Objectives and Challenges of Financial Management in Healthcare

Financial management is the process of planning, organizing, controlling, and monitoring the financial resources and activities of a healthcare organization. The main objectives of financial management in healthcare are to ensure the financial viability and sustainability of the organization, to support the delivery of high-quality and cost-effective patient care, and to comply with the regulatory and ethical standards of the industry. Some of the common challenges of financial management in healthcare are:

• Managing the increasing costs and complexity of healthcare delivery, such as the rising demand for services, the aging population, the chronic disease burden, the technological innovations, and the workforce shortages.
• Balancing the revenue and expenditure streams, such as the reimbursement models, the payer mix, the billing and collection processes, the budgeting and forecasting methods, and the capital investment decisions.
• Enhancing the financial performance and quality of care, such as the financial and clinical indicators, the benchmarking and reporting systems, the risk management and audit procedures, and the performance improvement initiatives.
• Adapting to the changing environment and expectations, such as the regulatory and accreditation requirements, the competitive and collaborative strategies, the stakeholder and customer satisfaction, and the social and environmental responsibility.

To overcome these challenges, healthcare organizations need to adopt effective and efficient financial management practices and systems that can align the financial goals and operations with the strategic vision and mission of the organization. Some of the best practices and systems for financial management in healthcare are:

• Implementing a comprehensive and integrated financial information system that can provide accurate, timely, and relevant data and analysis for decision making and reporting.
• Developing a strategic financial plan that can guide the allocation and utilization of financial resources and activities in accordance with the organizational objectives and priorities.
• Establishing a sound financial governance and accountability structure that can ensure the transparency, integrity, and compliance of the financial management processes and outcomes.
• Engaging and empowering the financial management team and staff that can foster the collaboration, communication, and innovation of the financial management functions and roles.