What financial information should be routinely provided to board members? Generally, financial information that is provided to board members only has two uses, to evaluate the financial condition of the organization and to assess the operational efficiency of the organization. It is usually not necessary to provide detailed financial information to the board. However, if there are significant deviations in the quality of care and the plans of the organization are not being met, more detailed financial information may be needed in order to take corrective action. With that, "An effective hospital board has been shown to be related to high hospital financial performance" (Culica & Prezio, 2009). The board must be able to understand a sound financial strategic plan that includes profitability, liquidity, creditworthiness, capital structure, and asset activity. "It is recommended that these indicators be reviewed monthly with a predetermined plan in place to take appropriate action in the event of negative variances" (Culica & Prezio, 2009). The board has some responsibility in assuring financial health for the hospital/healthcare organization, along with operational planning, budgeting, monitoring, and reporting progress.
Do you think it's important for board members in healthcare organizations to have basic accounting or financial background? Why or why not? I do feel that it is important for board members in healthcare organizations to have basic accounting or financial knowledge. Accounting and financial information is a vital component in the decision-making process. "An adequate understanding of the accounting process and the data generated by it are thus critical to successful decision-making" (Cleverley, Song, & Cleverley, 2011). Poor decisions can be made if important financial information is ignored. With the growing number of governing boards, it is important that the governing board knows the difference between financial reports and...
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