The financial environments of businesses vary from one to another
even in the same industry. Health care organizations have the most varying of
financial environments. The purpose of this summary is to discuss the financial
environment of three health care entities. These three types of health care
organizations are for profit, not-for-profit, and government. A for-profit
business focuses on obtaining revenue for profit. In a not-for-profit uses
their revenue to reinvest in the organization or the local community. A
government entity serves the government, is exempt from paying taxes, and is
funded by the government. The for-profit organization is Thomas Jefferson
University in Philadelphia, Pennsylvania. The not-for-profit organization that
will be discussed is the American Medical Association, (AMA). The government
organization is the United States Department of Health and Human Services, (HHS).
Each of these organizations financial structure, practices, and environment
will be discussed in detail. This analysis will also clarify why effective
financial management is of greater difficultly in the health care industry than
any other business industry.

Financial Structure

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The structure, roles, and finances of the health care industry is
constantly changing. According to The Medicare Newsgroup (2015), “A for-profit,
or investor-owned, hospital means the facility is either owned by private
investors or is owned publicly by shareholders and is part of a company that
issues shares of stock to raise revenue to expand the hospital activities, (para
2)”. A for-profit institute is possessed by private investors or is held
publicly by stockholders. The Thomas Jefferson University Hospital in
Philadelphia, Pennsylvania is one example of a for profit organization in the
health care industry. This organization’s detailed service and treatment with
patients aided this organization in becoming a pacesetter in the industry. According
to Thomas Jefferson University Hospital (2015), “As an academic medical center,
Thomas Jefferson University Hospitals believe in the importance of an excellent
clinical setting for our patients and as a foundation for the learning
experience of Jefferson students and residents. It is within our various
clinical settings that scientists, residents and attending physicians, medical
students, nursing and allied health students, and technologists learn their
profession and learn to work together as a team and help define the future of
clinical care, (para 3)”.

Understanding the role of the individuals within the finance
department is critical for the success of an organization. This financial
accounting team has the responsibility to record budgeting, expenses, financial
statements, and other organizational accounting habits. The finance or
accounting branch of any organization contains a Chief Financial Officer (CFO)
or a vice president. Many organizations have one specific person to manage all the
company funds going in and out. The primary manager and finance workers delegated
to oversee the financial affairs of the sanatorium. The Chief Financial
Officers role consists of being a director for the undertakings from a monetary
point. The financial officer or treasurer is responsible for handling of
currency, capital, debt, financial risk management, leases, and donations.
Numerous establishments run their companies as a for-profit association which
has numerous sections that support the institute. According to Gapenski (2008),
“In the smallest health services organizations, the entire finance function is
managed by one person, often call the business manager, (para 11)”.

A not-for-profit category of health care institute is immune from
state and local property taxes and federal income taxes for the reason it is designed
as a charity. These types of organizations obtain funding from tax deductible
charitable donations and government grants. The organization takes all profit
and either reinvests that money into the company or the community is so
fashion. The not-for-profit facilities will see patients regardless if they can
manage to pay for care. The not-for-profit organization that will be discussed
is the American Medical Association, (AMA). The American Medical Association is
the most seasoned and biggest group speaking to American physicians (Ama-assn.org, 2017). The AMA speaks to around 33% of
the country’s doctors. It distributes the week by week Journal of the American
Medical Association, a standout amongst the most renowned and persuasive
American medical journals, and additionally a large group of different other
journals and books (Ama-assn.org, 2017). The AMA
is one of the country’s driving campaigning powers, and its political activity
panel, which administers cash to political campaigns, is additionally one of
the country’s wealthiest. The affiliation runs awareness campaigns on medical
problems and attempts to shape governmental policy that influences doctors and
patients. The AMA infers around one-fourth of its revenue through its yearly
membership prices. Another revenue originates from corporate grants and the
purchasing of their products and data services (Ama-assn.org,

According to Wall, A. 
(2015), “A local government may operate a self-funded health plan that
qualifies as HIPAA covered entity. The government may contract with a
third-party administrator to manage the plan, but the plan itself may be a
component of the local government. The local government is the covered entity.
Many local governments, especially counties, are HIPAA covered entities because
they offer services or have staff that (1) meet the definition of “health care
provider” under HIPAA and (2) transmit health information in electronic form in
connection with a HIPAA-covered transaction, (para 9)”.

The United States Department of Health and Human Services, (HHS)
is the government health care organization chosen for this summary.  The Health and Human Services delivers
functioning health and human benefits meanwhile ensuing proficiency within all aspects
of treatment, public health, and social services.  The financial planning is reserved by a budget
passed by the President of the HHS institute (Health and Human Services, 2015).
This financial plan must be approved and enclose an efficiency statement from
what has been achieved from objectives and targets heretofore authenticated. This
organization provides numerous different types of support to the community.
Programs like Women’s Infants and Children (WIC), Medicare, and food stamps.

