Health Care Finance Importance to A Health Care Organization

 Health Care Finance Important to A Health Care Organization


  • Why is health care finance important to a health care organization?
  • Has it become more, or less, important in recent years?
  • Support your answer with an example.
  • Respond to at least two (2) of your classmates’ or your instructor’s posts. Your responses should include elements such as follow-up questions, a further exploration of topics from the initial post, or requests for further clarification or explanation on some points made by the classmates.
  • ALL citations and references needs to be APA 7th edition format. THANK YOU!

Peer# 1

 Health Care Finance

An organization’s health care finance needs to be intact for an organization to survive and grow. Finances are managed by accounting departments who base their decisions on assessments of past and present investments to benefit the company. “Therefore, the most important objective of healthcare financial management is to generate a reasonable net income by investing in assets and putting the assets to work” (Nowicki, 2014, p.8). Other factors come into play which is your third-party payers.

      Importance Finance to A Health Care Organization

“Financial management must be responsive to third-party payers .and in many ways must treat third-party payers as customers because the third party pays the bill. At the same time, financial management must be attentive to the patient.because the patient has influence over the third-party payer and in some cases may be partially responsible for the bill” (Nowicki, 2014, p. 8). Methods are chosen on the amount of payment chosen by third-party payers, such as Medicare. who are requesting the healthcare organization to occur. some of the financial risks for the patient by agreeing to prospective payment for agreeing in advance to price for providing care to a patient (Nowicki, 2014).

the Affordable Care Act

Another key component in the health care organization is the Affordable Care Act signed into law in 2010 under the Obama presidency. It impacted consumer well‐being and the role health and financial literacy play in achieving well‐being (Fitzgerald et al., 2017). Individuals could receive medical attention at a lower cost, increased reimbursement for rural health care providers to encourage these professionals to stay in rural communities. In return, providers were being paid for their services. As you can see, finances have become more important for a business to stay afloat.

the purpose of finance

Peer# 2

According to Nowicki (2015), “the purpose of finance is to analyze the information provided by managerial accounting to evaluate past decisions and make sound decisions regarding the future of the organization” (p. 7). Basically, finance is the management of large amounts of money. Healthcare finance focuses on maximizing the use of the healthcare organizations resources to increase efficiency, effectiveness and overall value, and allow it to grow and thrive. Some objectives of healthcare financial management include:

  • Generate income – no company can survive if it is not producing revenue
  • Respond to regulations – healthcare organizations are highly regulated and must comply with endless Federal, state, and local government laws and regulations or incur fines or lose the ability to do business
  • Facilitate relationships with third-party payers such as insurance companies (Nowicki, 2015)

the COVID-19 pandemic

Due to the COVID-19 pandemic, the importance of healthcare finance has been in the spotlight in the past year. To protect both staff and the public from possible exposure, healthcare providers cancelled non-emergency and non-essential medical, surgical and dental procedures. Individual patients avoided routine visits to their primary care or specialty providers, and even trips to the emergency room out of fear of being exposed. This decrease in revenue coupled with the increase costs of caring for an overwhelming number of critically ill patients, increase need for PPE, and staffing shortages (registry/travel nurses from staffing agencies have much higher salary) has put healthcare organizations under unparalleled financial pressure (American Hospital Association, 2020). Hospitals in rural areas have been hit especially hard.

Because the healthcare industry provides such varied and essential services (direct care, research, etc.), its ability to grow and thrive (in a patient-centered approach) is important to every community. Keen and well-balanced financial management is an important element in that process.