The primary role of Accounting management in healthcare organizations is to manage money and risk in a way that helps to achieve the organization’s financial goals. Evaluation and planning: Evaluate the healthcare organization’s financial effectiveness and overall operations to plan for the future.
To prepare for this discussion: Review this week’s Learning Resources.
Post by Day 3:  Why is ” Financial Management ” a key competency for healthcare executives? Assess how financial management can help healthcare leaders and their organizations become more competitive and viable eventually?
Chapter 1
Introduction to
Health Care
Accounting and
Financial
Management
Financial Management
• Accounting – System for providing financial
information.
– Financial accounting is a formalized system of
recording the organization’s financial history.
– Managerial accounting provides financial
information to help future oriented decision
making.
• Finance – Management of the organization’s
acquisition and disposition of resources
(especially cash).
Figure 1-1
Goals of Financial Management
• Profitability
– Regardless of tax status, health care
organizations need to generate profits.
– Invest in new technologies.
– Subsidize clients.
– Rainy day fund.
– Replace old buildings and equipment.
– Inflation.
Figure 1-2
Profitability Trade-Off
• Risk vs. Return
– The greater the risk an organization
incurs, the greater the anticipated
return.
– When faced with alternatives,
organizations need to assess if the extra
profits are worth the risk.
Figure 1-3
Viability Trade-Off
• Liquidity vs. Solvency
– Liquidity is a measure of resources that
can be used to quickly meet any near term
obligations (like cash).
– Solvency is a measure of the
organization’s ability to meet its long term
obligations.
– Every dollar kept liquid (in cash) is a dollar
that could have been invested in a longer
term, higher yielding project.
Figure 1-4

Purchase answer to see full
attachment