Health Financial Management Paper

Health Financial Management Paper

When maintaining an operating budget in a healthcare facility, there are many factors to consider. Obviously, the essential conceit of an effective financial management process is to be able to spend just as much money as you need – no more, no less. The example given in this paper, of the 2009 to 2010 operating budget of the Patton-Fuller Community Hospital, is one of a very effective budgeting plan that showcases extremely practical, workable strategies for operating a health care facility.Health  Financial Management Paper

One of the biggest challenges to making an efficient budget in this day and age is the poor economy, which has led to a major recession that has been diminishing income and decreasing revenue. As such, it is no surprise that the budget overall will decrease by about 3% in 2010, based on projections. Some of the more adverse conditions are due to a lack of new patients because of managed care contracts, something which also weighs on the budget. Patton-Fuller will experience some patient revenue increases (3%), but the increase will be less so than the previous year.Health  Financial Management Paper


Luckily, the financial management practices used at Patton-Fuller will help fill in the gaps in the budget and prevent overspending. For one, the marketing department has plans for a 15% increase in donations, which means utilizing innovative and creative means for fundraising. Whether or not they meet their goals, it is ambitious and provides a lot of flexibility and the budget. What’s more, there are added factors that this management strategy is taking advantage of, such as arrangements with the managed care companies, which will provide an added bit of revenue to the hospital. This, combined with no new patients to spend money on as well as more efficient equipment and deflated prices, will lead to a greater profit margin for the hospital, which will leave sufficient money to keep operating. Overall, their net income will experience a 1,354% increase from last year.

There are more inefficient ways that Patton-Fuller is using to run the hospital, which they need to stop. For one thing, one of the biggest expense increases is a 5% increase in the utilities budget, due to rising oil prices that are making it more expensive to power the hospital. However, steps are not being sufficiently taken to diminish power usage, despite the installation of more efficient heating and cooling systems. Health  Financial Management Paper Further changes could be made to power conservation, including making sure that sections that do not need power at certain times are turned off. The largest expense increase overall is a 30% increase in interest payments for loans taken out in 2009, which could have been circumvented by finding slightly better interest rate deals, and not taking out as much money in 2009. Neglecting to make frivolous expenses such as this is one way in which to more effectively manage a hospital’s finances.

In essence, the Patton-Fuller Community Hospital operating budget is a perfect example of an effectively run and tightly operated healthcare facility. Due to the lack of unnecessary expenses and concerted efforts to increase fundraising through effective marketing, this facility is well on its way to maintaining its budget, provided that they keep adjusting their strategies to the current market conditions.Health  Financial Management Paper