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Summary of financial planning
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Summary of financial planning
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Financial planning is the method of managing the healthcare organization money in short and long-term to meet the needs of the organization. Strategic planning is the process of determining the missions and goals of organizations and procedures and processes on how to achieve the set goals. Both types of planning connect closely with each other in propelling the organization to reach the set targets (Thibodeaux).
Financial planning will direct how healthcare organization can afford to reach the strategic goals. After the strategic planning has set the goals and the directions to follow to reach those goals, the financial planning will be created to calculate the available human and objectives resources, infrastructures, activities and timeframes
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Financial plan development
There are four steps in developing a financial plan of organization. First, organizations need to evaluate the current financial status and the growing trends of prior periods. Second, organizations need to determine the expected growth in total assets of the planned period. Third, organizations must specify the allowable debts that they can tolerate for short and long terms. Lastly, organizations need to evaluate the rationality of required growth rate in equity (Cleverly & Cleverly, 2017, pp. 313-326).
It is very important for organizations to evaluate the current financial status, which will assist organization in projecting the future growth and reasonable goals. Organizations will need to analyze the financial statement of the previous 3 to 5 years, such as balance sheets, revenue, debts, and expenses. Then, the ratio analysis should be performed to examine the financial conditions of organizations. The ratio analysis should include: profitability, liquidity, capital, and activity of organization (Cleverly & Cleverly, 2017, p.
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Examples of revenues prediction are: net patients’ revenues, expansion of infrastructures, properties, and reimbursement rates that are related to services that are planned to be provided in the periods. Expenses predictions would include costs of staffing, supplies, payments of debt interests, and maintenances of assets. Based on the predictions, organizations can define the growth rate for each category (Cleverly & Cleverly, 2017, p. 319).
The leaders of organizations must specify the acceptable debts for planned period. Determine the debt levels will allow organizations to calculate the capability to borrow loans for developments and ability to make payments for loans. Then, organization can develop the appropriate financial planning without jeopardizing their operation (Cleverly & Cleverly, 2017, p.
The purpose of financial measurement in healthcare is to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost. This is done by providing healthcare finance managers with accounting and finance information to help accomplish the purpose of the organization (Nowicki, 2015). When making accounting decisions about budgeting and inventory control, an understanding of economics, statistics, and operations research is needed. Major Financial Measures
Select any five (5) financial ratios that you have learned about in the text. Analyze the past three (3) years of the company’s financial data, which you may obtain from the company’s financial statements. Determine the company’s financial health.
The revenue of the healthcare industry unlike any other depends on the inpatient occupancy or ALOS(average length of stay), the volume of outpatient visits and procedures, the services ordered for the inpatients and outpatient. For CHS the majority of its revenue comes from Managed care and other insurers ( apart from govt. insurance) with 54.5%, after which comes the gover...
First, it is important that the senior executives self-evaluate the hospital, update and communicate the strategic plan with all members, and improve the operating margins and optimize the cost structure (Davis & Robinson, 2010). Overall, labor and/or medical supplies are the items that drastically increase the healthcare organizations operating expenses therefore, it is important that these areas are analyzed for cost-saving options (Davis & Robinson, 2010). In addition, Trinity cannot afford to lose any of its liquidity therefore, it is important that the hospital monitor its liquidity closely (Davis & Robinson, 2010). As a result, Trinity should establish a cash-flow projection that is closely monitored and adhere to the projection for the entire fiscal year (Davis & Robinson, 2010). In addition, Trinity cannot afford to lose any revenue therefore, it important that the hospital is dedicated to providing high quality patient care and develop an integrated healthcare model (Davis & Robinson, 2010). Overall, it is important for the Board members to consider these suggestions in order, to improve the debt portfolio of Trinity Health
According to the Food and Agriculture Organization of the United Nations (2014), “Planning is the process of setting goals, creating organizational strategies and/or outlining tasks and innovative ways to accomplish the goals you have set in order to be a successful organization.” In the world of management or healthcare management planning is a vital importance in that it helps to focus, prepare and clarify the daily projects and assignments that may help an organization become a successful entity. Planning can also be very important in many other ways such as, saving time...
