Productive management of financial resources has gained significant concern in health and social care entities after the amendment of The Health and social Act 2012. The act specified that the health practitioner and social care manager have to be more innovative, productive and accountable related to quality, safety and patient experience while delivering the NHS, Adult social care and Public health services (Beck, Levine and Loayza, 2000). This report was made to construct the deep understanding about planning and management of financial resources need to be done in the social and health care and for this purpose CareTech Holding Plc, a leading Social care services provider of UK was taken. The report will explain how monitoring and controlling of financial resources and decisions can be done in health and social care.
1.1 Principles of costing and business control systems
NHS has approved six best costing principles which can be implemented in health and social care like CareTech Holding Plc. These principles are-
Stakeholder Engagement- According to this principle, CareTech Holding Plc can estimates its cost by including cost related to non-finance department. The cost which are considers in non-finance department are related to clinical staff and non- clinical staff.
Consistency- This principle states the entity should adopt consistent approach in its all departments and unit for measurement of cost (Approved Costing Guidance, 2014).
Data Accuracy- This principle states the entity like CareTech will able to compute right cost when the different data are properly recorded. To make this possible, the entity should maintain a proper recording system related to journal entries, ledgers accounts, trial balance, staying period of patient, time spent by clinical staff and other to make appropriate decisions.
Materiality- It states the entity should accurately record the cost related to material procurement and other activities for the right calculation of cost.
Causality and Objectivity- This principle entails the costing should be based on an understanding of causality to minimize its subjectivity (Gauld and et.al., 2014). It means analysis of causality should be done before measuring the cost as it will help in reduction of causality.
Transparency- This principle expresses that the costing of health and social care like CareTech should be transparent and easily auditable.
CareTech Holding Plc can use underneath methods for controlling of cost-
Cost Centered Approach- In this, the manager of CareTech will give emphasis to keep the cost within the expenditure budget (Akortsu and Abor, 2011). It is because if the cost will increase then it will wipe out profits of the business.
Per Patient cost computation- The entity will able to set the fee of patients after valuation of cost per patient. It will be computed by dividing all variable and fixed cost incurred over a period of time by number of patients appointed in the organization.
1.2 Information needed to manage financial resource for CareTech Holding PLC
In social and health care, a entity requires financial resources to make payment to staffs, procurement of materials, equipments, medicines, beds and others. They can meet this requirement by careful planning of its revenue sources. A health and social care receives revenue in terms of fee which it receives from patients (Isosaari, Ollila and Vartiainen, 2009). CareTech will manage its financial resources in the best manner when the entity is practicing transparent and accurate accounting method for the measurement of cost.
Further, the efficient management of financial resources will be possible by implementation of effective management of risk will be done by identification and assessment of possible risk. In health and social care risk can be seen related to negligence of staff, death of patient due to failure of operation etc (Rivers and Glover, 2008). In addition to this, preparation of budgets and auditing of reports related to procurement expenditure, administrative expenditure, financial cost, marketing expenditure, renovation of building cost and legal cost will also assist in management of financial resources in CareTech.
1.3 Regulatory requirements need to be satisfied while managing financial resources
In health and social care, due diligence is must required for the safety of patients. There are various authorities or regulators who make rules and regulations for health and social care.. Following are the regulators who specified regulatory requirements for health and social care-
Care Quality Commission- It inspects whether the health and social care entities are meeting national standards or not. On the basis of this inspection, they issue their findings to aware people about the degree of services provided by the particular entity (About us Care Quality Commission, 2014). This helps people to make better choices for selecting appropriate health and social care.
Healthcare Sector Regulator Monitor- It was established to authorize, monitor, and regulate entities which come in the purview of NHS foundation trust. It issues license to the entities who wants to establish health and social care. It focuses on safety of patients, price determination, and support patients for treatment who have financial difficulties. (Monitor, 2014)
GAAP- It is the accounting standards which assists health and social care in recording and reporting of financial information in standard manner (Richards, 2014). It is helps in encouraging making transparent and fair accounting systems in the business entity.
1.4 Evaluating the systems for managing financial resources in CareTech Holding PLC
There are various methods for systematic management of financial resources in health and social care. Following are the best known systems which the entity CareTech can used in operational activities for the effective management of its financial resources-
Open System- It is computer software which is becoming most common in health and social care because of its applicability of use. The software collects all financial information at one place by importing all financial and tax information in to the system (Accounting Software and Integrated ERP, 2014). After this gathering of data, it immediately starts evaluating the income and expenses of the entity. This software helps in making decisions related to buying and selling, improvisation of customer services and etc.
Caresys Software- This computer software is made by considering all the financial and non-financial activities done in health and social care. It includes modules related to Time and Attendance, Staff HR, Care Scheduling, Behaviour Support, Income and Billing, Care Planning, Finance, Equipment maintenance, and Enquiries and meeting (Caresys, 2014).
