helps to control costs below the budget and contributes indirectly to improve their profits.
Break-even: This analysis helps to determine the activities which are needed to perform well to attain their break-even point. It is the point where cited care home reaches to the situation of no profit and loss. So, it plays an effective control regarding controlling of different costs like fixed and variable (Almalki, FitzGerald and Clark, 2011).
1.2 Information needed to manage financial resources
Management of financial resources is important for Airedale NHSto attain success in their business operations. In this regard, large number of various information are required regarding different aspects. It helps the manager of Airedale NHSto draw important conclusion and improve their decision making. Different business information needed are mentioned as below:
- Employees: The workforce which is working in Airedale NHShas main aim is to effectively provide their medical services in UK. Determination of number of employees helps in effective disbursement of amount of salaries.
- Finance: It includes determination of the amount of funds which is required for the performance of their diversified services regarding basic medical facilities, optical care, etc. It provides an opportunity to raise funds as per the requirements.
- External factors: There are many factors which affect the financial resources. Such factors include change in policies, competitive factors and legal requirements. Non fulfilment of legal requirements affect the government support towards NHS. So, it is duty of manager to follow all legal requirements which help in raising the funds from their different investors and governmental authorities.
- Equipment: In health-care industry, there are frequent changes that happen in medical equipment which makes the services better. It brings an obligation upon the management to adopt such technologies to improve their performance. It requires effective management of funds as per the requirements.
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1.3 Regulatory requirements which helps in management of financial resources
There are many rules and regulations are provided by the government of UK regarding health acre facilities which is need to implement by Airedale NHS while providing their functions. It provides the opportunity regarding effective management of their functions as per such requirements. It also contributes in managing financial resources. Such different regulatory requirements are mentioned below:
- Legislations and code of practice: There are many legislations which are followed by NHS. One of the important legislation is Health and safety work Act 174. As per this act, management of Airedale NHShas the obligation is to take adequate measures which provides the safety of medical representatives and patients. It helps in their prevention from unnecessary penalties impose by government. On other hand, application of the code of conduct provides the direction to workers which improves their performance and effective use of funds (Boulware And et. al., 2016).
- Accountability: It is the broad concept which includes the provision of management and costing accounting. It helps the management of Airedale NHS is to prepare different kind of reports like job costing, performance, inventory management etc. which is used by the internal parties to take effective decisions. It helps in management of their funds as per the information attained regarding operations of different departments in NHS. It provides the opportunity regarding preparation of budgets which directs the employees to meet such standards.
- Audit: It is considered as the process of examination by independent professional about all the activities which are happened in NHS. It helps in identification of the issues which are irrelevant. So, it provides the opportunity regarding improvement of their existing medical services and saving of costs through removal of unnecessary functions. They directs regarding effective disbursement of funds in different departments as per their needs.
2.1 Diverse sources of income encountered in health and social care
Airedale NHS is public organisation which provides free medical facilities in UK. The main aim of organisation is to provide basic medical facilities to all the individuals of society. To provides their functions on effective basis requires sufficient amount of funds. There are many sources from which management of Airedale NHS raise their funds are mentioned below:
- Public: It is the biggest source from where the large number of funds are coming to support the activities of NHS. Under this option, funds are come in the nature of grants from governmental authorities. Such sources of funds are called public. Such grants are free from interest or carry less interest rates. It is difficult to raise funds from public sources as management is need to fulfil different governmental requirements in this regard (Cascio, 2018).
- Private: One of the easy available source of funds in front of the management of NHS. This includes the private organisations, banks and investors. Such funds are come in the nature of loan. One of the important source under this is bank loans which is easily available to NHS. It carries the high rate of interest which is need to by the management within stipulated period of time.
- Voluntary: It is the one of the source from where funds are coming from the outsiders on voluntary basis. It can be come from two paths like local and national. The amount which is come from local entities are called as subscriptions which is used by the management of Airedale NHS to improve their particular services for which such funds are provided to them. On other hand, donations are come from national entities with the aim of developing the facilities which are provided to society. In this regard, not need to provide any returns.