Strategic planning is a proven resource for enabling health care organizations to navigate an environment that evolves continually and allows organizational leaders to clearly identify and communicate organizational objectives. [1] Health care administrators often fill the strategic plan leader role for health care organizations. When executed correctly, strategic planning results in an ongoing process of discovery and improvement. [2] The following article details the basics of the most common strategic planning technique known to organizational leaders – SWOT analysis.
To begin with, a strategic plan is recommended to meet organizational goals. According to BMS Consulting “a strategic plan provides a blueprint of the goals and objectives a healthcare organization may want to pursue in the future with context of the potential impact on revenue, physician schedules, capital expenditures, staffing, marketing, space and equipment leases, etc., (2016). Under those circumstances, the author (2016) maintains an examination of historical data and production information is recommended for budgeting which included an examination of revenue by provider and by key service line or location. In addition, integrating a budget plan into the planning process is essential as, “ it is not uncommon for a medical practice to consider a potential opportunity, only to have a break-even analysis indicate that the risk is too great in relation to the potential benefit
A strategic plan is a tool that delivers guidance in achieving a mission or goal with maximum proficiency and control for an organization. Strategic planning is used to transform and revitalize organizations. The plan helps provide an inclusive understanding of opportunities and challenges both internally and externally for the organization. The plan delivers an assessment of the strengths and limitations that are realistic within the company. A well-developed strategic plan will offer a comprehensive approach and empowerment for the stakeholders involved. It is an opportunity for learning and understanding priorities that will drive the business to succeed. Jones (2010), describes how in health care organizations, strategic plans characteristically concentrate on operational and organizational goals such as when to obtain new technology, how to meet competitive challenges, and what staffing, tools, or facilities are needed to ensure organizational survival. The mission and value statements are significant in determining the quality of a strategic initiative. Forcing the organization to look toward the future creates proactive objectives in which both short-term and long-terms plans and goals are necessary in order to succeed.
The impact of strategic planning in the health care industries Why Strategic Planning? Advantage: SP is a rational process that aims to bring the future closer and allows us to both study and conduct simulations of the future. The process can reveal previously hidden opportunities or threats,6 providing the option to act on them early. Strategic planning establishes a clear and explicit framework with criteria for making day-to-day decisions and identifying fragmentary and unaligned choices or personal value judgments, all of which facilitates and simplifies managerial decision-making. The development of SP encourages the participation and commitment of the entire HO in achieving the planned results, thus becoming an important element in institutional
The financial planning tool enables availing of proper funds for staffing. Managers have more insight on operations, and can alter them as required to improve their revenues and quality of healthcare services. The integrated system budget provides a reference point of efficiency at the firm level instead of the system level. The advantage of using integrated budget as a reference is that the information needed can be obtained relatively easily from financial
This section will discuss ratio analysis for the following ratios: current ratio, quick (acid-test) ratio, average collection period, debt to assets ratio, debt to equity ratio, interest coverage ratio, net profit margin, and price to earnings ratio. Depending on the end user which ratio carries more importance, however, all must be familiar with ratio analysis. Details on each company's performance for each of these areas can be found in the attached ratio analysis worksheet.
Ratios traditionally measure the most important factors such as liquidity, solvency and profitability, as well as other measures of solvency. Different studies have found various ratios to be the most efficient indicators of solvency. Studies of ratio analysis began in the 1930’s, with several studies of the concluding that firms with the potential to file bankruptcy all exhibited different ratios than those companies that were financially sound.
What is Strategic Planning? Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes results, and assess and adjust the organizations. (Carroll, 2009) A strategic plan is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise (Schmarzo, 2016). Strategic planning is a step-by-step process with definite objectives and end products that can be implemented and evaluated.
Finance plays an important role in the healthcare industry. It deals with accounting and money management options (Gapenski, 2012). Finance is the evaluation of costs, expenses, revenues and investments options. Financial information will be useful with the Cs, which includes reducing costs, managing cash, acquiring capital and controlling resources (Gapenski, 2012). The healthcare industry’s finance is not well balanced when it comes to patients and reimbursement.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.