Unit 14 Managing Financial Resources in Health and Social Care (MFR) HNC/D Assignment

In the present report, principles of costing and business control systems as well as information that helps in the management of financial resources, regulatory requirements, different kinds of sources of income, and factors that have influence upon the availability of financial resources and different types of budget expenditures will be discussed. Also, management of financial shortfalls, budget monitoring arrangements and information that helps to make effective decision-making, the impact of financial considerations upon individuals using health and care services, and ways to improve health and social care services will be studied here.

TASK 1

1.1 Principles of Costing And Business Control Systems

Costs: It is the value of money that is paid for acquiring something new which helps in the effective performance of operations. Different items that need to be considered include efforts, risk associated, time consumed, and material required as well as different resources. The cost which is related to the prior period is not considered. For example: NHS Foundation Trust acquires equipment the cost includes production and delivery charges of such equipment.

Income: It is considered as the money received by the NHS Foundation Trust in respect of services that are provided to their patients. It is further used to operate day to day activities effectively.

Cost-benefit analysis: It helps in the evaluation of the decisions taken by management. The benefits which are received from business activities are added and all costs which are incurred in this regard are subtracted.

Expenditure: In the context of NHS Foundation Trust, expenditure means money spent on acquiring medical equipment. Money is spent in the form of cash or cash equivalents. It can be of two types i.e. revenue and capital expenditure. Revenue expenditure is incurred by the care home regarding operations of day to day functions. On the other hand, capital expenditure is incurred on the purchase of fixed assets and machinery.

Cost center: It is considered a business control system. It is a separate department in NHS foundation trust which is responsible for the costs incurred. They do not take care of the activities regarding the generation of profit through the use of their assets. It helps to control costs below the budget and contributes indirectly to improving their profits.

Break-even: This analysis helps to determine the activities that are needed to perform well to attain their break-even point. It is the point where the cited care home reaches the situation of no profit and loss. So, it plays an effective control regarding controlling of different costs like fixed and variable (Almalki, FitzGerald, and Clark, 2011).

1.2 Information Needed to Manage Financial Resources

Management of financial resources is important for NHS to attain success in its business operations. In this regard, a large number of various information is required regarding different aspects. It helps the manager of NHS to draw important conclusions and improve their decision making. Different business information needed is mentioned below:

• Employees: The workforce which is working in NHS has the main aim is to effectively provide medical services in the UK. Determination of a number of employees helps in the effective disbursement of the amount of salaries.
• Finance: It includes the determination of the amount of funds which is required for the performance of their diversified services regarding basic medical facilities, optical care, etc. It provides an opportunity to raise funds as per the requirements.
• External factors: There are many factors which affect the financial resources. Such factors include changes in policies, competitive factors, and legal requirements. Non-fulfillment of legal requirements affects the government's support towards NHS. So, it is duty of  manager to follow all legal requirements that help in raising funds from their different investors and governmental authorities.
• Equipment: In health-care industry, there are frequent changes that happen in medical equipment which makes the services better. It brings an obligation upon the management to adopt such technologies to improve their performance. It requires effective management of funds as per the requirements.

1.3 Regulatory Requirements Which Help in the Management of Financial Resources

There are many rules and regulations provided by the government of the UK regarding health care facilities that need to be implemented by the NHS while providing their functions. It provides the opportunity for effective management of their functions as per such requirements. It also contributes to managing financial resources. Such different regulatory requirements are mentioned below:

• Legislations and code of practice: There are many legislations which are followed by NHS. One of the important pieces of legislation is the Health and Safety Work Act 174. As per this act, the management of NHS has the obligation to take adequate measures which provide the safety of medical representatives and patients. It helps in the prevention of unnecessary penalties imposed by the government. On the other hand, the application of the code of conduct provides direction to workers which improves their performance and effective use of funds (Boulware And et. al., 2016).
• Accountability: It is the broad concept which includes the provision of management and costing accounting. It helps the management of NHS to prepare different kinds of reports like job costing, performance, inventory management, etc. which is used by the internal parties to make effective decisions. It helps in the management of their funds as per the information attained regarding the operations of different departments in NHS. It provides the opportunity regarding the preparation of budgets which directs the employees to meet such standards.
• Audit: It is considered the process of examination by independent professionals about all the activities that are happening in NHS. It helps in the identification of the issues which are irrelevant. So, it provides the opportunity to improve their existing medical services and save costs through the removal of unnecessary functions. They direct regarding effective disbursement of funds in different departments as per their needs.

1.4 Analysis of The Systems Which Help in Managing Financial Resources

There are many systems that provides the opportunity for the manager of NHS to manage their financial resources effectively. Through the implementation of such systems large number of benefits are gathered by NHS like satisfaction of patients, building a good image, development of their existing facilities, etc. Such different systems are defined below:

• Sources of income: There are many sources of income that can be used by NHS in the future to raise finances. Such sources are categorised as public, private, or voluntary. Public sources of finance include grants provided by the government, private sources include bank loans, funds from financial institutions, etc., and voluntary funds come from local and national mediums. Such amounts are considered as charity and donations (Hunter, 2016).
• Accountabilities: It includes the application of accounting principles and provisions which helps to determine the information about departments working in NHS. Different kind of reports helps in the management of different areas which in turn improves overall performance. It improves the decision making of internal parties regarding effective management of funds.
• Formulation of budgets: The preparation of financial budgets helps in the effective allocation of funds to different departments. It directs them to optimally utilise their funds to attain maximum returns.

