Comparative Summary, Research Paper Example

Introduction

This paper offers a comprehensive and comparative analysis of the three different financial environments of health institutions. The analysis is carried out by use of existing firms. The three firms form the diverse financial environment, which include one from profit, non-profit and government categories of financial environments. The UnitedHealth Group is selected is used as the organization designed for profit. The organization used in this case study for comparative reasons as a non-profit and nongovernmental organization is the Ascension health. This is a Roman Catholic Church-sponsored organization. Moreover, the paper provides a clear description of the discrepancies in the organizational structures of the institutions. The comparative analysis is implemented by describing the financial structures of each of the three organizations as well as the description of the policies implemented across their operations. The paper is instrumental in identifying useful financial management practices used in the healthcare financial environment. The complexity of implementing effective financial management in health care institutions is also covered in the paper.

Comparative analysis

The UnitedHealth Group is one of the most successful for profit health institutions. The organization serves about seventy five million people across the globe. The organization runs close to one hundred and forty hospitals in multiples states. The organization has to perform its financial reporting in accordance to the conventions of the Securities and Exchange Commission as a public limited and listed company. In order to comply with these regulations, the financial report and the implementation of the financial systems in the organization facilitate the realization of relative valuation ratios. These ratios include the price to earnings ratio, price to operating profit ratio, price to sales as debt to equity ratios. These ratios are necessary for investors to understand the actual position of the organization before investing into it without necessary having to understand the entire business operations of the organization.

The financial management and the structure of financial operations in the organizations are designed to enable the organization to acquire, plan and use resources in the most optimal approach. As a profit making organization, UnitedHealth Group has a structure headed by the chief financial officer. The CFO ensures that effective planning of resources across the company is implemented. Moreover, the CFO is involved in long-term decision-making, financial risk management, contract management as well as the working capital management (Stroh, 2005).

On the other hand, Ascension health is a not for profit organization with over 500 location across the United States of America. Ascension health fiancé is responsible for the financial management of the organization. The task of the section includes the financial planning as well as analysis for the optimal utilization of resources. It provides leadership in operational finance to attain excellence in the running of the business. The organization does not have to conform with the policies of the SEC (Securities and Exchange Commission) since it is not a listed company.

However, it is significant to note that the corporation has to will the well-being of support organizations as well as well-wishers through the provision of financial information to show accountability. The organization produces regular audited reports to the public to enhance its credibility in helping the society. The organization qualifies for tax exemptions. Unlike foundations, the organization declares profits but it is not taxed. The delivery of health services is considered a charitable organization. As a nonprofit organization, the association is under the management of the board of trustees and does not have actual shareholders.

Another financial environment for health care institutions is the children health insurance program (CHIP) this is a health program wholly funded by the government to cater for the health insurance of children emanating from families with low incomes. The program is integrated into the United States department of health. The program is administered by all the states of the country. A joint funding approach is implemented with the federal government contributing a certain proportion whereas the other proportion is contributed by the states. As a result, the financial management of the control varies from one state to another. There are states that run it as a separate insurance program whereas other combines the approach of Medicaid expansion and the insurance program. Unlike the two other categories of the healthcare financial environments, the insurance program is designed as a government agency and does not need to declare profits or gains since there are only two sources of income (Ullman, & Bruen, 1998). Accountability of the program’s management is the responsibility of the state governments as audited reports of the program are necessary just like any other government program.

Financial Management Practices in Healthcare Institutions

The key management practices in healthcare institutions are based on certain principles. These principles include the management of the capital cycle, strategic budgeting, resource allocation, creditworthiness, capital structure management, as well as financial planning. Every healthcare organization has to enhance its operations to ensure that it raises its credit rating. It is pertinent to acknowledge that financial management in any organization provides the decision makers with the theories as well as tools pertinent to attainment of excellent decisions in the healthcare industry (Swayne, Duncan, & Ginter, 2008). While every institutional leader wants to attain set targets, certain financial management practices are common in the healthcare industry. Whether the organization is for profit or not for profit, there has to be planning as well as evaluation, strategies implemented within the organization (Community & Investor Relations. (n.d.).

UnitedHealth Group has fully fledged strategic planning department, which is responsible of making the long-term decision of the corporation based on statistical and business environment analysis. The board of trustees of Ascension health is tasked with the planning and long-term decision making of the organization. It is pertinent to note that audit reports have to be prepared in all the three organizations. However, the UnitedHealth Group is held accountable through stringent financial reporting rules of the SEC. Moreover, the organization has an effective risk management section that is tasked with the close monitoring of the financial risk of every operation of the organization. Moreover, the selection of appropriate financial management concepts will help to reduce the risk of the corporation (McLean, 1997).

Conclusion

Effective financial management is relatively difficult in health care institutions than in other organization due to the complexity of the financial operations of the institutions. First, there are the multiple reports that the institution has to produce to receive funding from Medicare program. Another aspect of the healthcare financial operations that makes it complex is the existence of third party reimbursements. They demand detailed documentation and the use of multilayered authorization approach. This makes the financial system of healthcare systems to perform bureaucratic functions instead of resource optimization.

References

Community & Investor Relations. (n.d.). Ascension Health. Retrieved September 12, 2012, from http://www.ascensionhealth.org/index.php?option=com_content&view=article&id=45&Itemid=160

McLean, R. A. (1997). Financial Management in Health Care Organizations. Albany, N.Y.:     Delmar Publishers

Stroh, P. J. (2005). Enterprise Risk Management at UnitedHealth Group. (Cover Story): An        article from: Strategic Finance [HTML] [Digital]. Montvale, NJ: Institute of Management Accountants.

Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2008). Strategic Management of Health Care    Organizations (6th ed.). San Francisco, CA: Jossey-Bass.

Ullman, F., & Bruen, B. K. (1998). The State Children’s Health Insurance Program: A Look at the Numbers. Washington, D.C.: Urban Institute.