Roles of Healthcare

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arinru0609

Health Medical

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2,000–2,500 words including title page and references

As a health care manager, daily management tasks include financial management. Financial management includes items such as labor cost, equipment cost, and a budget that controls the operations. Operations requires management planning and control. The budget is created using the basic financial information and accounting principles information that an organization reports in its monthly, quarterly, and annual financial reports.

After learning the basics of financial statements, it is very important for a health care manager to understand the basic five areas of performance that set the financial plan for the organization. Define and provide an example of what the following mean:

  • Short-term solvency
  • Activity
  • Financial leverage
  • Profitability
  • Value

Define the following terms, and explain why they are important in a health care organization:

  • Current ratio
  • Total asset turnover
  • Debt ratio
  • Profit margins

Include a minimum of 2 reference

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Explanation & Answer

Attached.

Running Head: FINANCIAL MANAGEMENT IN HEALTHCARE ORGANIZATIONS

Financial Management in Healthcare Organizations
Student’s Name
Institution of Affiliation
Course
Date.

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FINANCIAL MANAGEMENT IN HEALTHCARE ORGANIZATIONS

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Introduction
Financial management in a healthcare organization is an important aspect that determines
the success of the operational activities of the facility. Any healthcare organization must thrive
on sound financial management to ensure that it can finance all its administrative and operational
costs. For sustainability of these facilities, a health care manager will be required to perform
certain tasks on a daily basis to keep the institution operating efficiently.
The key management tasks that a healthcare manager must deliver promptly include
management of the financial resources of the healthcare facility. Financial management in a
healthcare facility entails ascertaining all the items relating to the labor cost, equipment cost, and
the operational budget. It is, however, important to note that effective operation of healthcare
facilities require proper management planning and control. Besides, the operational budget is
created in conformity to the basic financial information and accounting principle just like other
entities in different sectors of the economy
The basic areas of performance that define the performance of a healthcare facility are the
profitability and efficiency ratios that must be incorporated into the organization’s financial plan.
Below are the definitions and explanation of the significance of various profitability and
efficiency ratios that the management of a healthcare organization must acquaint them with to
achieve efficient and healthy performance.
Financial Performance Areas in a Healthcare Organization
Short-term solvency
Short-Term Solvency
This refers to a metric ratio which is utilized in the measurement of the ability of a healthcare
institution to meet its debts with the inclusion of other obligations to achieve the short-term

FINANCIAL MANAGEMENT IN HEALTHCARE ORGANIZATIONS

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financial goals (Berger, 2008). Short-term Solvency ratio is a good indication as to whether the
cash flow of a healthcare organization is self-sufficient to ensure that it meets its liabilities in
both the long terms and short-term aspects. Therefore, with reference to a healthcare
organization, the lower the solvency ratio it is likely to have, and the increased the probability
that, the healthcare institution will default on its obligations to meet the long-term and short
debts. There exist various types of short-term solvency ratios within a healthcare organization.
These include but not limited to; ratios of interest coverage, debt to equity rat...


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