The field of financial management is extremely important in an organization that belongs to any industry. Growth and achievement of goals is the state that absolutely any organization in the world aspires for – otherwise it merely would not exist. Further are presented the characteristics of a financial manager working in healthcare industry, which is quite niche, however, possesses similar characteristics of the competence assigned to financial department, which is oriented in decision-making and accounting.
One of the most evident functions of a financial manager is accounting; however, it is wrong to think that their competence ends there. Accounting, indeed, is a significant part of the work of a financial manager. Its purpose may be put more correctly in the following way “provide accounting and finance information that helps to accomplish the organization’s purposes” (Nowicki, 2018, p. 5). The process of accounting, undoubtedly, constitutes a big part of the manager’s responsibilities.
Universally, two types of accounting are distinguished: financial and managerial accounting (Nowicki, 2018). These areas greatly differ in their purpose: when financial accounting is a historical record with the aim to report to external sources, managerial accounting focuses primarily on “providing accounting information, current of prospective in nature, to internal users” (Nowicki, 2018, p. 6). Thus, the role of the financial manager is greatly involved in both of these fields of accounting, however, exceeds them as well.
Beside accounting, a financial manager in healthcare also carries out various other functions. These include: decision-making, which is another majorly important aspect, analysis, as well as typical “management functions” – organizing, staffing, planning, directing and controlling. Perhaps, the most challenging aspect of financial management would be multitasking all of the above. Another challenging dimension of the profession is undertaking the responsibility for the decisions that a financial manager ought to make on countless occasions during the length of their career. This function is not discussed well enough in literature, despite financial management being greatly concerned with analysis and decision making (Pink & Song, 2021).
Decision-making, in particular, is a challenging and stressful aspect of financial management because of financial risk being present in every decision that one makes. Financial risk is a compound term that is fully dependent on a type of business that performs operations. Generally, healthcare industry has medium level of risk, however, being deeply intertwined with pharmaceutical industry, which is marked as extremely risky, it inherits some of its qualities (Pink & Song, 2021). Thus, one of the most challenging sides of financial management in healthcare is associated with significant levels of potential risk.
As a subsequent function of a financial manager, comes risk management ability. There are multiple types of risks, however, to coup most of them a general process is followed. It consists of the steps below: identification of the risk, assessment of its severity – along with estimation of its potential impact – and finally, deciding how each of the risks should be handled (Pink & Song, 2021). Every decision made by the financial manager concerning either risk handling or any other managerial aspect should be firmly supported by analysis, which is another component of immense value in this profession.
Financial management is quite complex and responsibility-oriented, as one has seen so far, but it is also rewarding. The prime point that provides satisfaction for a financial manager is seeing how their decisions are directly affecting the organization in a positive way; to experience its growth. Another one is associated with the patients of a medical center: seeing how financial manager’s decisions to invest in a new equipment, for instance, benefits the patients’ health, is priceless.
In the course of the interview conducted, the role of the financial manager pertaining to their contributions in the relationship of financial requirements and the quality of performance outcomes of the healthcare organization. Jones et al. write, “on a broader perspective, the financial needs of the organization encompass the need to be able to replace facilities as they become obsolete and to adopt new technologies as they become available” (2019, p. 218).
As a rule, budget requirements break down into five categories: the costs of doing, staying in, and changing business; the costs of uncertainty, and the returns to the capital source (Jones et al., 2019). The work of a financial manager consists of considering all of these factors and maximizing the performance based on the resources available (Jones, et al. 2019). Thus, a financial manager is involved into the relationship between budget and high performance outcomes to a great extent; and the results vary dramatically: they can be either positive or negative.
Concerning the management of lean and medical waste, financial manager’s role varies from one medical organization to another. For instance, according to Straten et al., “waste disposal varies per hospital and per contract the hospital negotiates with the waste processing company” (2021, p. 170). Therefore, the role of the financial manager in this area can be secondary; however, their work can be very evident, too. As the circular economy becomes increasingly popular, its postulates spread into different industries and adapt to their unique needs; healthcare organizations are no different in that sense.
Inventory is another crucial aspect of financial management in any business, but especially in healthcare organizations. According to Leaven et al., “the healthcare industry has started
using inventory management applications to achieve efficiency and effectiveness in its supply chains” (2017, p. 2051). This factor varies, just like the subject of waste management discussed above, as some hospitals and clinics make a decision to outsource inventory management and some do not; it all depends on a particular organization. Some medical organizations choose to employ a centralized system, while others practice “outsourcing distribution network” (Leaven et al., 2017, p. 4). In the case of the interview that was conducted, the financial manager did not have to work with the issues of either waste, nor inventory management, as they were handed over to other professionals.
The training required for the development of a knowledgeable and experienced financial manager in healthcare requires the person to go through training that is based on the analytical capability and evaluation of investment opportunities. Healthcare administration requires financial managers to complete such courses in order for the employees to gain experience similar to a Master’s degree in Healthcare Administration. Knowing that it is usually available before one may acquire the position of a financial manager, it can be safe to say that exceptional skills attained during the courses might be helpful in many ways in addition to shaping a conversant financial manager.
The most valuable piece of training is the one dwelling on complex financial information and facilitating decision-making. Financial managers in healthcare should also be able to communicate effectively and participate in developing and discovering the biggest potential prospects for the organization.
In conclusion, it is appropriate to note that the role of a financial manager is, contrary to what one might think, very multi-faceted. As any management position, it involves multi-tasking and has an incredible array of functions – initiating into action, controlling, organizing, planning, and so on. Accounting possesses a major role, however, financial management might be even more concerned with decision-making process. As a result of dealing with finances of an entire organization or a department, financial manager bears a high-level of responsibility for their decisions. Moreover, financial management can be applied to the problems of waste management; as well as deal with lean and inventory management, but the competence concerning these questions vary from one medical organization to another.
Jones, C., Finkler, S. A., & Kovner, C. T. (2019). Financial management for nurse managers and executives (5th ed.). Elsevier.
Leaven, L. & Ahmmad, K. (2017). Inventory management application for healthcare supply chains. International Journal of Supply Chain Management, 6(3), pp. 2051-3771.
Nowicki, M. (2018). Introduction of financial management of healthcare organizations (7th ed.). Health Administration Press.
Pink, G. & Song, P. (2019). Gapenski’s Understanding of healthcare financial management (8th ed.). Health Administration Press.
Straten, B., Dankelman, J., Van der eujk, A., & Horeman, T. (2020). A Circular Healthcare Economy; a feasibility study to reduce surgical stainless steel waste. Sustainable Production and Consumption, 27, pp. 169-175. Web.