Attached.

Running head: ROLE OF FINANCIAL PLANNING IN HEALTHCARE
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Role of Financial Planning in Healthcare
Student’s name
Institution of Affiliation

Role of Financial Planning in Healthcare
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Introduction
Financial planning in healthcare is an important area of study because healthcare is one
on the busiest and labor intensive industries. It is also one of the most expensive yet most of the
customers cannot afford the high expenses. Careful planning is a must to ensure productivity,
efficiency and accountably. Some healthcare facilities are funded by the government while some
are funded by private owners. Either way, it is important that the planners organize the finances
in that the organization spends within its means. Financial planners are mostly employees in the
finance team, in collaboration with management. Together, they draw up a budget of what they
need and compare with the money available then plan how to spend or save it. The role of
financial planning in healthcare is to ensure facilities run smoothly within their financial limits.
Duties of the Financial Management Team.
The financial team is tasked with the responsibility to plan and keep the facility’s expenditure
within budget. Moreover, they are tasked with negotiating with contractors and suppliers on the
behalf of the hospital so that it can spend within its means. To add on that, it is their duty to
ensure that working capital is enough to meet the needs of the facility at all times including
salaries and a contingency plan to make sure the hospital can handle financial emergencies.
Alongside the board of management, the team has to ensure that all the necessary equipment,
supplies and human resources availed to the hospital in a timely and efficient manner.
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Strategic planning

Financial management involves planning for the hospital to ensure they are not sued for
misuse of funds. This plan is normally carried out through audits which are very important to any

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facility. Audits ensure money is being collected and billed correctly. It also ensures that the
money collected is not in a way that exploits people it s done in a way that it meets the needs of
the people. The result from an audit are important in creating a budget therefore, for smooth
running, they should be done at least once a year.
Role of financial planning in healthcare.
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To meet Different financial goals.

It is important to carry out financial planning in any healthcare facility because it will help it
achieve both the short term and long term goals. Services can be sold to other hospitals or the
hospitals could share professionals by the method of referrals. This way, the hospitals become a
regional systems and it helps them get money from the spectrum of medical care. The new
revenue brought in can help the hospital meet its financial and management goals. It is
advantageous because it brings in more money than if the hospital was independent and it will
have more bargaining power with health insurance companies (Bloor & Maynard, 2003).
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Managing treatment costs.

Financial management ensures the doctors give the best medication to people, at the same
time meeting the bottom line for insurers. Insurance companies use computer software to track
the cost effectiveness of the medicines given out by doctors hence, they can find out if an
expensive drug was given in the place of a cheaper one. The main goal of insurance companies is
to find the cheapest method possible for treatment to avoid high cost, but doctors have to give
patients the best care possible. Maneuvering the intricacies requires medical and financial know
how so that the insurance bottom line is at par with the level of financial management of the

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facility. Doctors need to make sure that the treatments they give are sound, otherwise the
hospitals will be at risk of getting sued (Kaissi & Begun, 2008).
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Avoiding expensive medical conditions

Financial planning in healthcare will prevent expensive expenditure on diseases by ensuring
that people stay healthy. Mitigative measures will be put in place to prevent people from
contracting the disease. Such measures include pouring money into research institutions so that
preventative measures are found out. Once they are discovered, public health action is
undertaken to ensure the disease is made extinct. Such measures include vaccination, or
quarantine. For lifestyle diseases, which tend to be the most expensive to manage, methods of
early screening are rolled out so the disease can be arrested before it becomes serious. This type
of financial planning mainly aims to reduce future costs in the industry and help project the costs
by keeping them under control (Voelker, Rakich, & French, 2010).
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Budget development

Financial planning is important in the budget development of a facility in the health sector. It
enables the stakeholders to know the amount of money that can be used in different sectors and
ensures that workers are paid. Budgeting also ensures that medical centers are well equipped and
it can be used as a basis for asking for funds from other stakeholders such as the government and
nongovernmental organizations. Lastly, it helps healthcare facilities make long term and short
term goals with respect to the budget (Bloor & Maynard, 2003).
You may add an example of a budget here. The budget should be in form of a table showing
different revenues and expense in a healthcare facility

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Accountability.

Health facilities are always audited to ensure public or private funds are put to good use.
Auditing is good because it fosters accountability and prevents people from misusing money.
Without proper financial planning, there will be gaps in the auditing report and it can lead to
closure of the hospital. Financial management ensures every penny is used for its intended
purpose. Additionally, financial management ensures ...