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Q.1. Write short notes on significance of financial information in the field of decision making in healthcare organizations .

Healthcare organisations are quite similar to most large business corporations. Running them efficiently means putting in place of a Financial Information System (FIS) that operates effectively on all levels, from individual departments to the corporate office. When an organisation grows, coordinating these systems across the enterprise is crucial.

The problem in healthcare, however, is that many of the groups have a centralised corporate
office and the hospitals running under it are situated miles apart. This creates a world of disparate systems that require interfacing with other hospital systems. This can be a daunting task within a single hospital, let alone among a dozen facilities owned or operated by a parent company.

In healthcare organisations, budgeting, cost accounting, strategic planning, and financial and clinical analytics are disconnected functions, performed on different systems and with varying data. This makes reporting actual results against the budget, operations and strategic plan all but impossible, and fails to take into account key factors in an organisation’s true financial performance.

But things are beginning to change. Large healthcare organisations, and some vendors, have realized that financial information systems can no longer be relegated to back-office status. Their importance in patient billing, claims processing, materials management and even strategic planning requires that standardized business applications be accessible to key personnel across the entire enterprise, whether that means one hospital or a dozen.
Today hospitals need financial information systems that could be rolled out at each institution not only improved overall efficiencies, but also provided the flexibility necessary to support future growth. The major function of financial information is to oil the Decision-making process. Figure shows how it happens.

In the above Figure, the hospital authorities make use of the information provided by the financial statements, in this case, financial forecast of a proposed Ambulatory Surgical Center (ASC). On the basis of this information, the authorities can decide whether or not, it will be feasible to develop the ASC.

The next step is the implementation of the decision. Let us suppose that in this case, the authorities decide to go ahead with the ASC. As a result to it, the organisation incurs losses. How did the authorities come to know about these losses? Obviously through the financial information disseminated. And how do the organisation decide about the next step? Gain the same method. By looking into the financial information, the authorities can analyse

The problem areas for revenue and can either improve ASC’s financial performance in the next year or continue to bear the losses (only if they seem to be inevitable for some initial years) or do away with the center.


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