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Non-Profit Hospital’s Financial Challenges Essay

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Updated: May 8th, 2021

Budget type in the healthcare organization

My organization is a non-profit children’s hospital, which is why effective budgeting is crucial to ensure that the organization does not suffer any losses. At the moment, the hospital is using the add-on budget type. Add-on budgets are based on previous years’ budgets that are adjusted for known changes, such as salaries, inflation rate, and more. This type of budget is used by the company as it contributes to preventing losses, thus helping the hospital to continuously serve patients. However, there are also certain downfalls to the add-on budget in the healthcare setting. For instance, it does not allow for planned expenses that are different from year to year, such as the purchase of new equipment or legal costs. A more viable alternative would be for the hospital to switch to the strategic budget, which tailors the budget to the company’s needs according to its strategy. The strategic budget would allow the hospital to include more staff in the decision-making process, thus promoting better patient outcomes.

Staff participation in budgeting and strategic planning

Strategic planning is an important tool that allows companies to develop successful strategies based on the internal and external forces affecting organizational performance. Thus, budgeting is somewhat connected to strategic planning as it contributes to the company’s development if used efficiently. However, whereas strategic planning is more focused on the external forces affecting the organization, budgeting activities have to take into account the processes that occur at different levels within the companies. Therefore, engaging various personnel in budgeting activities can help companies to make more effective and realistic budgets.

In my agency, budgeting processes are performed by the higher management, including the CEO, the Board of Directors, and the Chief Financial Officer. Middle- and low-level workers do not usually participate in the process. However, they can still impact budgeting decisions by making applications for budget extensions, purchase of equipment, and more. The applications are carefully reviewed and, if an adequate rationale for the costs is provided, included in the budget.

In the case of strategic planning, regular employees play a more prominent role, as they are required to provide insight into the functioning of their unit or department. Throughout the year, employees can submit their notes, ideas, and concerns to the management. Heads of departments, on the other hand, file quarterly reports that outline the work of their department, its strengths and weaknesses, and more. Employees’ notes are included in these reports and are thus passed to the higher management for review. For instance, last year, nurses reported staff shortage in the neonatal department of the hospital. After the complaint was reviewed, the adequacy of human resources became recognized as one of the key internal concerns. The new strategy included allocated more resources for hiring and retaining employees. Therefore, the leaders of my organization allow a moderate degree of employee input into strategic planning and budgeting processes.

However, there is still room for improvement. Personally, I believe that it would be useful to allow employees to play a more significant part in the process of budgeting and strategic planning. In a hospital, every employee might offer a positive input due to the diversity and complex structure of the workforce. For example, nurses spend more time with patients than any other medical professionals. Therefore, they might be able to offer valuable insight into certain factors affecting hospital performance, such as patient satisfaction, patient safety, and more. Surgeons, on the other hand, have a very different set of duties; they might help the management to determine if any adjustments are needed to relieve their workload or improve patient outcomes. Physicians might have some useful ideas for improving the hospital’s diagnostic capacity, and so on. Engaging employees from all levels in budgeting and strategic planning activities could help my organization to address issues that are not apparent to the higher management, thus improving performance and patient outcomes.

Overall, strategic planning and budgeting are essential processes that affect organizational performance and functioning. In my organization, regular employees have a moderate impact on strategic planning and budgeting, as they can only influence these processes by submitting propositions or ideas to the higher management. However, I believe that involving employees from all organizational levels in budgeting and strategic planning would help the hospital in achieving its strategic goals.

Budgeting issues and solutions in the healthcare organization

Although non-profit hospitals have some significant financial benefits from tax exemptions, they are still subject to budgeting problems. One of such problems for my organizations is expense allocation. To provide high-quality patient care, it is important for hospitals to maintain and continuously improve their facilities. On the other hand, it is also important to ensure adequate salaries to doctors, nurses, and other staff in order to avoid workforce-related problems. Therefore, balancing the expenses has become one of the most crucial budgeting problems for my organization. One possible way of resolving the problem is to set up an effective support system for decision-making in expense allocation. It is essential to compare the hospital’s financing needs with its goals to avoid excessive spending. Such strategy would allow the organization to be more effective in its budgeting activities, thus improving expense allocation while maintaining a desired level of care quality.

