Introduction to Financial Resources
Finance consists of fund or money which is available to an organization for spending on its business projects. In each and every organization, finance plays a vital role in implementing business plans as well as strategies in an effective manner. In health care organization, finance manager frames strategies and policies which facilitate optimum utilization of financial resources. This present project is based upon Bupa which is an international health care group which offers its services over 190 countries. It is a private health care group which provides health care services to 29 million people who reside in different parts of the world.
The present report will discuss the information which finance manager of health care requires to manage financial resources effectively. Further, it will also develop understanding about the regulatory requirements which organization needs to follow while managing their financial resources. Besides this, the report will examine the factors which may influence the availability of financial resources within the health and social care. Along with it, the report will shed light on the relationship which exists between health care service cost and expenditure.
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1.1 Stating the principles of costing and business control systems
Principle of costing refers to guidelines which help organization in managing the financial cost and other aspects in an appropriate manner. Bupa has several departments namely marketing, research and development, laboratory as well as human resources etc. In order to deliver the health care services and maximize the productivity aspects, care home needs to make several expenditure which imposes high cost in front of the organization (Moorhead, 2013). In this, finance manager can control the cost by taking into consideration the principles of costing which ensure effective use of the financial resources to a large extent. In accordance with the principles of costing, Bupa needs to record each income and expenditure of an organization in the books of accounts. Besides this, finance manager needs to undertake double entry system while recording business transactions in the accounting books. It provides deeper insight to an organization about the expenses which are incurred by them. Through this, care home is able to identify the area of expenses in which they need to make control. Besides this, care home needs to make the entry of expenditure in the books of accounts only when, it is actually incurred by the firm. This aspect helps care home in presenting the fair record of cost in front of different stakeholders.
Further, care home can also make control upon the cost with the help of cost responsibility centers. By forming different responsibility centers namely cost, revenue, investment and profit, company is able to control their expenses. It is the most effective way which helps organization in controlling the cost of service offered by them (What is responsibility centre? 2016). In each responsibility center, manager requires to perform their activities in accordance with the predetermined instructions. For instance: Investment department is highly responsible for the investment made by them. If, investment department conducts research and development to identify the better ways to deal with undiagnosed diseases then, manager of such center has responsibility to give desirable output to the firm by making suitable investments. In addition to this, revenue center is highly accountable for generating sales through business activities. Thus, Bupa can control the cost of services by taking into consideration various responsibility centers.
1.2 Identifying the information needed to manage the financial resources of health care home
There are several information in relation to costs are required by Bupa to manage the manage the fund of the firm in an effective manner. Health and social care home needs to make assessment of different types of costs while managing monetary resources. Specifically, business enterprise has to incur several direct and indirect costs while offering services to their patients. These are enumerated below:
This cost refers to the expenses which care home incurs while delivering services to their patients. It includes salary of doctors and nurses, medicine cost, ambulance expenditure, training expenses etc. All these expenses are directly associated with the production object (Aveyard, 2014).
It includes both fixed and variable expenses which are highly dependent upon the nature of expenditure which are incurred by the firm (Singh, 2014). Electricity expenses, rent of the hospital, bed charges etc. represent indirect expenses which are not directly attributable to the cost object. Nevertheless, organization has to incur all such expenses while serving their patients.
By taking into consideration all the above mentioned costs, care home is able to identify the areas of high expenses. Thus, by identifying such areas, health and social home is able to frame suitable strategies and policies which help them in reducing the wastage of money. It enables organization to make proper utilization of money and thereby maximizes their sales as well as profitability aspects.
1.3 Stating the regulatory requirements for managing financial resources
According the regulative requirements, Bupa needs to prepare budget for the accounting year. It is the best tool which helps care home in managing the financial resources more effectively and efficiently. Financial resources are the crucial elements which closely affect the growth and success of business unit. Budget is the most effectual tool which facilitates optimum utilization of money to a large extent. Budget contains all the expenses which care home needs to incur during the accounting year. It includes promotional expenses, research and development expenditure, salaries of the employees as well as other office expenses (Ifanti and et.al, 2013). Besides this, it also contains information about the revenue which organization will generate over the time period. Budget acts as a guide and thereby assists employee to perform their financial activities and functions in a right direction. Thus, care home requires circulating the budget at all levels of the department which helps them to prevent confusion from the mind of employees. This aspect ensures effective management of the fund of business enterprise.
