Introduction
Decision-making in healthcare financial management has a crucial implication to the organization in general. It is apparent that the healthcare industry is belongs to the service sector in which the essentials of its operation are analogous to healthcare service delivery. The healthcare industry also conducts inventory of drugs and medical supplies. It is because the amount of supplies that the organization has is detrimental to the quality of service that the healthcare organization provides. These factors are part of the financial segment of the healthcare sector, which managers and decision-makers are more likely to concerned.
Viewpoints
Decision-making in healthcare management includes financial considerations. Managers generally work on finance on a daily basis. Their financial decision the efficiency of reporting function, which is part of their responsibility. Part of it is to perform strategic planning for their respective organization. There are four elements in healthcare financial management. First is planning, followed by controlling, then directing and organizing and lastly, decision-making (Charles & Demaio, 1993). In the decision-making element, the financial manager is the one that makes the choice among the available alternatives. Decision-making occurs and should be aligned with organizing, planning and control. All aspects of decision-making rely on the accuracy of information and the crucial task of analyzing and evaluating, thus allowing informed choices (Eichler et al., 2004).
Every aspect of decision making in healthcare management depends on financial accounting, although it is often regarded for the third party use. The variation in opinions about decision-making is determined by both external and internal reporting (Bose, 2003). For example, Medicaid and Medicare programs are initiated through funding derived from plan payers. If the manager decided to terminate its contract such programs, the decision would have an impact to the financial health of the organization. However, if the management would decide to terminate affiliations with such programs the portion of the organization’s profit will also be limited. In addition, the healthcare organization may have to report to the stockholders regarding the decline in revenue due to the termination of association to such programs.
Several finance executives of healthcare organizations have experienced discord because of the result of wrong decisions. Furthermore, the outcomes of the wrong decision may resort to each of the organization’s utilization of time and resources on their own, which may result to counter productivity. Instead of focusing the efforts on a single department, it would be best for the healthcare organization to centralize their effort along with a carefully planned initiative by the financial manager. The problem will emerge eventually if the decision-makers have different opinions regarding financial management. For instance, if one of the decision-maker decided to stop funding service innovation within the organization, this will entail outdated service approach, and then the quality of education is likely to be compromised. However, if the decision-makers are unanimous on the decision to pursue service innovation, the organization will benefit from such decision due to increased profitability. In contrast, the decision-makers would also consider cost-effectiveness because it does not only encompass revenue probability, but also an opportunity for the healthcare organization to maximize its resources and assured quality of service.
Conclusion
When decision-makers act upon the need for financial decisions, the variation of their opinions and approach curtails negative and positive implications to the health organization. Therefore, the healthcare organization’s financial decision is detrimental to its growth.
References
Bose, R. (2003). Knowledge management-enabled health care management systems: capabilities, infrastructure, and decision-support. Expert Systems With Applications, 24(1), 59-71. doi:10.1016/S0957-4174(02)00083-0
Charles, C., & Demaio, S. (1993). Lay Participation in Health Care Decision Making: A Conceptual Framework. Journal of Health Politics, Policy and Law, 18(4), 881-904. doi: 10.1215/03616878-18-4-881
Eichler, H., Kong, S. X., Gerth, W. C., Mavros, P., & Jönsson, B. (2004). Use of Cost-Effectiveness Analysis in HealthCare Resource Allocation Decision-Making: How Are Cost-Effectiveness Thresholds Expected to Emerge?. Value in Health, 7(5), 518-528. doi:10.1111/j.1524-4733.2004.75003.x
