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Health care financial management involves controlling costs and managing money matters to maintain business growth, reasonable service costs, and quality services. It includes planning for growth, managing risk, and handling accounting functions efficiently.
Health care financial management refers to the methods by which health care facilities control costs and manage money matters. Medical practices must do this to maintain business growth, keep the cost of services reasonable for insurance companies to pay, and continue to benefit patients with quality services. The way in which health care financial management is carried out depends on several factors, including medical equipment and treatment costs, unpaid claims and malpractice risks, as well as general accounting processes.
A strong healthcare financial management plan takes into account how a hospital or physician group can grow over time. For any healthcare provider, having access to the best medical technology, professionals, and treatment options is critical to this growth. All of this requires careful planning and investment of money to ensure that only the best doctors, equipment and treatments are available to patients. When planning for growth, factoring in actual treatment costs is often at the top of management’s list.
Another part of the health care financial management plan has to do with managing risk within this industry. Patient medical benefits and payment plans must be carefully managed to ensure that all medical claims are paid in a timely manner. For many healthcare facilities, unpaid claims can add up to millions of dollars in lost revenue annually. This means that the medical center must continually be aware of ways to maintain positive cash flow by avoiding claim denials or delays.
Additional risk in the healthcare financial management strategy includes damage or death that occurs as a result of faulty equipment, medical errors, and other unforeseen events. A health care financial management plan should include adequate malpractice claim and legal coverage should these issues arise. It is critical to handle these matters tactfully so as not to damage the reputation of the health care facility, so the public relations department often gets involved as well. Failing to do so can cost a medical center even more revenue over time.
Naturally, a healthcare financial management plan also includes a process for handling the necessary accounting functions of a hospital or doctor’s office. Patient insurance copays and deductibles must be collected. Medical claims must be submitted for payment. Overdue medical bills must be settled. All of these activities must be managed as efficiently as possible to reduce operating costs and enhance growth initiatives.
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