Question

The question is : from the managers perspective how does budgeting and financial management change as payment system change? Give an example based in the health care industry from one of the following setting: hospital, free standings outpatient facility, pharmacy.

Answer 1

Budgeting and financial management will be changing when the payment system will be changing because budgeting and financial management are often flexible in nature according to the changing nature of the payment system, because payment system will mean that there are various types of credit policies which are being adopted into the organisation and they are leading this organisation in order to maximize their benefits and they are also leading these organisation to have any impact differently on their overall revenues figure and realizable value so it can be said that the credit terms and other incentives which are being offered by the company will be having an impact upon the payment system and hence it would lead to an impact upon overall budgeting because financial management should be proactively discounting the changes into the payment system.

One example could be that all the fees which are outstanding is generally increasing due to increase in the days outstanding in hospital industry and management is discounting them through budgeting by reducing the estimate of overall Revenue.