Healthcare Financial Concepts

Healthcare Financial Concepts

Healthcare managers within a health organization budget, plan, monitor the budget and expenditures, and advise and manage the use of assets. A thriving healthcare administrator is one who, through planning, organizing, controlling, and decision-making, can adjust the inflow, revenue, and outflow expenses to achieve the most beneficial end outcome for the organization (Baker, Dworkin, & Baker, 2017). The Keys to analyzing a healthcare organization’s success and stability are assets, liabilities, and equity. Assets are those things that add value to the business’s worth either at that moment or in the future. Liabilities are the things that remove weight from the business’s capital, for example, financial debts. Lastly, equity is utilized to identify the contribution of money invested into a business’s worth, also called net worth. The heart of accounting is the relationship between the three (2022). There are three financial statements health managers must know how to read and analyze. The first financial statement is a balance sheet. This tool provides a picture of the organization’s financial health for a given period, which lists the assets, liabilities, and equity. The next is an income statement, also known as a profit and loss statement, which provides an overview of the income and expenses during a set period. Lastly, leaders use cash flow statements that detail the inflows and outflows of cash for a specific period. These are broken down into operating, investing, and financing activities. This demonstrates the organization’s ability to work in both the short and long term (Cote, 2020).

The healthcare industry encompasses different types of environments, for example, hospitals, emergency services, primary care providers, long-term care, and ambulatory services. Hospitals have always been one of the primary foundations of the industry. According to the Centers for Medicare and Medicaid (CMS), in 2011, hospital care accounted for $850 billion of the total $2.7 trillion of national health expenditures, accounting for approximately one-third of the total healthcare spending (Patrick, 2014). The structure of a healthcare organization is a vital factor in management (Baker, Dworkin, & Baker, 2017).

Reference

Assets, liabilities, and net worth. (2022, January). Retrieved January 29, 2022, from https://class.aiu-online.com/_layouts/MUSEViewer/Asset.aspx?MID=21720190&aid=21720191

Baker, J. J., Dworkin, N. R., & Baker, R. W. (2017, February 15). Health Care Finance.

Retrieved January 28, 2022, from https://aiu.vitalsource.com/reader/books/9781284141375/epubcfi/6/20[%3Bvnd.vst.idref%3Di09_Chapter01]!/4

Cote, C. (2020, June 16). How & why managers use financial statements. Retrieved March 4, 2022, from https://online.hbs.edu/blog/post/how-managers-use-financial- reports #:~:text=There%20are%20three%20key%20financial%20statements%20managers%20should,a%20company%E2%80%99s%20financial%20health%20for%20a%20given%20period.

Patrick, M. (2014, November 06). Analyzing hospital expenses: Breaking down the crucial costs. Retrieved January 28, 2022, from https://marketrealist.com/2014/11/analyzing-hospital-expenses/

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Healthcare Financial Concepts

The healthcare administrator should be able to understand some basic financial concepts.

How do income, expenses, liabilities, and profit relate to you as the administrator in a hospital?

minimum 300 words