2.1 Discussing the diverse source of income which may be encountered within the health and social care
There are several sources of finance namely public, private and voluntary funding which may be encountered with the health and social care home. Bupa can generate fund by approaching government for the financial assistance. Usually, government provides financial support to health care home which enables them to offer the care services to the disabled people (Dinnie, 2015). In addition to this, care home can also raise its finance by approaching private institutions for the helps. Usually, non-public institution prefers to perform corporate social responsibility to build distinct image in the mind of their stakeholders (Ledgerwood, 2014). In the present era, there are several people or individuals who wish to donate their money in some social purposes or activity. Thus, Bupa can also raise its fund through individual donation. In this, Bupa has responsibility to make use of money is the same purpose for which it is given by the private institutions, government and individual donation. In addition to this, business unit also requires to follow all the legal codes and practices while taking financial help from others. Through this, care home can build or sustain distinct image in the mind of patients and other stakeholders.
2.2 Analyzing the factors which may influence the availability of financial resources in health care home
here are several are available within the business environment which have level of influence upon the availability of funding sources within the care home. Bupa faces many difficulties while they take money from the government and private institutions as well as people who donate fund. Primarily, care home have to undertake large documentary procedure when they approach government for monetary helps. In this, care home needs to present the plan which they wishes to implement (Cornwell and Waite, 2012). Further, business enterprise also requires giving information to the government about the each and every aspect of their plan. Huge documentary procedure and time is the main aspect which negatively impacts the availability of financial resources through government.
Along with it, corporation also faces problem while collecting fund from donor. Moreover, individual who donate his fund wishes to make interference in decision making aspect of the firm. For instance: Individual who donates £1000000 to Bupa for the purchasing of new instruments that helps institution in diagnosing the diseases of its patients. In this condition, donor make invention in the decision making aspect in relation to the brand, price etc. Due to this aspect, health and social care organization prevents to take support from individual donors (Stenberg and et.al, 2014). Besides this, private companies who give fund to the care institution usually prefer to attach their name with the donated instrument or assets. Usually, private institutions have desire to sponsor the camps which helps in getting the popularity. This aspect also influences the financing decision of Bupa.
2.3 Reviewing different types of budget expenditure in the context of health and social care home
In order to attain success in the dynamic business environment Bupa needs to frame various kinds of expenditure budgets which help them in perform the financial activities in the more effectual way. Company needs to frame material labor and overhead budget which helps it in making suitable expenditures for the business purpose are as follows:
It may be defined as financial estimation of the material which is required to perform the business operations during the accounting year. It includes drug, medical instrument etc. which are recorded in the budget along with their prices. Through this, personnel of care home are able to perform its functions in accordance with the predetermined budget.
This budget contains information regarding the human personnel which are required by Bupa in order to give care services to its patients (Barlow, Roehrich and Wright, 2013). Besides this, it also includes the salary which organization needs to give their employees. Through this, Company is able to frame effective financial plan.
It includes other expenditures such office expenses, electricity expenses etc which health and social care home has to spend for the smooth functioning of the business operations and functions.
3.1 Evaluating system which is used in managing the financial resources within the care home
Bupa undertakes several types of responsibility centres which help it in managing the financial resources of firm. System of responsibility centre is highly effective which helps care institution in getting the desired level of outcome or success. In responsibility centre, each head or department is highly responsible for their financial activities and functions. Profit centre has responsibility to maintain the sales as well as profit in accordance with the target allotted buy those (Gray, 2014). Performance of profit centre is highly accountable for the revenue generated by them. In addition to this, it is also highly responsible for the expenses incurred by them which may cause of the profit or loss. Along with it, investment centre is held accountable for conducting research which makes contribution in the attainment organizational objectives. However, it is to critically evaluated that responsibility centre make pressure upon the employees and thereby affect their performance. Thus, budget is the most effective method which helps in making control over the expenditure by comparing actual performance with the budgeted figures over the time period. It enables Bupa to attain success by taking effectual measures within the suitable time frame.
