Question

Why is budgeting, managing receiveables, and short-term financing important in the healthcare industry?

Answer 1

Budget in the healthcare sector facilitate tighter financial control, more responsive decision and making staff- motivation.

The annual budgeting process sets the performance agenda for the year ahead. However, healthcare budget are often only an estimate of income and expenditure, with incremental budget setting.

Budget can facilitate the necessary delegation of managerial responsibilities. Delegation expenditure consumption upto a certain level can also improve the speed of decision making if there is no need for authorisation from a higher level manager.

Managing Receivables- Every financial metric carries importance in running a healthcare business.

Receivable measures the amount of time between patient discharge and when payment is made. If the metric we use to monitor how quickly insurance companies process claims and pay the cash we are owed.

Short term financing- It is usually aligned with company's operational needs. It provides short er maturities 3-5) years

Increased financial pressure in hospitals have elevated short term financing-. In case of any kind of shortage of fund or emergency, short term finance is helpful and it reduces the burden on current assets.