FINANCE AND RESOURCE MANAGEMENT IN HEALTH AND SOCIAL CARE SECTOR

Finance and Resource Management in health and social care sector

Finance and Resource Management in health and social care sector

Introduction

The main purpose of this paper is to make an analysis on the financial and human resource management on the health care sector. It is believed that the policies on the national level and also the social and health care systems are changing throughout the globe. Thus, this change is creating the increased demand of quality and the improvement in the service and the product and service efficiency. Thus this paper discusses the role of managers, business planners and the financial management system in the social and health care system (Abernethy, 2001).

Most social and health care organizations are constantly striving to improve their financial and resource management while keeping costs under control, in a continuous effort to meet customers' demand. After its proven success in the industry, the revenue management approach is implemented today in many industries and organizations that face the challenge of satisfying customers' uncertain demand with a relatively fixed amount of resources. Resource management has the potential to complement existing scheduling and pricing policies, and help organizations reach important improvements in profitability through a better management of capacity and demand. The work presented in this thesis investigates the use of financial and resource management techniques in the social and health care sector, when demand for service arrives from several competing customer classes and the amount of resource required to provide service for each customer is stochastic (Abernethy, 2001).

In 2006, national healthcare expenditures reached $2.16 trillion, and are projected to reach $3.6 trillion in 2014, growing at an average annual rate of 7.1 percent. The growing population of the United States, combined with continued medical advances, has increased demand for quality healthcare. With this growth, however, comes the challenge of managing rising costs and maintaining efficient operations. Research literature indicates that the inefficiency of healthcare institutions contributes to high healthcare expenditures. Thus, maximizing efficiency in healthcare institutions has become an increasingly important factor for healthcare executives because it has great potential for cost savings (Abernethy, 2001).

Discussion

The healthcare industry is one of the largest industries in the world and, in the United States, accounts for 16 percent of the gross domestic product (GDP). In general, it consists of the following nine segments: hospitals, nursing and residential care facilities, offices of physicians, and offices of dentists, home health care services, offices of other health practitioners, outpatient care centres, other ambulatory health care services, and medical and diagnostic laboratories (Abernethy, 2001).

The U.S. Department of Labour, Bureau of Labour Statistics (2006) shows that roughly 76 percent of health care establishments are offices of physicians, dentists, and other health practitioners, 2 percent are hospital establishments, and 22 percent are other health care firm establishments. Even though hospitals only cover 2 percent of all health care establishments in that survey, hospitals employ around 41 percent of all healthcare ...