3.2 Evaluating the ways through which decisions about expenditures are made in health and social care organization
The health and social care sector comprise of different factors to make the decision regarding the various expenses that need to be considered to assist the entire working of Bupa. All the aspects are undertaken to analyze the befit that are associated with the cost related to the expenses. This helps Bupa to assess the various benefits which is obtained through the expenses incurred over the product and services. Beside this, the budgeting aspect is also considered while making the decision regarding the expenditure made while carrying out the business operations.
Effective strategy should be framed up so that the expenditure is analyzed in an appropriate manner. Through this, proper decisions will be taken by the management authorities of Bupa to carry out the operations related to the services which are rendered by them (Chassin and Loeb, 2013). All the aspect that are considered shall be cost effective so that the expenditure is met up in proper manner and the services that are offered meet the expenses.
Effective allocation centres the cost which is associated with the analysis of the reserves that helps in meeting the expenses that reflect the future expenses. All the decisions are made with the expenditure monitoring to carry forward the balance between the expenses which are associated to Bupa.
3.3 Evaluating the budget monitoring arrangement in a health and social care organization
Budget monitoring system involves a regular comparison of projected financial costs and gains against the actual outcomes. The concept discovers variance between budgeted amounts and actual financial performance. Like other regulatory and control methods, budgetary monitoring helps the care home to build potential finance in the working of firm (Broadbent and Cullen, 2012). It is fruitful for the organization to study and reflect the business activities in financial terms. The preparation of budget on the quarter, monthly and yearly basis helps to judge the inputs and outputs in monetary terms. John and Jill budget contains expenditures on one side like staff expenses, ambulance maintenance and petrol bills, medical equipment s expenses, research and development expenses (Overton, 2007). While revenues and income generated through government aids, patients fees and medicine receipts on the other hand. The revenue and expenditure of the company should be monitored and evaluated as it provides several advantages to the managers which are as follows:
- This system of budgetary controlling helps to coordinate various business activities performed in different departments of the care home
- It specifies and describes the resources, revenues, activities implemented to formulate strategic plans of the organization
- Apart from evaluation and auditing of the tasks better communication system i9s developed among different levels of the firm.
- It also corporate in improving the resource allocation of resources as all requests are clarified and justified. It can be considered as an efficient tool for corrective actions through reallocation
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4.1 Assessing the information which Bupa Care Home require in order to make the financial decision
In order to make an effective financial decision, manager of Bupa Care Home has to assemble the different type of financial information. Thus, it can be said that in the process of making an effective financial decision, finance manager of cited firm plays very significant role. In accordance with the given context, number of sources assessed which enables firm in making appropriate financial decisions. The sources consist of cash flow statement, income statement and balance sheet etc. With the help of respective sources, manager can make firm's expansion related decisions (Fuller and et.al, 2013). For example, manager of Bupa has planned to expand the capacity of its ward. This decision is taken with an aim to give services to the large number of patients. However, in order to do the same, operation manager of Bupa has to consult with the finance manager wherein it will have to assemble the information that whether firm has sufficient finance for the purpose to fulfill the respective goal of care home in an effectual way.
Here, with an aim to give answer to the operational manager question, finance manager can take help from the cash flow statement of the company. With the help of given statement, manager can gather the information that whether firm has sufficient cash in hand or not. Thereby, it enables corporation in making an appropriate decision about the enterprise in an effective way. In addition to this, financial statement also gives information about the equity and debt aspect. The information obtained by the firm can be used by it in order to establish the balance between the financial structures of the company.
4.2 Assessing the relationship between care home services and cost and expenditure
The services given by Bupa Care home as well as the cost and expenditure which are being incurred by it are interrelated and interconnected with each other. In this context, number of services assessed which is being given by the care home. It consists of residential services, nursing services and health care services etc. The services which are mentioned will be delivered by care home if it makes significant expenditure regarding the same (Ham and Walsh, 2013). Here, for the respective services firm will have to make the expenses such as paying salary to health care staff members, purchasing all the latest and new equipment, maintenance expenses, training expenses and electricity bills etc.
