Strategic Financial Management in Healthcare Discussion

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Is this article relevant to the current healthcare strategic financial management approaches? In what way? Discuss the empirical findings and the implications of the data? What has/has not changed and why?

Kleinmuntz, C.E. (1999, April). A Strategic Approach to Allocating Capital in Healthcare Organizations. HFM (Healthcare Financial Management); Vol. 53 Issue 4, p. 52 (In Library)

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1

Strategic Financial Management in Healthcare Outline
Student's Name
Institutional Affiliation
Course Name: Course Code
Professor's Name
Due Date

2

Strategic Financial Management In Healthcare Outline
o The Relevance Of The Article To Current Healthcare Strategic Financial Management
Approaches
o Empirical Findings
o Data Implications
o What Has Changed
o Reference


1

Strategic Financial Management in Healthcare
Student's Name
Institutional Affiliation
Course Name: Course Code
Professor's Name
Due Date

2

Strategic Financial Management In Healthcare
The Relevance Of The Article To Current Healthcare Strategic Financial Management
Approaches
The article is significant to the contemporary healthcare premeditated pecuniary
management methodologies. It discusses capital allocation to proposals that would benefit the
system, with an example of a community hospital. Its relevance comes in the way it discusses the
steps when determining a method to allocate funds for proposals that would take an average cost
while at the same time coming up with a proposal that would end up producing high-quality
healthcare service delivery. The article is relevant in current healthcare strategic financial
management approaches as many healthcare organizations face a slump in revenue while facing
competition from other private healthcare organizations. These organizations facing a slump in
revenue need to adjust their service delivery by revitalizing their facilities to meet resource
needs.
The article's relevance is evident in its capital budgeting approach, where it highly
discusses that the approach should come at low costs. It describes strategic capital-budgeting
procedures as the best way to analyze healthcare organizations' decisions and has long-term
benefits. Long-term benefits may include investment in health care infrastructure that would in
the long term provide extensive healthcare service delivery, thus, enabling patients and
healthcare workers to achieve their goals at a friendly cost.
The article highlights the decision analysis in strategic financial management approaches.
It describes that a successful capital budgeting process requires a formal evaluation of the
organization's strategy while critically evaluating the capital allocation's financial benefits that
would be beneficial to the organization. Its relevance to the current healthcare strategic financial
management approaches comes in the wake of its eight-step strategic capital allocation process.
The article focuses on the eight-step approach that states the healthcare organization's
analytic criteria that should reflect its capital investment objectives. This first step would
highlight the organization's primary purpose and give scope to how far they will achieve this
purpose. The analytic criteria are divided into measures on quality service impact, strategic
impact, and financial impact. The second is proposal classification, where healthcare
organizations perform proposal classification according to the investment areas. Proposal
classification would combine small proposals that would leave enormous proposals for critical
evaluation by the management. The third step in the approach involves confirmation that neither
proposal is hard to understand and incomplete. This third step in the process ensures capital
budgeting goes to a clear and understandable proposal such that there would be no flawed
financial assumptions by the management (Kleinmuntz, 1999). The fourth step involves proposal
cost determination, where the finance department in the organization has a cost calculation and
incorporates the total amount that will go to capital allocation.
The article discusses the fifth step in the approach that determines each proposal's rating
according to the criteria. Since there are various proposals, each proposal should be ranked
according to their value and financial projection returns. The article highlights that the hospital
needs to calculate its operating net present value among other relative values through the finance
department such that subsequent financial implications are separated from acquisition costs
(Kleinmuntz, 1999). The article describes that this step enlightens the management on the

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expenditure's effect on the hospital's long-term strategies and targets. Then comes the sixth step
in the approach that involves each criterion having strategic priority weights. Evaluation criteria
for capital allocation, as the article describes, have their importance reflected by given priority
weights. Each proposal's seventh step has a weighted value score calculation that sees all
proposals' evaluation ranked with the final scores. The last step of the process involves the
benefit-cost ratio ranking of every proposal, including the ratios of needed expenditure and
weighted value score (Kleinmuntz, 1999).
Empirical Findings
The empirical findings of strategic financial management in healthcare were that the
evaluation criteria were based on patient satisfaction and outcome that were under quality,
network development, working efficiency, physician socialization and market share under
strategies, and lastly under financial is operating net present value. The community hospital's
empirical findings in the discussion had the proposals categorized in large and small proposals
where the large ones were the main center of focus. In contrast, the short proposals were
prevented from making the process longer. The investment areas were categorized with the
proposed classification that created a group for those with the same budgets, thus reducing
project management work. More minor proposals would have their capital allocation by specific
team members with exquisite experience and information on the requirements. Empirical
findings highlight that managers will have a clear scope of their investments and their impact on
their goals. Not only will the manager have a clear scope of what to expect from the investments,
but they will also have shipping and installation costs of every proposal (Kleinmuntz, 1999). The
findings of the evaluation criteria will have every propos...


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