Managing Healthcare Finance

Introduction

National Health Services England is a Health and Social Care organization that is working to deliver improved care for patients. It is publically funded healthcare and offers healthcare facilities to the English residents. It is mostly funded from the general taxations, and it is noteworthy that the total budget of the department of the health in England for the year 2017/2018 was about £124.7 billion (Harker, 2019). The budgets are well planned to spend upon the medicines and to fund the aging population as social care. The financial decision making of NHS is one of the forefront factors as a political debate regarding fiscal regimes. It is of significance to gain an understanding of the budgets and financial aspects of the health and social care organization to determine its ability to act as a well-established care organization (NHS England, 2015). The funding is increased to boost the services and various social care activities to benefit the nation.

The Setting of Budgets for departments or functions within the NHS

It is vital to note that the expenditures on NHS have risen since its initiation. The budget for the departments is increasing within the NHS for its operations and spending in the UK government. It is worthy to note that the UK government has spent around £11.4billion in the year 2018/2019. This figure is ten times the amount of £152.9 billion, and it is stated that the growth in the health expenditure is due to the rise in the GDP in the period. With the increase in the health expenditure, the structure for funding NHS is being planned in departments to deal with the situations. The UK expenditure upon health is depicted through the graph below: . .

The budget is planned as per the expenditure per heads in England, which is £2269 per head. In the year 2018/20109, the budget of NHS was held up to £114 billion. In this, the majority of the budget, which is about £75.6 billion, was allocated to the Clinical Commissioning Groups. This was done as per the needs-based formula so that the funding is effective in meeting the needs of healthcare. Moreover, NHS has a budget of about £38 billion for the year 2018/2019 for direct commissioning that is being spent upon healthcare, primary care along with military and offender services. For specialized services, a budget of £17.7 billion was allocated. The budget of NHS is planned as per the structure. Thus, the major budget, as witnessed, is allocated to the Clinical Commissioning Groups or Health Boards, which are the local organization to serve people better (The King's Fund 2020). The major funding for NHS is done from the Central (UK) taxation, and a block grant is allocated to the administration so that the patient charges and other charges are taken care of.

It is planned that the current funding or budget for NHS in the year 2019/2020 is about £140.4 billion. The budget is divided as the majority of the funding, which is £133.3 billion for the day to day spending departments. The budget of £7.1 billion for the capital spending department that focus on the development of building and equipment. The process of funding for NHS is based upon the total budget for the Department of Health and Social Care. The budget of NHS is allocated to meet the local commissioner health services and the local authorities (Harker, 2019). The remainder of the NHS budget is usually spent on centrally administered projects along with services, which include immunization and screening programs. The budgets for NHS are increasing with the increase in the health expenditure due to the changes in the accounting procedures, which is based upon year on year real-term increase consistently. The budgeting for NHS is determined by examining the expenditures in England as depicted below: .

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The NHS England budget for the years and future years has been projected through the help of the table below:

Best practice for reporting budgetary performance

The reporting of the budget is vital for the project to be effective, and the best practice for reporting budgetary performances is that it requires the proper formulation of budgets with the use of budget models. The budget process to be effective is based upon three main processes, which include the formulation stage, which is the initial budgets, and proper forecasting. The financial characteristics of the plan from the government in health care are also followed to analyze the potential. The second is the execution stage, and the third is the reporting stage (International Federation of Accountants, 2004). .

