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| LETTER TO THE EDITOR |
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| Year : 2015 | Volume
: 1
| Issue : 2 | Page : 114 |
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Establishing Financial Control in Health Care Settings: Need and Tools
Saurabh RamBihariLal Shrivastava, Prateek Saurabh Shrivastava, Jegadeesh Ramasamy
Department of Community Medicine, Shri Sathya Sai Medical College and Research Institute, Ammapettai, Chennai, Tamil Nadu, India
| Date of Web Publication | 1-Jun-2015 |
Correspondence Address:
Saurabh RamBihariLal Shrivastava
3rd Floor, Department of Community Medicine, Shri Sathya Sai Medical College and Research Institute, Ammapettai Village, Thiruporur - Guduvancherry Main Road, Sembakkam Post, Kancheepuram - 603 108, Tamil Nadu
India
 Source of Support: None, Conflict of Interest: None  | Check |
DOI: 10.4103/2394-7438.157936
How to cite this article:
Shrivastava SR, Shrivastava PS, Ramasamy J. Establishing Financial Control in Health Care Settings: Need and Tools. MAMC J Med Sci 2015;1:114 |
How to cite this URL:
Shrivastava SR, Shrivastava PS, Ramasamy J. Establishing Financial Control in Health Care Settings: Need and Tools. MAMC J Med Sci [serial online] 2015 [cited 2021 Sep 16];1:114. Available from: https://www.mamcjms.in/text.asp?2015/1/2/114/157936 |
Sir,
Globally, from the health perspective, most of the developing nations are lagging behind other developed nations, not only because of the limited expenditure of the gross domestic product on health, but also because of the improper utilization of the available financial resources. [1],[2] In addition, the scenario becomes further complex owing to the intangibility and inability to measure the service or outcome. [2] Thus, controlling the finances in health care settings requires the same amount of attention when compared to any other field. [3]
Financial control in a health setup generally comprises of a complete accounting system; establishment of measurable standards of performance against which actual performance can be compared, and regular performance audits. [2],[3] Different tools can be employed for exercising financial control in a systematic manner such as:
| Budget | |  |
Budget is an important tool in the hands of a health manager as it allows him/her to execute their plans with perfection, provided it has been developed in a sound manner. [3]
| Hospital Statistics and Cost Control | | |
This can be assessed by multiple indicators like
Patient-day
From the financial control aspect in a hospital, the most important parameter is "patient day" (viz. the total number of patients who availed in-patient services in a healthcare setup in entire duration of 24 h).
Hospital census
It refers to the total number of patients admitted in hospital wards at any specified time.
Bed occupancy
It is computed by dividing patient days with bed-days multiplied by 100. This can be used as an indirect indicator for planning the future expansion of a hospital.
Average length of hospital stay
It indicates the average time spent by a patient in a hospital and when compared with other similar hospitals, is an indicator of the performance of that hospital. [2],[4]
| Financial Statement Analysis and Control | | |
This is an indispensable element in the financial control of any establishment, including health care centers, and can be ascertained by
Balance sheet
This sheet indicates the financial status on any date by showing the assets (fixed/current) and the liabilities (what the organization has to give to others - bills, bank loan, etc.) for a particular organization.
Income and expenditure statement
This statement represents the record of all financial transactions over a given period of time.
Cash flow statement
This is usually prepared by managers to record the cash inflow from the three major activities - operations, investments, and financing.
Funds flow analysis
This statement generally records the various sources of funds available to an organization and its utilization of these funds over a given period so that none of the functions of the health care establishment get compromised.
Liquidity ratios
This tool explains the ability of a health care establishment to address their short-term debts. Thus, if the liquidity ratio is high, the organization can be considered safer to take care of their current liabilities. [5],[6]
In conclusion, in order to benefit larger sections of the society, ensuring financial control in health care establishments by judicious use of appropriate indices deserves paramount importance.
| References | | |
| 1. | Costich JF, Honoré PA, Scutchfield FD. Public health financial management needs: Report of a national survey. J Public Health Manag Pract 2009;15:307-10.  |
| 2. | Seewer M. Financial management for cost control. Schweiz Arch Tierheilkd 2011;153:198-200. |
| 3. | Dutta M. Management Control Systems. New Delhi: S. Chand and Company Limited; 2002. |
| 4. | World Health Organization. How can hospital performance be measured and monitored? Denmark: WHO Press; 2003. |
| 5. | Santos MA, Madeira FC, Passos SR, Bakr F, Oliveira KB, Andreazzi MA. Autonomy for financial management in public and private healthcare facilities in Brazil. Cad Saude Publica 2014;30:201-6. |
| 6. | Anthony RN, Govindarajah V. Management Control System. New Delhi: Tata McGraw-Hill Publishing Company Limited; 2004. |
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