Health Care Budget
Effective financial management is the basis of thriving health care organizations. Organizations must make good investment decisions based on objective analysis (Healthcare Financial Management Association [HFMA], 2005). Integration of financial management principles provides decision makers with guidance to make capital decisions maximize mission-based benefits at effective costs (HFMA, 2005). An operating budget is the statement of profit and loss for the entire organization. Various health care entities prepare operating budget for the following year for discussion and approval by top management (Academic Writing Tips, 2011). At the end of the year, departmental managers provide an account for the previous year’s financial performance (Academic Writing Tips, 2011). Effective Financial Management Practices in Creating and Monitoring a Budget Effective financial management is useful when creating and monitoring a budget. The budget must include data relevant to the organization. An operating budget is a profit and loss statement of projection. The budget must include estimates of revenues and future expenses. Financial managers should present the operating budget with the correct schedule. Leaders must present financial statements such as the Statement of Cash Flow, Statement of Revenue and Expense, and Balance Sheet with the operating budget as supporting documentation explaining the financial practices of a company (Academic Writing Tips, 2011). There are seven principles, which guide financial management practices (HFMA, 2005). According to HFMA (2005), these principles are: * “Through finance education, organizations achieve real unification around an integrated planning process” (p. 3). Companies must groom leaders and employees at different levels by implement a Financial Management Program to help employees become familiar with the financial initiatives. * “Rigorous calendar management guides the integrated...
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