2.1 Sources of income available to CareTech PLC in the financial year in 2013
CareTech is focused towards providing of services related to specialist social care. The entity is providing range of quality care services which is meeting the commissioners' entire requirement. The entity is dealing in mainly four segments from which it is generating revenue-
Adult Learning Disabilities- It includes care services related to adult residential care homes, independent supported living and community support services (About Us CareTech, 2014). CareTech generated £73.9m of revenue in the year 2013 from this segment.
Mental Health- From this segment the entity has made £6.5m revenue in the year 2013 which it made £6 in the precedent year. In this, CareTech provides community based hospitals, adult residential care homes, and independent supported living and community outreach.
Young people Residential Services- This care pathway includes children residential care homes. The entity booked income of £19.3m in the year 2013 (Annual Report, 2013).
Foster Care- It is child fostering services provided to the children with disabilities. The entity facilitates foster care family assessment in the homes. From this segment, CareTech has registered £14.3m revenue in the year 2013.
2.2 Analyzing the factors that may influence the availability of financial resources
A business entity is surrounded by several factors which influence the availability of financial in the business such as payment of taxes, charitable activities, free health check-ups and etc. The primary affair which can be considered as a factor for influencing of availability of financial resources in the business is objectives and strategies of the CareTech (Robinson., 1992). If the higher management of entity is planning to make strategic alliance for the growth and development of the business enterprise then it will affect the availability of financial resources with the business. As in this case, CareTech acquired EQL solutions which enhanced the care pathway of the entity and also helps in establishing strong position in the market.
CareTech also acquired assets of Quercus Healthcare and Roborough House for extending the business activities. In addition to this, government fiscal budget also influence the availability of finance (Annual Report, 2013). When the government makes plan to enhance the health and social care of the country, it provides funds to the health and social care entities for enhancing their services in better way and expands their reach through health care inclusion. CareTech will able to receive advantage of this fund by setting good example in the sector by providing best services to the public.
2.3 Review different types of budget expenditure in CareTech PLC
In CareTech different types of budgets can be prepared to monitor and control the cost of operation. The types of budget which can be made in CareTech are as follows-
- Fixed cost and variable cost budget- In this budget, the entity CareTech will list out the estimated fixed and variable cost it will need to incur to provide services (Perrin, 1992). Fixed cost is that cost which cannot be reduced irrespective change in output whereas variable cost varies with the change in output. This budget will help in reduction of cost of operation.
- Administrative Cost Budget- It will include all those expenses or cost which are incurring indirectly on availing of services. It includes cost related to payment of salaries to clinical and non-clinical staff, managers, use of stationary and etc (Rudolf, 2010).
- Material or Consumable Budget- CareTech can make material or consumable budget which will helps in controlling the cost of wastage of consumables.
- Marketing Expenditure Budget- This budget helps in assessing whether the marketing plan of the firm is efficient in bringing sales revenue for the entity.
2.4 Evaluating the manner in which decisions about expenditure could be made
The expenditure of business enterprises is not always fixed as the business activities is smothered by different activities which could be come up at any time. In addition to this, a business entity always makes plans for the enlargement of business activities by adding new products or services in its portfolio. Usually a business entity draws decision about expenditure on the basis of needs and opportunities (Martin, Charlesworth, and Henderson, 2010). A business entity makes expenditure by first identifying availability of finance within the business. If the appropriate funds are available then it makes fast decision about further expenditure but if funds are not in adequate quantity then the entity identify different sources of finance from which it can obtained the funds. Further, decision about expenditure could be made by assessing appropriate location for the business, demand for the care services, number of existing competitors, central government guidance and other regulatory framework.
3.1 The way situation of financial shortfall can be managed in CareTech
Financial shortfall is considered to be a curse for the business entity as it can lead the business organization to become extinct from the market (White, 2010). Financial shortfall put barricade on the operational activities of the business and because of this reason every organization wants to overcome from this bane as early as possible. To deal with this type of condition in effective manner, CareTech can adopt following practices-
Working within estimated cost- This will help in eliminating additional cost burden from the entity.
Additional obtaining of funds from the government- CareTech can overcome from the situation of financial shortfall by taking grants from the government (Bryans, 2005). This will help in rejuvenate business activities of CareTech.
Divestment of in services- The entity can end-up those services which is annihilating huge availability of cash. So, the CareTech will able to rid-off from the situation by stopping its one or more services.
