Financial Viability In Health Care
Managing finances within a health care organization can be seen as a daunting task. There is a lot of work that goes into the success of a health care organization. Finances and accounting are two areas of health care that manage and plan the spending of an organization. Together they create the means for a successful financial plan and bring in profits. This essay will examine the relationship between finance and accounting following with how they determine financial viability within a health care organization.
Before analyzing the relationship between finances and accounting, we must first understand what they deal with individually. Finances deal with the decisions that are made for the organization based …show more content…
To a manager, this means that the company has met their goals and stayed within budget over a period of time. Finance and accounting play a role in this because they help determine what plan will be made and how it will be carried out into the following year. Together, they secure the accuracy of the health care organizations financial viability. Without the accounting, health care organizations would not be able to analyze any growth of the organizations financial situation because there would be no data to chart. Accounting also helps to predict future budgets based on historic budgets and how they operated. This allows for an organization to grow and not make the same mistakes as they did in the past. Finance also plays a role in financial viability by using the financial statement, created by accounting, to help keep track of previous budgets and any financial transactions. Financial statements work as a check book that you would balance at the end of the month to make sure that the numbers match up. Using financial statements in the health care organization can help those in that department double check their work to make sure the organization is financially viable. “These statements tell a story of where the organization is financially and how it arrived there” (Cleverley, Song, & Cleverley, 2011, pg. 198). Financial viability represents how a health care system is going financially and whether they can be trusted by investors. Investors will not want to invest their money into a health care system that has frequent variances within its budget and does not show stability within its finances. Each aspect that goes into financial viability helps determine the profits that will be made by a health care organization as well as its ability to uphold itself in the health care