Importance of Budgeting and Cash Flowing Within the Health Care

Question: Discuss about the Importance of Budgeting and Cash Flowing Within the Health Care Sector in Singapore. Answer: Introduction Singapore is recognised to offer universal coverage for the healthcare facilities for its citizens. The budgeting system in the health care is seen to be distributed in form of twin philosophy known as affordable health for all and individual responsibility. The adherence of a mixed philosophy is able to make the best use of financing system. Budgeting and maintaining a cash flow is important for the considering the contribution of health expenditure in the GDP of the country. At present the healthcare expenditures form about 4% of the total GDP (Hamza, Mutala Antwi, 2015). Understanding of fundamental financial management concepts and how they apply within a health care In general, most of the healthcare organizations are seen to adopt accrual accounting concept to match the expenses and income for arriving at the correct value of profit. In the past, such organizations adopted cash basis accounting. In majority of the health services the ledger accounts are grouped as per assets, liabilities, equity funds, revenues and expenses. The non-profit health care organizations are seen to use single entry recording (Asher, Bali Kwan, 2015). Critical analysis of financial management risk and change management strategies Therisk management is taken in situations when the healthcare faces hostile financial environment critical to accounting of costs. To mitigate such problems, the providers are able to redesign the financial functions for the recognition of the changes in the financial environment. In the recent times, the service providers are redesigning the changes in the financial systems which may have a detrimental effect on the financial management. In addition to this, for mitigating the various types of the current challenges related to the healthcare industry the riskmanagement is seen with protecting the investment in the subsidiaries (Jaafar, Bakar Awaludin, (2016). Financial modelling techniques and when and how they should be applied The purpose of good practice is seen to guide the processes and procedures which can effectively manage the budgets. This can provide the information on the budget virement process. A good financial management system is able to track the resource utilisation which is important for the taking remedial action where needed. Thefinancial management concept such as cash basis accounting is the method when the income is recorded at the time when the cash is received. The expenses are recorded at the time when they are paid, without considering the time to which they apply. On the contrary, the accrual method of accounting is applied when the income and expenses are recognised within the specific time and when revenue were earned. In addition to this, this financial modelling needs to be applied at the time when the expenses were incurred. Under this model the inventories and the stocks left at the end of the period, should not be counted as an expense (Kwan et al., 2016). Application of effective financial planning skills and processes The effectiveness in finance budgeting in healthcare is aligned with rolling forecasts, detailed budgets and multi-year plans. The statistically driven approach would allow for what-if modelling. In addition to this, some of the other benefits are seen with incorporation of service line analytics to refine the projections. The statement of the cash budget and the planning is effective with the preparation of the cash budget for examining both types of the cash flows. The statement of the cash flows looks backward to the actual events set in the past. In addition to this, the cash budget is aimed at forecasting the cash flows and budget. This is used with the conjunction of planning and control for comparing the actual and the planned forecasts. This planning is conducive for the decisions and adjustments related to the activities and resource allocation as per the results (Tan Low, 2016). Application of financial management concepts in the development of the budgeting and cash flow within the health care sector in Singapore There needs to be a multilayer affordability aspect maintained in the health care industry. In addition to this, the treatment of the drugs needs to be followed with cost effective and at a subsidised rate. The developmental aspect needs further seen to be considered with segregating the bills in terms of inpatient and outpatient bills. The selection of the costly outpatients bills needs to be covered with MediShield Life. Since the launch in the late 2015, the Singaporeans and the various types of the senior are able to benefit from the better support and assurance. This support needs to be considered by taking the assistance from considering the Specialist Outpatient Clinics (SOCs) and polyclinics which are operated in Singapore (Brooks, 2015). Conclusion The various types of the discourse about understanding of fundamental financial management concepts are considered with the adoption of accrual accounting concepts to match the expenses and income for arriving at the correct value of profit. Moreover, critical analysis of financial management risk and change management strategies are considered with recognition of the changes in the financial environment. In addition to this, financial modelling techniques are applied with the expenses recorded at the time when they are paid and expenses when are applied. It needs to be also seen that effectiveness in finance budgeting in healthcare is aligned with rolling forecasts and application of statistically driven process. References Asher, M. G., Bali, A. S., Kwan, C. Y. (2015). Public financial management in Singapore: key characteristics and prospects.The Singapore Economic Review,60(03), 1550032. Brooks, R. (2015).Financial management: core concepts. Pearson. Hamza, K., Mutala, Z., Antwi, S. K. (2015). Cash Management Practices And Financial Performance Of Small And Medium Enterprises (SMEs) In The Northern Region Of Ghana.International Journal of Economics, Commerce and Management,3(7), 456-480. Jaafar, S., Bakar, N. S., Awaludin, N. S. (2016).Budget Awareness and Knowledge of Small Trader: A Preliminary Study. Kwan, C. Y., Bali, A. S., Asher, M. G. (2016). Organization and reporting of public financial accounts: insights and policy implications from the Singapore budget.Australian Journal of Public Administration,75(4), 409-423. Tan, B. S., Low, K. Y. (2016). Budgeting Practice in SingaporeAn Exploratory Study Using a Survey.