Allocation of Finite Resources

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Allocation of Finite Resources within the Typical Not-for-Profit Health Care Organization

University of Phoenix

Allocation of Finite Resources within the Typical Not-for-Profit Health Care Organization The general philosophy, structure, and approach of the not-for-profit health care organization, as well as its future aspirations are contained in the values, mission, and vision statements of the organization. Once the typical not-for-profit health care organization has defined its mission, vision, culture, stakeholders, services, structure, and goals, it must then develop organizational objectives to help achieve its stated goals. While organizational goals are qualitative in nature, organizational objectives are primarily quantitative financial performance goals, and specify such things as target market share, target return on equity (ROE), and target economic value added (EVA) (Gapenski, 2012). These elements drive financial results, and dictate how finite resources are allocated within the not-for-profit health care organization. In this paper we will explore the processes involved in allocating financial and human resources in the not-for-profit health care organization. We will look at operational planning in general, and specifically at the financial planning process, including the ethical considerations that must be addressed. In allocating human resources we will detail the roles recruitment and retention play in the process, and how senior leadership can partner with the human resources arm of the organization to identify and retain the best and brightest talents in the industry. Financial Resources

The finance department of the organization has the responsibility for all functional areas related to the financial management of the not-for-profit health care organization. These areas include long range planning, accounting and financial reporting, capital finance, cost control, and financial performance (Kreidler, 2008). The strategic plan builds on the values, mission, and vision statements of the organization and sets the direction for the organization. It defines the broad framework within which multiple specific, measurable, goals are established. At the very least, the strategic plan should include the organization’s vision, a summary of the goals, objectives, and activities for the organization, a financial assessment of current resources, and a strategic analysis. According to Gapenski (2012), “Organizational goals are specific aims that management strives to attain” (p. 255). Cothan and Clouser (2009) go on to say that the strategic planning process is important in providing the vision, direction and accountability for the organization. Internal and external stakeholders then have an opportunity to work together toward achieving the shared goals and vision they helped to define. While the strategic plan provides the general direction for the organization, the operating plan provides the specifics of how to achieve the organizational objectives. It is more like the roadmap for executing the strategic plan. The normal time frame for an operating plan is five years, and this is most often the name of the main tool in the operational planning process. In the operational or five-year plan, the first year provides the most details while subsequent years are less specific. Capital Funds

The first section of the financial plan provides a review of the organization’s investments, financing, and basic financial situation. This is the beginning point of the financial plan. The second section addresses future capital investments such as land, buildings, and equipment and the capital budget. According to Gapenski (2012), “regardless of size, all health services organizations must have capital funds to acquire the facilities, equipment, inventories, and other assets needed to conduct their businesses” (p. 367). The information for future capital investments is incorporated into the forecasted...
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