"An empowered organization is one in which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success. (Covey,2011).
" Financial management within an organization is crucial to the success and stability of the organization. Financial information on Patten Fuller Hospital will be covered in this paper. More specifically, difference between audited and unaudited statements and reporting on the hospital's ratios will be included.Finally, information related to the relationship on revenue sources and expenses which included how the hospital revenues and expenses are grouped for planning and control will be included. The differences between the audited and unaudited sections of the financial statements are very different.
According to Patton-Fuller (2011), it seems the financial officer had over-estimated the payments, giving the impression that the organization would be doing a lot better than they actually did.When providing numbers for accounts receivable in 2009 the financial officer estimated the total at (totals shown in the thousands) $59,787, with a net allowance for bad debt for the same time-period at $10,757 while the audited version shows a very different picture. Accounts receivable for 2009 revealed a total $58,787, a one million dollar lower receivable difference. In addition, the net allowance for bad debt is shown at, $11,757, a one million dollar increase. The differences showing the audited amounts appear to show a vast difference. In addition, reveal a two million dollar deficit, from the unaudited version.
This difference could in time cause the organization to suffer. Are the financial ratios for the hospital improving? Explain. With this scenario I would have to say no they are not improving. The reason for this is a number of ratios must be analyzed together to get a true and reliable picture of the financial performance of the business.
Relying on each ratio individually may not be a good strategy. Year-end values may not be truly representative of the actual performance of the business, average values should be used when they are available.According to Baker and Baker, revenue is an inflow of earnings to an organization. Typically, in a healthcare setting revenue is earned by providing some type of service to a client or patient (Baker, 2011). Revenue can be received by a number of different payer sources such as Medicare, HMO groups, private payer sources, etc.
Services provided by a healthcare institution are valued based on the company’s “established” rate, which is determined by a combination of market factors and a company’s internal needs and preferences.The established rate is simply what the facility will charge the payer source for services rendered (Baker, 2011). Expenses incurred by a healthcare institution are the costs related to rendering the services they offer to patients. These costs can be anything from employee related expenses, utility fees, supply expenses, etc. An expense represents an outflow of revenue for the facility.
A successful business is able to establish systems centered on increasing the revenue stream, while either decreasing or controlling the outflow of revenue.The end goal is for revenue to outweigh an organization’s expenses (Baker, 2011). Patton-Fuller’s 2008 operating budget illustrates that their expense categories greatly outnumber their revenue sources. Unfortunately, this scenario resulted in a net loss for the company.
The operating income for 2008 was approximately (-) $15,846, or a net loss of $15,846. This is an excellent example of a case where an organization’s expenses outweighed its revenue sources, and the company was faced with a net operating loss for the year (Patton-Fuller Operating Budget , 2008).The hospital’s revenue sources were based on two categories: net patient revenue, and other revenue. These two categories accounted for $421,314 in total revenue for Paton-Fuller. The revenue generated was based on monies received for services rendered to patients and/or clients. Unfortunately, the revenue generated was less than the expenses incurred by the facility (Patton-Fuller Operating Budget , 2008).
The hospital’s revenue and expenses are broken down into specific categories. These categories offer the organization a means of analyzing each area individually from the others.Breaking down revenue and expenses into smaller categories allows for more oversight and control of the financial management of the hospital. These smaller groups can be used to better understand what areas are generating revenue and/or what areas are draining revenue. A category breakdown can help the facility focus its resources on areas that consistently generate higher revenue streams.
Historically problematic expense categories are also easily exposed, which is helpful during cost control exercises.The manner in which the hospital groups its revenue and expense categories is very beneficial to both the planning and control processes (Patton-Fuller Operating Budget , 2008). In conclusion, planning out a budget for the facility will help to keep the financials in order and on track at all times. There will be times there will be emergencies come up, but the budget will have allotted for emergencies. Budgeting also allows for departments to see where his or her department is and what each department can afford extra for the year to do upgrades and or hire new employees.
References Covey, S. (2011).Inspirational Quotes for Business: Empowerment and Delegation. Retrieved from http://humanresources. about. com/od/workrelationships/a/quotes_empower.
htm Baker, J. a. (2011). Healthcare Finance: BAsic Tools for Nonfinancial Managers (3rd ed. ).
Jones and Bartlett. Patton-Fuller Operating Budget . (2008). Retrieved from www. phoenix. edu: https://ecampus.
phoenix. edu/secure/aapd/cist/vop/Healthcare/PFCH/HosDepts/CFO/HDCFO004. htm Patton-Fuller Balance Sheet . (2008). Retrieved from www. phoenix.
edu: https://ecampus. phoenix. edu/secure/aapd/cist/vop/Healthcare/PFCH/HosDepts/CFO/HDCFO004. htm
