19-03-2014, 09:46 AM
Finance management
Finance management.ppt (Size: 217 KB / Downloads: 18)
Objectives
To create awareness
To stimulate to further learning
To develop a vision
To develop an ability to plan and control with clinical precision
To equip our selves to ask right questions to CA
To develop a healthy practice with patients as beneficiaries
Financial management – definition
It is the art and science of managing money
The most essential requirement of any organized business or activity
The process of procuring and judicious use of resources with a view to maximize the value of the firm
Interdependence with other areas of management
Balance Sheet
A statement of assets, liabilities and capital on a given date
Assets:
Fixed: land, building, equipments etc
Current: Cash in hand or in bank, stocks, debtors
Liabilities
Long term: Loans > 1 yr
Current/ short term: overdraft, taxes
Capital= Assets -Liabilities
Budget
An important instrument of the financial management used as aid in planning, programming and control
A budget may be defined as a financial and quantitative statement, prepared and approved prior to defined period of time, of the policy to be pursued during that period for the purpose
Nomenclature
Costing: to find out money spent on a service
Cost center: an allied group of activities in a hospital eg laboratory, immunization, laundry service
Cost object: anything for which separate measurement of cost is desired e.g. rooms, OT, ICU, equipment
Cost unit: a measurable detail of service rendered e.g. linen, laboratory investigation
Categories of expenditures
Important in understanding dynamics of costing
Capital Vs Recurring
Fixed Vs Variable
Fixed : Remains unchanged despite changes in related level or volume of activity e.g. salary of permanent staff
Variable – volume dependent, varies in proportion to changes in level of activity e.g. medicines, consumables, power cost
Break - even analysis
Volume of activity at which total income just equals total variable and fixed costs
Lower break even point is more desirable e.g. bed occupancy 60% Vs 80%
Advantages: Equipment selection and purchase decision, formulating price policy
Expenditure - containment and cost - cutting
Sound economic sense
It does not mean compromising quality
Promote awareness amongst staff
Practice cost monitoring: analyze actual expenditure against budget and standards , find reasons for variations, work on them
Cost management: establish systems with responsibility and accountability
Investments
We work hard to make money, but learn to make your money work for you
Daily wage earners
Save, invest, build wealth, spend, give it away
Invest some percentage in improving services, facilities
Stagnation without growth