Health Care Financial Management

Excellent financial management is essential to the economic welfare of the health care industry. Two aspects make the stipulation of health care  services unlike any other services. First, more than half of the providers are associated with not for profit organizations. Second, health care services are paid by third party payers instead of the patients who receive the services. According to Gapinski, " financial management plays a much larger role in the overall management of a business. Now, the primary role of financial management is to plan for, acquire, and utilize funds (capital) to maximize the efficiency and value of the enterprise. Because of this role, financial management is known also as capital finance" (2012, para.26).

Commonly financial management include:

1. Evaluation and planning: This first step include evaluation of current finances and planning for the future.

2. Long-term investment decisions: In this step strategic planning is set up and investing is done for the future, such as equipment and new facilities.

3. Financing decisions: This step involves raising funds to support assets. Also, decisions need to be made if those funds will be internal or external. Also, if those funds will be equity versus debt and long of short term capital.

4. Working capital management: This step involves reducing cost with cash, receivables and marketable securities.

5. Contract management: In this step financial management must monitor and negotiate contracts with third party payers.

6. Financial risk management: This last step involves managing financial risk with transactions that takes place (Gapinski, 2012, para.27).


References:

Gapinski, L.C. (2012). Understanding healthcare financial management. Retrieved on May 3, 2015 from http://www.ache.org/pubs/chap1-3gapenski5th.pdf