From the theoretical perspectives, the budgetary process includes the budget framework, budgetary methodologies, and allocation of resources to budgetary activities. The best practice for budgetary reporting is to determine the budget framework, which is based upon a few vital factors, which include timeframes, oversight/ governance, challenges, and budget rules. The assessment of best practices of reporting budgetary performances includes a timeframe that focuses upon 12 months that aligns to better financial allocation and financial horizon. The next understanding is based upon the financial constraints along with final budgets approval (PWC, 2012). The NHS budgetary is followed by the revenue and expenditure statement by NHS England. It reports the expenditure that healthcare in the UK is provided for better services and social care. The reporting in the budget is well explained by dividing into segments that comprise of the expenditure. The tax revenues of the fiscal years are well determined so that the reporting for the NHS is effective. Budgetary methodologies are created by NHS as it is the combination of both top-down and bottom-up budgeting. The financial outcomes and constraints are witnessed through the budgets (Robinson, 2002). One of the best performance approaches that are being used by NHS is the incremental budgeting to identify the value for money along with the opportunities. Resource allocation for NHS, such as local activities and other activities are event-driven. Thus, the allocation of the resources is also vital for the budgetary process. To enhance the budgetary performances, NHS has used the practice budget for certain elective procedures along with prescriptions. The budgetary reporting model is a mix of several factors as determined through the diagram below: .

According to NHS Code of Practice, active listening is one of the communication skills for effective nursing during episode of the care which is established by the nurses by being attentive to the information shared by the patient (NHS, 2018). The nurses ensure active listening in communication during episode of care by following SOLER model of communication according to which they sit squarely, maintain direct eye contact, present open posture, lean towards the patient to listen and have relaxed attitude (Moorley, Cathala & Corcoran, 2019). This is because the body language mentioned in SOLER model leads the nurses to show positive intention and attitude towards the patients that their needs and information are actively heard. However, lack of active listening by nurses in episode of care makes them unaware of the specific and vital needs of support as well as current health performance of the patients, in turn, making them deliver hindered and unsatisfactory care (Williams et al. 2018). In case of L, her psychologist is to actively listen to her needs in proper manner by following SOLER model so that her priority needs are understood and accordingly care can be developed. The interprofessional teamwork is to be established in episode of care for the person so that various experienced professionals from diverse field are able to assess the patient’s condition through their individual expertise to mention different prioritised support to be provided for their enhanced well-being (Li et al. 2018). Thus, in case of L, the psychologist is to involve interprofessional teamwork to assess essential needs of L that are then to be fulfilled through collaboration with the team to ensure quality well-being of the person.

Source: International Federation of Accountants, 2004

TNHS budgetary process performances are effective as it offers and prioritizes expenditures based upon regulatory activities, enhancing service deliveries, increasing values, and improving strategic objectives. The NHS reporting is about ensuring transparency by ensuring that the report frequency is regular. The budget report is professionally managed and transparent as it follows the timeframe, expenditures allocation, and funding resources. The reporting structure of NHS England provides proper overviews of funding along with accountability relationships. The roles of the organization include: .

• “NHS England and Clinical Commissioning Groups (CCGs), which commission NHS services.
• NHS Improvement, which since April 2016 has brought together Monitor and the NHS Trust Development Authority.
• The Care Quality Commission (CQC), which regulates the safety of services; and
• Health Education England (HEE), which leads workforce planning, education and training” (House of Commons Library, 2020)

The effectiveness and best practice of the budget are that it offers to track spending variations and performance reports based upon the costs, acquiring resources, and factors relating to laws and regulations.

Critique your theoretical model of budget reporting to the reporting practices within a healthcare organization The NHS

The conceptual model for reporting budgets emphasizes budget reports, structures, contents, and timeframe. NHS follows the reporting practices within the healthcare to offer proper understanding, relevance, reliability of the data, and the aspect to compare along with reliable information. The theoretical budgeting model is useful and is similar to NHS practicing budgetary models. As per the model, the budget triangle is considered upon which is about approval, income, and borrowing and expenditure along with investments (Bandy, 2014).