TASK 2

2.1 Diverse Sources of Income Encountered in Health And Social Care

NHS is a public organisation that provides free medical facilities in the UK. The main aim of organisation is to provide basic medical facilities to all individuals in society. To provide their functions on an effective basis requires a sufficient amount of funds. There are many sources from which the management of NHS raise their funds are mentioned below:

• Public: It is the biggest source from where a large number of funds are coming to support the activities of the NHS. Under this option, funds are come in the nature of grants from governmental authorities. Such sources of funds are called public. Such grants are free from interest or carry lower interest rates. It is difficult to raise funds from public sources as management needs to fulfill different governmental requirements in this regard (Cascio, 2018).
• Private: One of the easily available sources of funds in front of the management of NHS. This includes private organisations, banks, and investors. Such funds come in the nature of loans. One of the important sources under this is bank loans which are easily available to NHS. It carries a high rate of interest which is needed by the management within the stipulated period of time.
• Voluntary: It is one of the sources from where funds are coming from outsiders on voluntary basis. It can come from two paths local and national. The amount that comes from local entities is called subscriptions which are used by the management of NHS to improve the particular services for which such funds are provided to them. On the other hand, donations come from national entities with the aim of developing the facilities which are provided to society. In this regard, no need to provide any returns.

2.2 Factors That Impact the Availability of Financial Resources in Health And Social Care

There are many sources from where funds are easily available to provide their business functions. It is the capability of the management is to effectively identify the factors which impact their capacity to gather funds from different resources. There are many factors like funding priorities, agency objectives, and policies, private finance, government policies, geography, type of service, etc. which impact the availability of financial resources. Consideration of all these factors helps in providing better medical facilities to individuals in society. Such different factors are mentioned below:

• Funding priorities: One of the factors that reduces the amount of resources from where NHS is able to raise their funds. This includes about need for funds for different objectives like basic needs, healthy communities, vibrant democracies, purchase of medical equipment, etc. So, as per different needs sources of funds are reduced in number. This means priorities have a negative impact on the availability of funds (Chartier,  2014).
• Government policies: There are many regulations that are provided by the government about effective regulation of the financial system. This will restrict them not to provide the funds to any organisation or institution without fulfilling basic requirements. Also, provide policies that apply to health and social care homes regarding raising funds. This will also has an adverse impact on the availability of financial resources.
• Geography: This factor also has a large impact on the availability of resources from where the funds are available to operate their business functions. If the geographical area is not developed then less amount of sources like banks, and financial institutions are available. But in the present case, the UK is a developed nation where a large number of banks and Financial institutions are present to provide funds to NHS (Singer and et. al., 2011)

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2.3 Different Types of Budget Expenditure in Health And Social Care Organisations

The main aim of preparing different kinds of budgets is to set the standards that direct the workers and medical representatives of NHS in the providence of their effective functions. Through such budgets, the actual performance of workers is determined and compared with such standards for identification of the deviations. It provides the opportunity for the manager of NHS to develop their skills and accomplish their targets. The different kinds of budgets are mentioned below:

• Cost center: It is a different area in NHS that helps in controlling costs. This department is responsible for costs which are incurred in organisation. They do not focus on earning profits and making investment-related decisions. It is also known as an expense center where all costs which are incurred by NHS while providing their business activities are pooled in one place. They have the main aim is to make different budgets and control costs to keep them under such limits. It provides the opportunity for the management of NHS to effectively utilise its different resources in smarter ways (Shanks, 2016).
• Project management: Such a team of NHS provides the functions regarding the management of particular projects and completes them within the stipulated period of time. It includes the application of skills, knowledge, tools, and techniques which provides the opportunity to fulfill the different requirements of the project. The different steps that help in directing and controlling the project are mentioned below:

- Project conception and initiation: Determination and examination of the idea about identification of the benefits received by NHS (Chartier,  2014).

- Project definition and planning: Planning about the overall activities and designing the framework regarding the preparation of the budget.

- Project execution: Tasks are distributed among the different teams and disbursement of responsibilities.

- Project performance and control: Comparison of actual performance with budgeted to control their work.

- Project close: It is the last stage where all activities are completed and the project is accomplished.

2.4 Analysis of The Decisions Which Are Taken in Health-Care Organisations Regarding Expenditure

NHS provides its activities with the aim that nobody is deprived of basic medical facilities. They want to help society by improving their living standard. To provide their functions effectively, the management of NHS needs to make various decisions regarding different aspects like expenditures, current facilities, view of patients, etc. One of the major factors that helps in managing funds in NHS is controlling expenditures. So, the decisions that are taken by management in regard of expenditure are defined below:

• Financial risk: Identification of risk helps in the preparation of contingency provisions which provides an opportunity for the reduction of future expenditures through the removal of uncertainties (Kakuma and et. al., 2011).

