Reference no: EM132216556

Health care reform will have an impact on an institution’s viability but it won’t be known until it is actually in effect. The majority of reforms go into effect in 2013, 2014, and further in the future. There are many questions and meetings are still being held about the process. As the health care environment changes, it is important for leaders to keep informed about the latest developments in order to understand delivery, quality, regulatory oversight and program integrity, as well as the financial impact the future programs can have on an institution.

It is essential for a business to stay solvent. Even a nonprofit healthcare institution must have income to offset capital expenditures and keep the doors open. There have been times when healthcare institutions had to close because the revenue was not sufficient. There can be debts that have to be written off which reduce income. Pay for staff can be one-third of the annual budget cost. The budget needs to plan for future expenditures to replace equipment or update outdated technology to better serve the patients and families in the community you serve. The budget process is one component of being fiscally responsible.

As a strategic leader, how do you have to make sure there is financial viability? You may not be the chief financial officer but you have obligations as a leader or even a manager to help the institution maintain financial liability. Every employee also needs to be fiscally responsible. This can mean making sure pens are not taken from the supply cabinet for personal use, to being a manager who monitors her department budget area of responsibility. You might need to explain why costs are higher to your superior. Overtime may need to be justified based on service data levels. If you have authority to order supplies and/or equipment you need to follow the institution’s policies. For example, some items may not need higher authority to purchase (such as paper for the copy machine), but others (such as a new chair) may have a more formal process depending on the expense determined in the institution’s policy for approval permission. A manager might be able to order supplies for the area weekly. However, if a budgeted item needs to be replaced, further forms, approvals, even committee justification and ultimately board of director approval may be required before the purchase process can start.

Budgets are not only a tool to monitor what is going in and out for expenditures for the current month, but are also a projection of what will be needed in the future, such as what expenditures might be anticipated for the next year (based on history and present year data). A budget can also address anticipated capital expenditures for several years out. You may be responsible for the radiology department. You know the CT scan machine will be coming to the end of its lifespan use in another five years so you want to plan that far ahead so costs can be anticipated in the future for such capital equipment. If a piece of machinery fails before anticipated, you might have to move that request up to be an immediate concern while renting another piece of equipment to keep services functioning until that replacement can go through necessary approvals, be purchased, ordered, and actually be installed that may take some time from weeks to months.

Department heads and employees need to be accountable for what they do. The monthly budgets versus actual reports help monitor the institution’s goals and determine if the institution needs to take proactive corrective action while being fiscally responsible.

Many healthcare institutions are using a best practice in business called a balanced scorecard. The balanced scorecard approach (BSA) ties financial viability to a management system that incorporates the institutions overall strategy and measures targets with data to monitor success for both financial and nonfinancial key areas.

Assignment:

Put yourself in the role of a health care executive that is introducing the use of a balanced scorecard to middle management at the next management meeting for your institution. Find a short YouTube video to demonstrate key points about using a balanced scorecard that you believe would be valuable to present this concept at the management meeting.

1. In your first post, provide the YouTube video link.

Provide a brief summary of the video.

Address at least two benefits of using a balanced scorecard in health care institutions in your post.

Explain why using the balanced scorecard is a strategic measure to help a health care institution be successful and stay competitive.