Financial amd Managerial Accounting of Healthcare - 2200 Words

Financial amd Managerial Accounting of Healthcare (Essay Sample) Content: Financial and Managerial Accounting of Health CareNameInstitution AffiliationDateIntroduction The healthcare sector is perhaps one of the most important sectors in an economy. The manner in which this sector is managed could well determine whether or not the healthcare system thrives. Usually, developed and well organized countries, roughly a fifth of the world population have managed to have health care models in place that have improved their health care system and have managed to make health care accessible to almost their entire populations. Such countries have pretty strong and successful economies and are very well organized. On the other hand, in poor countries, the health sector suffers most. Health care is accessible to a selected few in their populations and even those who can access it suffer considerable financial strain (Simon, 2010). This forms the basis of this essays thesis system, health care accessibility and affordability is one of the most challeng ing issues facing the world today. In this case, 20 doctors who plan to form a new medical group and have adequate financing can come up with an efficient health care model. The models in place all have their advantages as well as disadvantages. One of the complaints lodged against the American health care system is the assertion that American health care is the most expensive one in the world never mind that its quality is as good as that of other first world countries. The main models used do not necessarily make health care cheaper. They do however; make it a bit more affordable and accessible through such means as medical insurance and loaning facilities. In such cases, emergency health issues are promptly dealt with and cases of ill patients unable to receive healthcare due to lack of immediate funds are reduced. The role of a good health care model is to make healthcare as organized and as widely accessible as possible (Arbuckle, 2012).The doctors must choose a specific health care system or model that will govern their service delivery and general operations. It would be prudent then to conduct a research that would among other things advice the implementers on the best health care system or model to adopt depending on factors such as affordability, costs involved, accessibility and viability. One of the best models in the world is the Swiss health care system used in Switzerland. Their system has indeed attracted a lot of attention and the current Obamacare health care system has been said to have borrowed quite a significant number of its principles from the Swiss health care system. One of the main determinants of variations in different health care models is the question on whether health spending should be controlled by governments or individuals. Some health care experts have argued that while it is noble not to make health spending and health care decisions based on money, the government is inclined to base their decisions on money. In some cases , it has been argued that they are objective and therefore better placed to make such decisions in relation to emotional individuals. For instance, when it comes to deciding whether to spend money on some procedures as opposed to other, individuals may make decisions based on their then situation while the government can be trusted to be a bit more objective (Duncan, 2011). For instance the decision to spend more on chemotherapy to extend a cancer patients life by five months as opposed to spending it on health care that will increase an elderly persons life by five years. Individuals with loved ones suffering from cancer will likely choose to spend it on chemotherapy, making the decision purely out of emotion and understandably so (Kronenfeld, 2010).However, the government as many have claimed cannot also be trusted to make this decision perfectly objectively as they are likely to go for cost effectiveness by picking low cost alternatives whenever they have to decide (Cleverly, 201 1). Therefor instead of stopping the practice of health care providers selling their services to the patients, such models only succeed in including a middleman and in many cases increasing the cost of health care. Cost effectiveness, whichever way we look at it is bound to be subjective, and the one size fits all approach would be inhumane since every individual has unique desires and needs. Therefore it appears that the government may not be so objective after all. The Swiss health care systems most admirable trait is its universal coverage, which president Obama has tried to implement through the Obama care system. This they have managed to achieve in spite of the little monies they dedicate to health care every year compared to America. Switzerland only spends about 2.7 per cent of its GDP on health care, compared to Americas 7.4 per cent. Even then, America is yet to achieve universal coverage. In emulating the Swiss health care model, the doctors can have insurance bought by i ndividuals as opposed to having the sponsored by employers or run by government programs just like they do in Switzerland. The government steps in to subsidize packages for the poor so that they spend less than ten per cent of their income on health care. Health insurance acquisition is also a norm in Switzerland, and studies report that the population percentage of individuals in Switzerland with health care insurance is about 99.5 per cent. In the case of the twenty doctors, this approach would be prudent. For one they could require and encourage their patients to acquire health care insurance. Like the Swiss, they could also ensure that the patients are at liberty to choose their doctor as well as their appointed waiting times (Porter, 2012). The model could work towards sustaining low costs in order to make it as affordable as possible. It is important to note that the Swiss population readily invest in healthcare therefore easing the governments burden. The government can cons equently manage to support the poor comfortably. It is also important to note that the Swiss are relatively wealthy and this model is therefore best applicable to financially stable countries.Health care has improved greatly over the last couple of decades and its improvement has brought in its wake new complexities (Hankins, 2014). The health care models that have been developed so far call for increased organization in many areas including Accounting and Finance. Accounting in healthcare is broken down into managerial accounting and financial accounting. The finance department, which is separate from the accounting department basically supervises and manages the acquisition as well as the disposition of the resources and revenues streaming into the organization especially in form of cash. This is especially important for accountability and purposes of monitoring (Matcha, 2013).Besides the Swiss healthcare system which the current Obama Care has borrowed significantly from, there are other common health care models. One of the most common one is the Beveridge model whereby the government regulates and pays for most of the health care through tax income (Simon, 2010). The government in this case owns majority of the hospitals and even the private doctors collect their dues from the government. In this model, the government has control over how much the doctors and general health providers charge for their services. Due to price controls by the government, this model tends to have low costs per capita. The Bismark model is also quite popular as a health care model especially in America. This model entails the use of an insurance system. The original model meant for the insurance to cover everyone without making profits and some Bismark countries such as Germany and Japan make little to no profits on health insurance. This is not the case however in American insurance industry (Burns, 2014). Financial accounting in the health care system basically is a record of the organizations financial history. Financial accountants need to be able to present the organizations financial history in detail to interested stakeholders. These stakeholders include but are not limited to financiers, the organizations analysts, board members, researchers and investors. One of the main objectives of health care accounting is structure and assemble the financial information required in the system in order to have health care providers accountable for the quality of services provided and how much they cost. This method can then be used to ensure that superior quality services receive superior pay. That is, pay would be based on performance and service quality (Buchbinder, 2012). In order to appropriate funds, a sound financial plan is important. A financial plan acts as an organizations skeleton and forms the basis upon which policies and operations structures can be built. The plan must include a well-defined budget for all the costs incurred in establishing a health care centre and must also include a worked out financial projections plan. In addition to this, the plan needs to include the organizations revenue sources as well as the strategies they intend to employ in order to maintain the effective running of the organization over time (Finkler, 2010).The net debt value shall be maintained at less than 3 per cent. The organization will maintain a tight rein on debt and will seek to limit debt as much as possible to assets that produce income. The organization will invest in a lot of financial consulting to ensure that they make prudent budgets and financial decisions in order to improve the organizations financial foundation over time and consequently manage to maintain quality service delivery. Performance measurement will also be a big part of the organization and the organization will take the necessary steps and investmen...