Financial Management is a fundamental part of successful healthcare financial planning. Financial decisions are a necessary part of day to day operations of any size or type of health care facility. These decisions are made in accordance with the facilities fiscal objectives and accounting practices. It is important that the individuals making these decisions follow proper reporting and ethical practices since these decisions affect the future of the entire facility. In order to make finical decisions it is important to understand generally accepted accounting principles, corporate compliance, ethics, fraud and abuse.
Currently health care facilities including private, public, for-profit and not-for-profit, use the generally accepted accounting practices to report their financial information. However compliance is very difficult because accounts and reporting requirements change frequently. PricewaterhouseCoopers International Limited (2010-2011) states that “Matters will get better – and worse – with the adoption of International Financial Reporting Standards (IFRS), which will become mandatory in 2014. This will be better because IFRS will increase the sophistication of financial reporting.
And it will be worse because converting to IFRS is a daunting undertaking. ” What this means is that there will be major changes in how health care facilities run their day-to-day operations because new requirements for reporting profitability. The transition to IFRS will benefit healthcare facilities by increasing the sophistication of financial accounting and reporting practices (Pricewaterhouse Coopers International Limited, 2010-2011).
The Business plan on Financial Reporting Earnings Levitt Accounting
On September 28, 1998, Chairman of the U. S. Securities and Exchange Commission Arthur Levitt sounded the call to arms in the financial community. Levitt asked for, "immediate and coordinated action to assure credibility and transparency" of financial reporting. Levitt speech emphasized the importance of clear financial reporting to those gathered at New York University. Reporting which has bowed ...
Ethics committees comprised of employees from different departments all work together in order to decide the ethic policies of the facility.
Since all facilities are unique there is not a set of universal ethical guidelines, but, each facility bases its ethics on the ideas and morals of the facility. For example, facility A might think that spending a certain amount of money on a piece of medical equipment will have a positive impact on patient outcomes and will be beneficial not only for the well-being of the patient, but also the facility as a whole. Company B may have opposing views on the matter, since the piece of equipment costs more than the budget will allow, and money will have to be taken from another area of the facility.
Patients may base their opinions on a facility based on their ethics and choose whether or not they want to give their patronage to at specific facility (Corporate Governance, 2010).
Generally accepted accounting principles are guidelines, objectives and conventions that have been set up over time to dictate how financial statements are prepared and presented (FASAB, 2010).
The GAAP includes standards, conventions and the rules in which the facilities accounting department following when summarizing reports and preparing financial statements (Baker & Baker, 2011).
Third parties that use these financial reports must then rely on the information to be free from all prejudice and discrepancy without debate. If the information is false then the GAAP standards were not followed and the facility is not in compliance and therefore behaving unethically (All Business, 2011).
Facilities have a moral and ethical obligation to comply with GAAP in an effort to prevent outside auditors from having difficulties when examining the facilities financial reports.
Health care facilities are faced with many challenges with duties and compliance measures that must be met. State and federal guidelines must be met and followed by all health care providers in order for them to receive state and federal funding (Corporate Governance, 2010).
The Essay on Organizational Ethics in Health Care
A. Introduction: Ethics comes from the Greek word ethos, meaning character. Ethics, in the ancient Greece, was concerned with the development of a virtuous and moral character. The Greeks believed that developing character would lead one not only to knowing the right thing to do, but to actually do the right thing or living the proper way of life. Ethics is defined as �the discipline dealing with ...
The health care industry is full of risks, which vary from patient risks to financial risks and consequences. Federal and state guidelines have been developed to ensure that health care facilities must follow to prevent negative outcomes from the risks they have taken.
Policies and procedures include operating guidelines such as having qualified staff made up of licensed individuals who provide first rate care to the facilities patients. In order to be in compliance with the governments guidelines the facility must exhibit the appropriate responsibilities (Corporate Governance, 2010).
Health care facilities must act in accordance with the four elements of financial management. These elements are related to compliance in that they comply with all of the guidelines set forth by the general accepted accounting principles.
The ethics element is dictated by the facility in that their ethics policies are related to the ideals and morals of the facility. Abuse and fraud are elements that pertain to being truthful and doing things that are ethically correct in regards to all parties involved. The last element is compliance and this can be achieved by using the general accepted accounting guidelines or GAAP. The GAAP guidelines are in compliance with the facilities ethical policies giving the facility the means to diminish the possibility of abuse and fraud from happening within the facility.
