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 organizations financial history.
Managerial accounting provides financial
information to help future oriented decision
making.
Finance Management of the organizations
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
organizations 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
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