Finance Questions? Ask a Financial Expert for Answers ASAP
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1. Briefly describe your current position and its duties and responsibilities.
The Finance Officer is responsible for all aspects of field financial data management at the organization, including quality review and integration of field financial data into organization's accounting system and subsequent reporting, including Life-of-Project (LOP) management reports, federal Financial Status Reports (FSRs) and other donor-required reporting (if the health care organization receives any donations. The Finance Officer also assists with budget preparation, monitoring budget variances, etc.
2. What are the revenue centers for your organization?
The revenue centres of the health care org are many. It has in house departments like Orthopaedics, Cardiac Wards, ICUs, Opthalmology,O&B, Nerology, Therefore, it has a numerous revenue centres coming from Indoor Patients coming in from these branches. It has also a revenue coming in from out patients surgeries,. an also a large revenue stream from retail OPDs conducted by visiting doctors.
3. What types of centers (departments) have budgets?
The organization adopts bests practices in setting and managing healthcare organization budgets which includes Using comparative benchmarks, Establishing a culture of accountability, Setting accurate, high-performance department budgets, Managing expenses, and Monitoring variances and requiring corrective action plans.
4. How many cost centers are there? Can you give some examples?
The major cost centres of the most departments include salaries, supplies, and other (purchased services such as dues, travel, and rents). Indirect cost categories include depreciation and allocated costs of other departments. From an administrative standpoint, cost centers can be distinguished based on the nature of their work---patient care, intermediate clinical care and overhead centers.
5. How important is it to control costs?
Importance of controlling costs is indusputable with any organization. Controlling costs has direct and improved effect on on core competence; improved speed of response to market demands; Need for increased profits, Improved competitive standing, Preserve organization resources, Reduce waste and Improved productivity
6. How are fixed costs separated from variable costs?
Fixed costs are easily separated from variable costs. The unit of a product in a any healthcare organization is Bed. SO all the costs, which include in creating a capacity are classified as fixed costs. This inculdes the building, salaries, utilities payments for the hosbital, insurance payments, equipments costs, etec.
Variable costs are the costs which vary with the movements of patiets. It includes supplies, internal medicine stocks, disposables, consumables, utilities such as electriicty used extra when the patient is admitted / not admitted and the use of OTs and its consumables are the variable costs.
7. How are variable costs handled?
Variable costs are primarily handled with very efficient material handling and managing almost in-time inventory. Consumables and the internal stock of medicines form a very major part of this. This provided protection in the costs that get cheaper by avoiding overstocking.
8. What method of cost allocation do you use in your organization (Direct allocation, step-down allocation, double or multiple distribution, or reciprocal)? What are the advantages and disadvantages of using that particular method?
Priomarily Direct Allocation is used. This is method of allocating costs of each service department directly to production departments; also calleddirect method. Under this method, no consideration is given to services performed by one service department for another. One of the major advantages is that each department of a healthcare organization functions as a separately profit center and therefore manages it s own profitability and efficiency. THe disadvantage is that it may dampen the collective financial picture when the figures are consolidated during a bad performance and it cannot give any good effect of its profitability and excess reserves to the other ailing department.Hence optimized use of assets and allocation of resources is not done in this method.
9. How are costs allocated? What are some examples of criterion you use to determine cost allocation?
The costs are primarily allocated based on the study of previous figures. Also an request is invited by heads of all departments requesting the need for resources and accompanied with a detailed justification for a particular resource. A detailed analysis is done and a balanced costs and funds are allocated.
10. What happens when a service's revenues do not cover its costs?
When a services revenue do not cover its costs, a detailed analysis done of the factors responsible with it and then proactive measures are taken for two quearters to see if the efforts yield any results.
11. Has a service been discontinued because revenue did not cover its costs?
Fortunately, there has been no instance that a Service has been discontinued. In event of revenue not covering its costs, proactive measures and scientific approach are adopted and so far has yielded positive results.
1. Write a summary of your impressions. Did anything surprise you? What types of cost allocation criterion and methods are available to all healthcare organizations? How does this particular organization deal with costs?
The functioning of a organization did not surprise me. All departmetns are run individually on profit center basis and therefore each departments has individually maintained its efficiency.
2. What method of cost allocation does this organization use? Do you feel that this is the best method of cost allocation for this organization? Why or why not?
The current direct cost allocation is appropriate as, it ahs kept departments in perfect shape and has able to moniter them all individually. This organisation has dealth with the costs very scientifically and correct manner. The only trouble or a little disadvantage is that if a department is ailiing , it is not getting any supprot from the department which has sound financials. This hamplers the optimized allocation of resources and assets.
3. What are some examples of cost allocation criterion used by this organization? Are these criterion appropriate? Why or why not?
As mentioned above, the answer to this is similar. The current cost allocation crieterion is appropriate as, it ahs kept departments in perfect shape and has able to moniter them all individually. This organisation has dealth with the costs very scientifically and correct manner. The only trouble or a little disadvantage is that if a department is ailiing , it is not getting any supprot from the department which has sound financials. This hamplers the optimized allocation of resources and assets.
I hope the above helps...