Financial challenges in the healthcare organization

As a non-profit children’s hospital, my organization is influenced by both internal and external forces that affect its financial status, including competition, government policy, patient flow, and other factors. These forces create a wide variety of financial problems that affect the hospital. While some of the issues have a minor effect on the organization, others have the potential to affect performance and patient outcomes. Thus, it is crucial for the hospital’s leaders to address these issues and challenges using effective methods.

The first and foremost financial problem that is experienced by all non-profit organizations is the negative revenues vs. expenses ratio. Although the hospital receives donations and fundings from sponsors and the government, there were times when the revenues were insufficient to cover the costs. The issue had a negative impact on patient care in the hospital, as the leaders opted for reducing nurse salaries in order to cut the costs. A more effective way to address the issue would have been to perform a thorough audit of the hospital’s operations and identify excessive spending or processes that did not affect patient care. Identifying the source of increased spending and evaluating whether or not it can be reduced can help to avoid damage to the workforce and quality of patient care.

Another problem that has recently been experienced by the hospital is the increased patient volume as a result of the Affordable Care Act. The ACA improved access to health care for millions of Americans. However, as the Act did not increase the number of medical institutions, hospitals suffered a steep increase in patient volume, associated with increased costs. In order to meet patients’ needs, the hospital had to expand its budget accordingly. As a result of increased expenses, the hospital suffered some financial losses and was forced to cut the costs by reducing the number of staff per shift and replacing some of the prescribed medication with cheaper alternatives. This allowed the organization to address the financial challenge that was the result of the ACA.

The healthcare sector is relatively competitive, which also creates numerous financial challenges for hospitals and other medical institutions. For example, a few years ago, the hospital faced a sudden increase in competition due to the opening of a brand new facility in the same area. Some of the patients switched to the new facility, which resulted in immediate financial losses. The hospital was also prompted to increase its marketing expenses to regain its leading position in the local market. In order to account for the costs and losses, the hospital sought to expand financing from its sponsors and gained support from the local public through donations. Although this strategy was useful in improving the cost-revenue ratio, it would also be beneficial to search for new ways of generating income. For instance, the hospital could develop new strategies for attracting donations from the public, such as organizing charity events.

Overall, like other medical institutions, non-profit hospitals face many financial challenges. Overcoming these challenges can help hospitals to be more successful and deliver better care to patients, thus improving their health outcomes. However, it is also essential to use efficient methods for cost-cutting, as poor cost-cutting decisions can lead to workforce and patient issues. My organization was quite effective in addressing financial matters in the last few years, which allowed it to remain among the leading hospitals in the area.

Value of forecasting expenditures and revenues into the future

Financial forecasting is an important activity that can help organizations to be more profitable. For instance, financial forecasting can be used to evaluate future expenditures and revenues to explore how the effect of internal or external changes on the company or to predict the need for strategy adjustment. If a financial forecast shows a reduction in revenues, this indicates a significant problem that affects the business internally. Therefore, financial forecasting allows organizations to predict problems and tackle them before they affect performance outcomes. In addition, financial forecasting is beneficial to organizations that depend a lot on external forces, such as policy changes and competition. My agency is a non-profit children’s hospital, which means that it is highly dependable on external market conditions. Financial forecasting can help my agency to evaluate the effect of external changes on its financial productivity. For example, forecasting was used to investigate the financial outcomes of the EHR adoption at the hospital.

Ethical shortcomings of public safety organizations

Public safety organizations are subject to multiple ethical considerations. Although the main aim of public safety organizations is to protect the public, their methods often become a subject of public discussion. Overcoming ethical problems can help public safety agencies to maintain a good reputation, thus creating a positive relationship with citizens and communities. Therefore, public safety leaders should seek to communicate and resolve ethical shortcomings in order to improve the effectiveness of their organizations in protecting the public.

People’s right to privacy and confidentiality of personal life is considered to be among the key values evident in the American society. However, the actions of public safety agencies can sometimes compromise this right. For instance, recent counterterrorism efforts of various government agencies and the police have become a subject of nationwide discussion. Although the use of surveillance in counterterrorism and other public safety efforts is justified as it can help prevent terror attacks and predict future actions of terrorist organizations, it impairs the citizens’ privacy. Depending on the goal, public safety organizations might monitor people’s internet activity or personal communication that is not intended for the public. Therefore, surveillance presents an important ethical concern that has to be addressed by public safety organizations.

