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Organizational Financial Viability in Healthcare

Taking a broad view, the finance department is in charge of all monetary resources and sees that they are channeled toward objectives in line with the organization. Such as the CFO analyzing growth trends and population health data, it’s clear that expanding a service line or facility is necessary for the organization’s success in the future. The finance team would take the lead in financial planning for this large outlay of capital. This included evaluating funding options, building a business case, and budgeting. At the same time, the accounting department concentrates on exact records of financial transactions and positions. It is the job of day-to-day work such as keeping ledgers, dealing with invoices and payments, making payroll runs, and executing month-end closes that produce the workforce, which statistics translate into decisions on strategy. Accounting also checks that transactions are in accordance with regulations and policies. Finance steers the way for fiscal organization, and accounting is a smoothly running engine room that processes each transaction in order to move operations ahead. Finance and accounting do complementary high-level oversight work, as well as ground-level precision. This combination of strategy and detail makes it possible for healthcare leaders to have the complete picture, which is required in managing resources and securing financial sustainability.

Financial reporting provides a periodic overview of an organization’s financial condition and performance. Each of the four core reporting statements reflects a unique perspective. The balance sheet illustrates assets, liabilities, and equity; the income statement presents reference values for revenues, expenses, and net profit or loss, while cash flow is based on actual inflows & outflows of aggregate cash from all sources in a particular period. From terminology and formatting to calculation methods, strict accounting standards control every aspect of financial reporting. For instance, generally accepted accounting principles (GAAP) provide clear-cut rules about when revenues can be booked and what kinds of expenses must be measured as depreciation (Cleverley, Cleverley & Parks, 2023). Reports can be compared across periods, departments, and organizations through compliance. But without this standardized structure, financial reporting would wildly vary according to personal interpretation. Following accounting standards adds credibility, assuring readers that reports reflect performance. An organization’s financial reporting must accord with the applicable rules and regulations, which are checked in an audit. All in all, the tightly regulated nature of financial reporting favors transparency; it also helps organizations discover problems early on and measure progress so they can make sound business decisions. Financial reporting is the bottom line for fiscal stewardship in healthcare.

The healthcare organization’s financial data and processes are checked by auditing, providing an independent check. It is the regular reviews performed by internal auditors that are designed to identify possible risks or inconsistencies in financial controls and reporting. At the same time, external auditors provide annual financial statement audits to check objectively that regulations and standards have been complied with. Their raw data come from finance, accounting, and financial reporting operations. However, auditing provides an objective standpoint on the whole thing. It thus divorces financial information from its evaluation, enhancing transparency and accountability. Audits also identify gaps and propose corrective measures for continual improvement. The standardization of structures for finance, accounting, and reporting is particularly important to effective auditing. To ensure that policies and controls are really getting things done, auditors must have comprehensive documentation on which they can base their audit trails. Through audits, any lapses detected point directly to flaws in the underlying financial operations. In fact, the purpose of auditing is to put tests on systems in order that cracks may be discovered before they become great fissures. Robust financial structures, along with rigorous auditing, promote dependability and credibility in healthcare finance.

Collectively, these departments enable organizations to assess and keep track of the health as well as potential problems or risks in their finances so that decisions are based on facts. The finance department, for example, might decide on a need for capital expenditure according to anticipated levels of volumes and revenues. The accounting department records the transaction as it depreciates over time. On balance sheets, capital expenditure shows up, and on income statements, we see depreciation (Smith, Thomas, Snoswell, Haydon, Mehrotra, Clemensen & Caffery, 2020). Auditing checks whether the purchase and reporting comply with regulations and standards.

The strategic planning begins with finance analyzing data throughout the departments and predicting future capital requirements. Revenue and cost trends are basic inputs to accounting. Efficient financial reporting allows gaps in performance to be identified, such as steady elective surgery volumes below budget targets. Internal audit assures that current procedures and controls are adequate. Based on these functions, budgeting for a project that fits the strategies of an organization can be achieved realistically by finance. When the plan begins to be implemented, accounting continues providing a look at actual revenues and costs—financial reporting measures performance against projections to illuminate new issues or opportunities.

When resources are limited, strategic planning and prioritization are needed. To identify expenditures that are genuinely essential to the mission and those that can be considered discretionary, organizations must sift through budgets (Broussard, 2023). In particular, even when budgets are tight, there is a need for cost-effective innovations such as telehealth and virtual care, which can help make the best use of limited resources. Financial leadership must steer the organization through difficult but necessary changes in its models of care and operation. By getting stakeholders on the same wavelength through advanced communication, comprehensive changes made quickly in times of scarcity can provide strategic benefits. However, fiscal responsibility should not crowd out investments in staff, capabilities, and community services vital to the competitive success of the organization. Top healthcare managers must walk a narrow path between short-term cost savings and long-term positioning. Even as a lack of resources forces economizing, if organizations maintain strategic focus and selectively invest in key priorities, they can emerge well-positioned competitively.


Broussard, W. J. (2023). How Much Does a Dollar Cost?: Annual Giving, Alumni Relations, Advancement Services in Lean Management Scenarios. In Fundraising at Public Regional Universities: Under the Radar, Below the Fold (pp. 141-159). Cham: Springer International Publishing.

Cleverley, W. O., Cleverley, J. O., & Parks, A. V. (2023). Essentials of health care finance. Jones & Bartlett Learning.

Smith, A. C., Thomas, E., Snoswell, C. L., Haydon, H., Mehrotra, A., Clemensen, J., & Caffery, L. J. (2020). Telehealth for global emergencies: Implications for coronavirus disease 2019 (COVID-19). Journal of telemedicine and telecare26(5), 309-313.


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