3.2 Action to be taken in the event of suspected fraud
Many of times it has been seen the business entity has to face fierce resistance in the market due to some illicit activities of its some personnel. These illicit activities are often related to fraud and harassment activities (Goldman and Carrier, 2010). These activities can be reduced or eliminated by taking strict actions against the perpetrator who made though to ruin the goodwill of the firm. If it happens in CareTech, then underneath action could be taken to suspect the occurrence of the event-
Gathering of information or evidence- The first and foremost thing which can be done before taking any action is gathering of evidences which will give indication about the reason behind the fraud and will also in making sound judgment about the real culprit (Pearson and Chant, 2011).
Doing inquiry of event by making team of internal and external auditor- the event of suspected fraud can also be solved by putting forth a investigation team inclusive of internal and external officials. This will help in arriving at finding without biasness of any party.
Termination of Perpetrator- The best action one can take promptly after identification of perpetrator is termination of its association with the business entity (Eiriz and Figueiredo, 2005). Then further action can be taken related to legal action.
3.3 Evaluate budget monitoring arrangements in CareTech PLC
Budget monitoring refers to reviewing and controlling the activities of the business in accordance with the planned activities. A budget is prepared in the organization to measure the actual performance of the business with the key indicators which were identified at the time of setting goals of the organization (Rivers and Glover, 2008). In budget monitoring process, the identified quantifiable goals of CareTech will be monitored and checked to ensure all activities of the entities are being performed in the planned manner. In this process, both internal auditor and external auditor keep a sharp eye on the overall performance of CareTech. They match the actual results arrived from the business operation with the key performance indicators. If the actual results are in line with key indicators no action are being placed but when there is any deviation between the standard and actual corrective actions are implemented immediately by the auditors to attain business objectives with effectiveness (Isosaari, Ollila and Vartiainen, 2009).
4.1 Identifying information required to make financial decisions relating to CareTech PLC
The Financial decisions will be drawn by the management when they have appropriate financial and non-financial information and records. The financial information signifies the financial transactions or activities made by the business entity in a particular period of time. The manager of CareTech will able to make financial decision by analyzing management accounts which is inclusive all financial accounts affected during a particular period of time from the business activities (Akortsu and Abor, 2011). In addition to this, evaluation of income and expenditure budgets, short-term and long-term goals of the entity, customer satisfaction report, regulator provisions for delivering of services, and government reports will also help in identifying enough information for making financial decision.
4.2 Analyzing the relationship between a health and social care service delivered, costs and expenditure
Any business organization will able to establish strong presence in the market when it understands the needs and requirements of its stakeholders. This need and requirement of stakeholders will be fulfilled when the entity follows fair and transparent policy and behavior with its stakeholder. This policy helps in constructing good image of the entity in the minds of its stakeholders (Gauld and et.al., 2014). The stakeholder of business entity includes owner, manager, employees, strategic alliance partner, government, supplier, customers, media, society, regulators, shareholders and etc. In addition to this, the cost, expenditure and service delivery will be effective when the entity adopts a costing and pricing strategy which is beneficial for both the entity as well as its for its customers.
4.3 Evaluate the way financial considerations impact upon a service user
Consideration is the amount which is paid in exchange of goods and services availed from the provider. It is usually seen that a consumer will able to ready to pay for a product or service when it is getting sufficient utility from the products or services. In today's time, business organization are focusing on providing services to the consumer at utmost ease and for this they are continuously improvising their way of offering services (Rudolf, 2010). This fact cannot be ignored that a consumer will have to pay higher charges if the services are provided according to his convenience. When the business entity like CareTech will increase its staff to expand its business operation then its impact can be seen in rise in prices of its service fee. So, ultimately the service users have to incur cost if there is any improvisation made in service providence.
4.4 Suggesting ways to improve the care service provided by CareTech PLC
Underneath methods can be adapted in context of financial system and processes to improve the care services of CareTech-
Estimation of accurate cost- The entity should reviewed its costing practices and criteria regularly. It is because the cost is that factor which never remains constant. It increases and decreases with the change in market force condition. Here, CareTech need to review the cost which is variable in nature (Bryans, 2005). Because at last, it has to set price of by considering total cost.
Estimation of per Patient Cost- This element is also very essential to look to improve the care services. CareTech should identify per patient cost it is bearing in providing of health and social care services (Beck, Levine and Loayza, 2000). Because on the basis of this cost per patient it can determine the appropriate price of its services.
Improvisation in consultation- In health and social care, the patient must be accurately advised and treated so that it can build sound positive thinking in his minds. This will create fast recovery will in the patient. (Pearson and Chant, 2011)
This report was made to explain how management of financial resources can be done effectively in the organization CareTech, a health and social care entity of UK. In the report six principles of costing which needs to implemented in health and social care are explained. The report give detailed about the information and regulatory required to mange financial resources in health and social care. The report also analyzed the role of planning in the management of health and social care budgets. From the whole study, it can be concluded that management of financial resources is an essence of every organizational activities.
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