Nevertheless, there is no easy way to address this ethical concern. Reducing surveillance could potentially affect the success of public safety agencies in protecting the citizens, whereas informing the subject about surveillance would defeat its purpose. One possible option for addressing the issue is to enhance internal controls with regards to surveillance by setting a clear code of conduct for all employees that participate in surveillance or other types of activity that compromises the subject’s privacy.

Another important ethical concern for public safety organizations is their involvement in political matters. One recent example of such involvement is the refusal of the LAPD police chief Charlie Beck to let his agency participate in Donald Trump’s deportation efforts. The case received national attention due to the underlying ethical dilemma. On the one hand, the main goal of public safety agencies is to protect citizens, which is why their leaders should be able to refrain from participating in certain activities. Indeed, the participation of LAPD officers in deportation efforts could affect their relationship with local communities. Impaired trust and poor communication, in turn, would affect their performance and their ability to protect the public. On the other hand, public safety agencies are part of the country’s critical infrastructure, and any conflict with political leaders could affect government policy, funding, and other critical aspects of the cooperation between the government and public safety organizations. Therefore, it is essential for public safety leaders to recognize this ethical issue and to work on resolving it.

There are many business tools that can be used by public safety organizations to improve performance, and risk assessment is one of them. When applied to the ethical conflict between public safety and politics, a thorough risk assessment can help to evaluate the options and achieve the best possible outcomes. However, it is also important for public safety leaders to address both the risks to the organization and the risks to public safety. Any damage to the organization or its reputation could have an indirect effect on its public safety efforts and thus has to be taken into account. Finding a balance between the needs of the community and the needs of the organization is crucial to making effective decisions and resolving ethical problems.

The greatest challenge in the healthcare organization with municipal finances

Recent changes to the Affordable Care Act (ACA), proposed by President Trump, could potentially impact the financing of my organization. A reduction in municipal finances could have a significant effect on the organization in the next five years. Cutting the costs and finding new sponsors would be two options for tackling the issue. For instance, the hospital could perform a thorough evaluation of its expenditures and identify ineffective processes and operations that have a considerable cost. Reducing the financing of those processes could be useful in cutting the overall costs and adjusting the budget to financing changes. Seeking new ways of attracting sponsors and donations from the public, on the other hand, would help the organization to generate more income that could replace the finances lost due to the changes in the ACA. Provided that the leaders use effective strategies for cost-cutting and improving sponsorship, the hospital will be able to adjust to the changes and avoid damage to the quality of patient care.

Common financial problems as barriers to the healthcare organization’s success

The response to the first question sought to highlight the key financial problems experienced by public safety agencies. The initial look at the resources used for the first section showed that finance cuts are the key issue experienced by public safety organizations. Indeed, finance cuts are a common problem for many organizations that promote public safety. However, further research on the issue shows that there are also other challenges that are pivotal to the success of public safety agencies. For instance, budgeting is among the main concerns faced by these organizations. Expense allocation is a difficult task that requires public safety leaders to use problem-solving and analysis skills in order to find the best solution. Balancing the needs of the agency with the costs can be difficult; however, careful financial planning can help organizations to be more successful. Another important challenge for public safety organizations is ensuring that their expenses contribute to long-term goals and fulfill strategic needs of the organization. Combining budgeting and strategic planning is a useful option for public safety leaders who want to ensure that their organizations remain effective in their role.

As a non-profit hospital, my organization experiences significant pressure to manage its expenses effectively. Failure to stay within the planned budget or to cut down the costs could have a significant effect on the quality of patient care provided at the hospital. Given the high rate of competition in the healthcare sector, impaired quality of patient care can result in loss of customers and poor financial performance, leading to the need for further cost-cutting. Thus, careful budget planning and expense allocation are critical to the success of my organization. Needs assessment is a common tool that is used by a variety of agencies to improve budget planning and avoid unnecessary spending. In addition, financial forecasting is essential for the hospital as it allows evaluating the effect of various policy changes on the organization’s financial performance. Non-profit hospitals obtain financing from a variety of sources, which is why financial analysis and forecasting is important for the agency to remain productive.

Overall, the course highlighted many important problems that affect financing of public safety agencies. It also stressed the importance of addressing financial problems and their effect on the organization’s functioning and performance. Public safety agencies are required to be effective in financial planning, budgeting, and forecasting, as it can aid them in achieving their goals. Using a variety of business tools, such as strategic planning, financial audit, and needs assessment, can help my organization, as well as public safety agencies, to improve performance and be more effective in serving the public.

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