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Summary Financial management in healht care organizations all important subjects
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Financieel management in Health Care Organizations (Begrippen die veel voorkomen opoefententamens)
Three main principles of care in NL
- Cost, Quality and Access
Characteristics of not for-profit organizations, why is financial management important for healthcare
organizations?
- Not primarily not focusing on making profit
- Social goals
- Not financial economic independent
- Collective financing (government, health insurers)
- Not allowed to pay out of profit
Vision statement
What a company desires to achieve in the long-run
Mission statement
Is a precise statement that defines what a company does and what purpose it serves
Strategy
The way how the organization wants to realize their goals
Decision making
- Investment decisions
- Operational decisions
- Financial decisions
Financial accounting
External reporting and bookkeeping
- Compulsory
- Monetary information
- For external use
- Specified format
- Published
- Audited by statutory auditors
Management accounting
Internal information for decision making, performance evaluation, and control
- Not compulsory
- Monetary and other information
- For internal use
- Not specified format
- Not published
- Not audited by statutory auditors
,Management control instruments
- Soft controls → Cultural factors influencing behavior in the organization
- Hard controls → Responsibility centers budgeting departments transfer prices
Management control
The repetitive process by which managers at all levels influence the people they supervise to ensure
that intended strategies get implemented (The way humans interact in their daily dynamic workplace)
- Managers coordinate activities of individuals
- Bounded rationality: not all information available for decision making
- Managers controls himself instead of being controlled by an external regulating device
Management control is link between strategic control and task control
Strategic control
Is the current strategy still valid?
Task control
Specific and detailed guidelines for actions on the workplace
Out of control reasons
- Lack of direction
- Motivational problems
- Organizational constraints
- Personal limitations
Types of Management Control method to be balanced (Merchant & van der Stede)
- Action controls → Ensure that employees perform (or do not perform) certain actions known
to be beneficial (or harmful) to the organization
- Results controls → Ensure that employees accomplish predefined outputs or results,
performance indicators needed
- Personnel controls → Ensure that employees are adequate selected and facilitated in
performing their job well
- Cultural controls → Ensure that employees exercise social pressure (positively and
negatively) on one another
Action controls
Preconditions
- Managers know what are desirable (or undesirable)
- Managers are able to ensure that the desirable actions occur (or that the undesirable actions
do not (occur)
Advantages
- Direct control of processes- immediate results
- Management learns how to control actions/processes
- Action control allows management to improve coordination between processes, departments
and business units
Disadvantage
- Analyzing and controlling actions is costly and time consuming
- Only applicable on more or less routine actions
- May discourage creativity innovativeness of employees
Result controls
Elements of results controls
- Defining performance dimensions
, - Setting performance targets
- Measuring performance
- Providing rewards (or punishments)
Preconditions
- Managers know what results are desired
- Targets need to be realistic and motivating
- Employees understand what is expected from them
- Managers have significant influence on the results
- Managers can measure the result effectively
Controls need to be
- Congruent with objectives
- Precise
- Timely
- Objective
- Understandable
Advantages
- Less costly than action control systems
- Applicable to routine and non-routine activities
- By its focus on results, it improves goal congruence
- Provide more autonomy to managers which enhances their motivation
Disadvantages
- Very complicated to design an effective measurement system
- Results controls do not distinguish between the manager’s efforts and the influence of bad
and good luck
- Not everything that counts can be counted (ethics)
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