TASK 3

3.1 Identification of The Information Which Helps to Make Financial Decisions

To make effective decisions need to gather important information regarding different aspects which helps to make better financial decisions. In this regard, need to consider an annual report which includes financial statements and balance sheets, and provides information regarding their incomes, expenses, liabilities, and assets. It is observed that there are a large number of difficulties faced by the management for the achievement of their cost reduction targets. Different aspects which help to take financial decisions are mentioned below:

• Available information: The information that is available to make better financial decisions is that issues are arising in staffing-related costs. It helps making of effective policies which makes the whole process of staffing more effective. It is observed that around £1 million is invested to improve their building and equipment. This information is gathered from financial statements, balance-sheet, etc.
• Priorities: Priorities also affect the financial decision making of management. Their main motive is to provide better services. In this regard. Around £1 million is invested in the renovation of the building and the implementation of new equipment which helps to provide better services to patients (Kringos Adn et.al., 2013).
• Sources of income: Determination of currently available sources provides the opportunity to make effective financial decisions. Management of Airedale NHS knew that they have the opportunity to raise funds from the government. So, it has a direct impact on their decisions regarding the improvement of existing services.

3.2 Relationship Between a Health And Social Care Service Delivered, Costs And Expenditures

The level of service would be provided by taking vital information from NHS while making their cost expenditure will gather various aspects by which they can take consideration in examining the effectiveness of an organisation.

• Cost-benefit: It is the utmost responsibility of managers to check and regulation over all expenses that are being delivered by NHS. This can be done by using proper evaluation as an important tool so that costs and benefits in an association can easily be managed. It also regulates the financial feasibility of an organisation over the presence of resources of the company.
• Pricing policies: According to the mentioned NHS pricing policies are carefully decided to look at their purposes for the betterment of an organisation by evaluating major factors. They deliver certain concessions to old age people in treatment or medicine. As they are working as a non-profit organisation they would increase the cost of services as their sole motive and they take a small portion as profit margin (Kringos, Boerma, van der Zee and Groenewegen, 2013).
• Purchasing arrangements: This would create maximum responsibilities for managers who are held responsible for maintaining superior service and quality at a more adequate cost. This would assist and motivate patients to take proper accountability for every issue that makes them comfortable. Henceforth, care services in health and social safety would not be attained without evaluating the costs or expenses those are associated with various activities (Luo and et. al., 2012).

3.3 Impact of Financial Considerations Upon Individuals Using Health And Social Care

The financial considerations taken by the management of Airedale NHS have a huge impact on the individual which uses the services mentioned below:

• Quality of service: It is observed that £1 million is invested in buildings and equipment which helps in improving their existing services. It helps to satisfy the different requirements of patients and ensures their maximum health.
• Access to service: New medical vans are operated which helps to provide the service who are not able to come to care homes. It helps to provide services as per their needs (Naledi,  Barron, and Schneider, 2011).

3.4 Ways to Improve Health And Social Care Service Through Change in Financial Systems

various type of financial problems occurs within health and social care sector. For better operation and utilisation of financial resources, it is required to analyse the requirement of financial resources at the initial level. It is considered that their effective analysis of financial requirements helps to reduce the idleness and misuse of financial resources. There are four major ways are defined subject to improve health and social care services through the financial system:

Investing in innovations

this is one of the essential aspects which helps to utilise the resources in an optimum manner. An organisation can use the financial resources for innovative ideas and plans such as adopting new technology, investing in technical tools, equipment, etc.   

Utilisation of finance within leadership programs

Utilisation of finance in leadership programs is also one of the common ways adopted by organisation. By providing proper knowledge and skills subject to managing and administration of health and social care sector.

Planning and structure of finance plan

Pre-planning and forecasting of financial resources is also one of the key aspects that helps to reduce the burden of financial management. More task requirements remain associated with finance plans and management (Richard and Shea, 2011).  

CONCLUSION

It has been concluded from the above report that Birmingham Women's NHS Foundation Trust needs to use effective principles of accounting which help in the preparation of important reports for making effective internal decisions. Management needs to implement different regulatory aspects like code of practices, audit, accountability, etc. which help in managing financial resources. There are many sources of finance like public, private, voluntary, local, and national used by care homes to properly conduct their operations in an effective and efficient manner. Through this, a large number of benefits are gathered by care homes like better services to patients, building a good image, higher profitability, etc.

REFERENCES

• Ahnquist, J., Wamala, S. P. and Lindstrom, M., 2012. Social determinants of health-a question of social or economic capital? Interaction effects of socioeconomic factors on health outcomes. Social Science & Medicine. 74(6). pp.930-939.
• Almalki, M., FitzGerald, G. and Clark, M., 2011. Health care system in Saudi Arabia: an overview/Aperçu du système de santé en Arabie saoudite. Eastern Mediterranean Health Journal. 17(10). p.784.
• Boulware, L.E. And et. al., 2016. Race and trust in the health care system. Public health reports.
• Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
• Chartier, Y. ed., 2014.  Safe management of wastes from health-care activities. World Health Organization.

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