“A significant number of the goals established and their
objectives are important in this HHS role to acquire for success. These goals
are for citizens and to secure the ones that have insurance and extend the
benefits to those that are uninsured, improve healthcare quality and patient
safety, and emphasize primary and preventive care with the community prevention
services, (Health and Human Services, 2015)”.

Unique Policies

According to Brumley (2015), “Managing the finances of any health
care business nowadays is like driving a car with foggy windows. The industry
has been changing in big ways since long before the Affordable Care Act took
effect. Medicare’s coding system for billing and the advent of electronic
medical records are examples of these changes. Financial management in health
care requires exceptional skill.”

For-profit organizations
are important to implement a financial policy that can guarantee that the
organization must be able to provide quality care.  In financial policies of a for-profit
organization, it is important to address a strategic plan that will identify
the financial manager’s goal and to develop plans that can help achieve those
goals. Quality care is key to a successful organization. Thomas
Jefferson University Hospital is a metropolitan entity that has positioned its services
around the community. This hospital is a teaching institution as well,
providing the newest technology incorporated with a plethora of goals for
success. Having a teaching hospital in a community is not only beneficial to
the economy but also the success of this type of organization.

Not-for-profit administrations
are required to create guidelines that deliver clear check and balances in
bookkeeping and accounting. This method of internal control assistances
separate responsibilities to prevent single individuals from making tremendous
economic transgressions (Kouri, 2010). There have been many past issues with
the accounting honesty is these types of organizations. Also, each not-for-profit
association is required to constantly evaluate the administration’s financial
statements as frequently as required and individual members of the board must obtain
a financial statement on a consistent basis. Primarily, there should be precise
records of clear financial guidelines in addition to procedures that plainly declares
the duty and responsibilities dealing with accounting, management of cash, bank
accounts etc. This ensures the integrity of all shareholders.

 Guidelines in government health care sector
can be more lenient because they are serving a certain group of individuals for
instance military personnel: active, reserve, and veterans. Therefore, guidelines
are formed to guarantee compliance with all government rules and to make certain
that funds are not being used in an unnecessary manner. The financial balance
sheet can differ as the values may be dissimilar from other health care associations.

Each type of company must abide by the SEC-established rules to guarantee
standardization of the appearance of financial data, and the SEC entitles the
Financial Accounting Standards Board (FASB) to directly administer the procedure
and execute the standard system (Gapenski, 2012). In 2009 the FASB linked all
the formerly distributed standards into a solitary collection known as the FASB
Accounting Standards Codification to accomplish an easier way to locate accounting
standards in one place (Gapenski, 2012). The American Institute of Certified
Public Accountants (AICPA) executes rules for industry-specific conditions
(Gapenski, 2012). Security and Exchange Commission (SEC) creates and imposes
the method and content of financial statements (Gapenski, 2012. All these rules
and policies combined create the generally accepted accounting principles
(GAAP) (Gapenski, 2012).


Health Care Financial Management and Other Industries

The federal government controls disclosure of the information
connected to financial practices. Government agencies such as the Health
and Human Services division practice financial management to control costs. This
is also universal for not-for-profit and for-profit entities as well because,
in the long run, they all share a common financial practice. They are about
making money it just depends on what type of organization it is to understand
where the money goes.

They also should share a common rule that to make accurate
financial decisions, investors need to have distributed roles, and that is the
essence of financial information. To make accurate financial decisions
investors must be involved in decision-making. This is a critical resource for
a successful decision making and achievement of goals that are set forth. by
each company in the healthcare setting being discussed. The financial practices
are essential for the everyday operations and evaluation of all three separate
organizations. “Larger health care entities have larger financial departments
consisting of CEO, CFO, senior management, and managers. Complicated accounting
methods require a more complex accounting system. Smaller health care entities
have less complicated accounting systems. Both entities still need to comply
with GAAP”. (Gapenski, 2008).


Budgeting, planning, financial reporting, capital investment
decisions, financing decisions, working capital management, contract
management, and financial risk management are all activities within the
financial environment of any successful organization (Gapenski, 2008). An
organization’s finance department is perilous for functioning as a successful establishment
that can reach the financial goals. The different types of providers plus the
size of the organization can influence the workings of the finance department positively
or negatively. Finance has many paths that commonly participate in the direction
to an effective business. To be fruitful in financial management within the health
care industry, one must recognize why effective financial management is a
greater degree more problematic in health care than in any other industries. 

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