NHS reflects upon the expenditure budgets as per the models so that the budgeting is professionally managed with preferential treatments for activities. The budget of NHS is based upon the clear lines of accountability and authority for budgeting with the Service Line reporting system. As per the budgetary model is concerned, NHS has a checklist witnessing the budgeting system to examine the adequacy of financial control. It is criticized that NHS faces challenges in the business aspect; thus, it changed the commissioning arrangements. The economic power in healthcare is one of the issues that are being faced by the NHS because of the fundamental changes in the funding mechanism. The cost reduction is one factor that tight financial control in the budgetary performances will secure the long term survival of NHS. The economic system of NHS is in alignment with the SLR for the examination of the financial contributions with references to funding and expenditures as per the model. It is being criticized that the role of budgeting in the NHS sometimes faces challenges in terms of lack of strategy. The budgeting report provides information that is part of the cost improvement and is in line with SLR (Bandy, 2014). In this case, for the NHS, the expenditure in the healthcare of the UK tends to determine the final budget and its reporting process. The best practices also include budget rules which are based upon the flexibility and change control. The funding and expenditures reporting in the budgetary process reflect upon the clinical involvements and resource allocation for better performances. NHS is considering the workload budgeting, which is about the budgets in the departments to ensure flexibility and ensure better control. The financial reserves are stated in the budget to improve the economic power to serve the people better. Financial management and accounting based upon the budget performances’ follows the performance budgeting where the performance information is offered based upon allocation resources for the overall analysis of the performances. The financial plans of NHS are well framed with the proper interpretation of the funding and expenditures for healthcare services.

One crucial factor that criticizes the theoretical understanding is that the role of the senior doctors of the NHS in the budgetary process leads to some issues in the process. The accountability of service directors is huge and accountable for the fiscal process. The doctors’ role differs, thus resulting in a lack of engagement for NHS (Harradine & Lowth, 2011). However, NHS values the opinion and thus ensures financial balance through sufficient budgets.

Judgment upon the Analysis on the Techniques such as Net Present Value and Payback

As an experienced healthcare manager, it is determined from the analysis that the NPV has improved for the healthcare. Positive NPV implies that investors can invest as it is worthwhile. However, it was negative in the initial years depicting a lousy investment for the investors. The negative NPV is still accepted by the managers because of the regulations, safety, along with the aspect of security. In general, NPV is negative doe the safety equipment. It is analyzed that negative NPV needs to be avoided and positive be valued for long term appraising projects such as healthcare. Being a healthcare project, this analysis acts as a success metric in the long term run. The five questions that will be asked are:

• Q 1: Your opinion about the relevance of NPV in the projects?
• Q2. Why is it vital to consider data for 10 years for better analysis?
• Q3: What is your opinion on positive and negative NPV determine?
• Q4: Is the healthcare sector growing and is sustainable?
• Q5: Does payback impact the finances of healthcare?

Conclusion

The healthcare sector is working to improve the health of people. It requires proper funding and financial management so that the expenses are professionally managed with the changing demand in the healthcare departments. NHS in England is working to improve the life of people and ensuring better social care for people. NHS intends to improve the quality of work through the use of quality data and information; therefore, the funding is done from general taxation by National Insurance contributions (NICs).

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References

• Bandy, G., 2014. Financial Management and Accounting in the Public Sector. Routledge. .
• Harker, R., 2019. NHS Funding and Expenditure. Briefing paper, pp. 1-16. . .
• House of Commons Library, 2020. The structure of the NHS in England. [Online] Available at: https://commonslibrary.parliament.uk/research-briefings/cbp-7206/[Accessed April 22, 2020]. .
• Harradine, D. & Lowth, G., 2011. A method for assessing the effectiveness of NHS budgeting and its application to a NHS Foundation Trust. Research executive summary series Vol7 , Iss 10, pp. 1-12.
• International Federation of Accountants, 2004. Budget Reporting. Research Report, pp. 1-92. . .
• NHS England, 2015. How to... bring budgets together and use them to develop coordinated care provision. [Online] Available at: https://www.england.nhs.uk/wp-content/uploads/2015/06/bcf-user-guide-02.pdf.pdf[Accessed April 22, 2020]. .
• PWC, 2012. Good budgetary processes: comparators. Research report commissioned by the National Audit Office, pp. 1-71.
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