However, before making expenditure upon any activity manager of firm can use the technique such as cost and benefit analysis. Through this way, the manager of Bupa care home can assess that the expenses which it is making is giving benefits to the corporation in the form of increase profit or not. If firm has assessed that its benefits are lesser than the gained benefits (Stanhope and Lancaster, 2015). Then in the given situation firm can make varied type of changes in the services. For example, reducing the salary of workers and putting limits upon the training programs of enterprise etc.
4.3 Impact of quality and access to service upon the individual
Care users decisions are majorly affected by the financial consideration factors. Also, it has been assessed that the family members of the care users gives more priority to the health services of their beloved. Thus, use of innovative technology by the care home helps in effectively dealing with the diseases so that patients can receive best care and attain results. Also, care providers are required to take proper quality measures so that effectual services can be delivered to patients in order to attain better health and safety. On individual, service delivery mode has high level of impact and thus it affects their health and well being. In regard to the, financial consideration, quality and accessibility to service upon individual are the crucial factors that impacts the care decisions.
Service users and their family members plays a crucial role in influencing the decision taken by care home regarding providing best quality of services. However, it is essential for the management of care home to maintain the quality and hygiene factors while delivering care facilities. Also, it is required for care providers to render services as per the convenience of service users. In the present era, accessibility aspect is mostly considered by more people; therefore, it is necessary for Bupa to follow such type of aspects while delivering services in care home. Accessibility aspects help in providing proper assistance to the management while rendering services in accordance with the demand of care users. With the help of such aspect, cited organization will be able to develop competitive edge in the minds of target market.
4.4 Suggesting ways to improve health and social care service through changes to financial system and process
Numerous ways are available to health and social care organizations for improving their services. It is the essential need for the health providers to provide standard quality of services at affordable prices so that patient will be able to take benefit of offered health care services. For fulfilling these objectives, nursing team and hospitality wards have to manage effective control over the service cost so that they can offer services at reasonable prices. They should regularly analyze their expenses and monitoring it on a continuous basis. Moreover, they should assess and analyze the payments and maintain effective control. This in turn, the objective of cost reduction can be achieved to a great extent. With this affect, health and social care provider organization will be able to generate increased revenue. This in turn, they can increase their profits through getting high level of customer satisfaction and operate for a long time period.
Moreover, they have to make effective research and development plan. It helps to assess customer requirement and identify new and innovative technologies. Nursing and hospitality industry should update its technology which helps to provide better quality of services to the patients. Innovated technology will provide high convenient to the customers and deal with their disease properly and effectively. In addition to it, getting regular customer feedbacks about the offered services makes organization able to understand the difficulties that the patients were faced. Thus, through overcoming from these difficulties, they can improve their service quality and getting higher level of patient satisfaction.
From this project report it has been concluded that Bupa needs to follow the principle of costing while recording their business transactions. In addition to this, organization requires to frame cost, profit, investment etc responsibility centre which helps them in making control over the business cost. Besides this, it can be inferred that care home requires undertaking both direct and indirect costs while managing their financial resources. Further, it can be concluded that government and private funding, individual donor are the main sources of finance which are encountered with the health and social care home. It can be seen in the report that there are various aspects which closely impacts the availability of finance within the business organization. Thus, Bupa needs to make assessment of all these factors while taking financial support from others.
You may also like to read:
- Aveyard, H., 2014. Doing a literature review in health and social care: A practical guide. McGraw-Hill Education (UK).
- Barlow, J., Roehrich, J. and Wright, S., 2013. Europe sees mixed results from public-private partnerships for building and managing health care facilities and services. Health Affairs.
- Broadbent, M. and Cullen, J., 2012. Managing Financial Resources. 3rd ed. Routledge.
- Chassin, M.R. and Loeb, J.M., 2013. High‐reliability health care: Getting there from here. Milbank Quarterly.
- Cornwell, E.Y. and Waite, L.J., 2012. Social network resources and management of hypertension. Journal of Health and Social Behavior.