An efficient financial management is something every industry needs and relies on to function well. But in healthcare industry profit is not only the sole goal like any other industry.
Especially in a country like India where public health care had taken a backseat and private healthcare sector is responsible for the majority of healthcare, most healthcare expenses come straight from the patients and their families rather than the insurance sector. Only one-fifth of healthcare is financed publicly, which is in sheer contrast to most other countries of the world.
This essentially means that Healthcare providers must carefully make investment choices by carefully evaluating costs and benefits of medical procedures and technologies, making capital investment decisions, managing Treatment costs, working capital management, contract management, and financial risk management, etc.,
Evaluation and Planning to prepare for the future
At the company's executive level, financial management means providing the leadership team with information to make strategic plans to prepare for the future. The financial management team achieves this goal by handling routine financial operations, such as negotiating contracts, making cash available for expenses such as payroll, and maintaining a cash cushion for unexpected costs.
For example, health care providers, such as large physician practices and hospitals, may decide to offer expanded tests or treatments by buying new medical equipment. Helping to make the decision and finding the best way to pay for it are both part of financial management.
Capital investment decisions
Capital investment decisions are among the most important decisions made by companies. They determine the firm's capacity for providing services and reserve the firm's cash for an extended period of time. Such decisions focus on the acquisition of new facilities and medical equipment (fixed assets) and are the primary means by which businesses implement strategic plans; hence, they play a key role in a business’s financial future. Health care systems face the same challenges as other organizations in developing and implementing capital investment strategies that use consistent methods for evaluation of projects that have inconsistent aims and outcomes.
Financial risk assessment and management
Many financial transactions that take place to support the operations of a business can increase a business’s risk. Thus, an important financial management activity is to control financial risk. In recent years, providers have been redesigning their finance functions to recognize the changes that have been occurring in the health services industry. Finance must help lead organizations into the future rather than merely record what has happened in the past.
Managing treatment costs
In the healthcare industry, it is extremely important to manage treatment costs because of the already high cost of medical care in the country. The Financial analysts can make use of Innovative technologies like data analytics, to survey on the treatment costs across the different hospitals in different locations to arrive at optimal treatment costs.
With new web-based solutions available, consulting costs are going down. Emerging companies in the healthcare market like “ZEPNURhealth” are assisting different medical and dental facilities in their procurement process, setting up efficient infrastructure, at minimal costs there-by reducing the treatment costs.
The healthcare industry is growing daily and changing rapidly! Financial management is an art and a science in any industry, but in health care is particularly challenging. Changes are inevitable and we need them in order to improve daily. Providers and insurers will need an exceptionally skilled financial management team to look after their financial assets and to wisely manage their businesses.