Healthcare Accounting Essay Assignment
Financial strategy and an organization’s finances are critical aspects of a healthcare organization. They affect the organization’s decision-making, the quality of care, and the services provided. An institution’s financial practices determine the organization’s financial performance and overall performance since finances are one of the crucial aspects of an institution. It is essential to examine the financial trends of an organization, thus enhancing proper financial decision-making for current and future purposes. This report analyzes significant trends in expenses and revenues in the Tenet Healthcare organization. The report will also entail whether the expenses and revenues are set to meet the budget goals, maintenance of expenses, improvement of the reimbursement strategy, and the use of financial performance to build the organization’s brand. Healthcare Accounting Essay Assignment
Trends in Expenses and Revenues/ Meeting Budget Goals
Trends analysis in expenses and revenues helps inform the management and the financial analysts in forecasting future financial statements (Hunter &Murray, 2019). Moreover, they inform future budgeting committees on where to increase or decrease expenses and revenues in future budgets based on whether the budget goals in the previous years were met.
The organization’s expenses have been controlled at an average rate in the last two years, 2020 and 2021. Most of the expenses in 2020 and 2021 were on target to meet budget goals. The only expense that did not meet the budget goals in 2020 and 2021 were the net losses on sales and consolidation and deconsolidation of facilities. The other operating expenses in these years met the budget goals. However, the net operating expenses in 2019 exceeded the net operating revenues, leading to a loss. Therefore, there was a trend of an increase in operating expenses.
The revenue in the three years also increased steadily, with the provision of grant income in 2020 and 2021. The equity in earnings from consolidated affiliates also increased, increasing the amount available to cover the expenses. Increased income translated to an increased profit. The net operating revenue in 2019 was lower since the expected grant income was not received. The less net operating revenue in 2019 contributed to the overall loss that amounted to $215 million. The revenues in 2019 were off target in meeting the budget goals since they could not cover the expenses and generate profit. However, the revenues in 2020 and 2021 were on target to meet the budget goals since all the expenses were met. They contributed a net profit of $399 and $914 million, respectively. Healthcare Accounting Essay Assignment
Maintenance of Expenses Without Damaging Services and Care Quality
Despite the need to maintain profitability and good performance of the organization, it is essential to maintain the quality of care and the services the organization provides. The quality of care and service provision in an organization helps maintain a good reputation and secure a good customer base. Based on the current trend in expenses as described above, there is a need for the organization to contain and reduce some expenses, thus improving its performance and increasing profits. There are various ways in which the organization can contain and reduce some expenses without damaging care services and care quality. My organization can contain and reduce expenses without compromising quality by improving efficiency, outsourcing tasks, and reviewing employees’ productivity.
One of the highest operating expenses is salaries, wages and benefits. The expense can be reduced by outsourcing tasks and reviewing employees’ productivity. Some tasks, such as website maintenance and employee recruitment, are occasionally needed. It is therefore advisable to outsource them when needed, thus reducing expenses rather than having to pay for them full time. Additionally, outsourcing enables the organization to get the most qualified experts, thus maintaining the quality of care and other services. A review of employees’ productivity will help redistribute tasks to reduce headcount and maintain well-performing employees, thus reducing expenses and maintaining good quality.
With a fluctuating economy and inflation, supplies and operating expenses may increase at any time. Thus, they should be maintained. A study by Ferreira and Marques (2019) showed that improving efficiency through training on supplies used to reduce wastage and still give the required output helps maintain the supplies’ expense without compromising quality. Healthcare Accounting Essay Assignment
Improvement of the organization’s Reimbursement Strategy
The organization’s reimbursement strategy can be improved to increase revenue. The current reimbursement strategy is Fee for Service (FFS). The strategy stipulates that every service provided, including supplies made, should be paid for. According to Galvin et al. (2019), FFS is an equitable reimbursement strategy since the organization gets paid for every service they offer. The customer is charged for only the services they receive; thus, every party is treated fairly. The strategy also maximizes income since no service offered goes uncharged. However, it is evident that the current revenue should be increased to improve the profitability and performance of the organization.
The FFS reimbursement strategy would be improved by integrating enterprise revenue management software and managing the revenue cycle using key performance indicators. The enterprise revenue management software will increase revenue by providing a platform where customers can register, compare service prices, and access and pay for their services before getting them. The software will not only develop transparency between the service provider and the customers but also attract more customers to transact with them, thus increasing revenue. Healthcare Accounting Essay Assignment
Additionally, the reimbursement strategy improvement will be implemented by first sensitizing the financial leaders and executives on the importance of improving the reimbursement strategy, getting their buy-in, and carrying out a pilot study, implementation and evaluation. Evaluation is a critical part of the improvement since it will help the team incorporate lessons learned and make changes for the initiative’s success. The reimbursement improvement strategy will be evaluated using revenue cycle key performance indicators. Some key performance indicators that will be used to evaluate the initiative include the number of new customers from the revenue enterprise management software, net revenue collected, and the total reimbursement made.
Use of the Organization’s Financial Performance to Build its Brand
One of the most effective ways to build a brand or improve a brand is through the use of its financial performance. Building the organization’s brand leads to an increased brand preference from the market, which improves the organization’s financial performance following improved profits, cash flows and market share. The organization’s financial performance can be used to build its brand.
One way the organization’s financial performance can be used to build its brand is by attracting investors. Good financial performance gives investors confidence that their investment will yield the desired profits. An increased number of investors in an organization improves the services offered due to the availability of revenue, thus developing its brand. Healthcare Accounting Essay Assignment
Furthermore, an organization can use its financial performance to inform decisions that would improve its services or products, thus building its brand. Tumasjan et al. (2019) note that based on the current financial performance, the organization’s management can decide what changes can be made to the products or services offered to improve their quality. Improved products or services are more likely to develop the organization’s reputation and build its brand.
Conclusion
In summary, the financial performance of an organization enhances informed decision-making. Trends in expenses and revenues also help the budgeting committee to forecast and plan more logically for the future. The reimbursement strategy of the organization can be improved to increase revenue, as discussed above. The brand of an organization and its financial performance are interrelated, whereby one influences the improvement of the other. Healthcare Accounting Essay Assignment
References
Ferreira, D. C., & Marques, R. C. (2019). Do quality and access to hospital services impact on their technical efficiency? Omega, 86, 218-236. https://doi.org/10.1016/j.omega.2018.07.010
Galvin, J. W., Thompson, J. C., Thompson, A. M., Parada, S. A., Eichinger, J. K., Dickens, J. F., & Gillingham, B. L. (2019). A Guide to Understanding Reimbursement and Value-Based Care in the Military Health System. Military Medicine, 184(3-4), e205–e210. https://doi.org/10.1093/milmed/usy206
Hunter, B. M., & Murray, S. F. (2019). Deconstructing the financialization of healthcare. Development and Change, 50(5), 1263-1287. https://doi.org/10.1111/dech.12517
Tumasjan, A., Kunze, F., Bruch, H., & Welpe, I. M. (2020). Linking employer branding orientation and firm performance: Testing a dual mediation route of recruitment efficiency and positive affective climate. Human Resource Management, 59(1), 83-99. https://doi.org/10.1002/hrm.21980 Healthcare Accounting Essay Assignment
