Essay Sample on Health Care Professionals: Navigating Complexity in Modern Care

Introduction

In all history, health and social care professionals have never faced a complex working environment compared to the one they currently have. Advancements in technology in the health care industry mean that their facilities can provide better care than they could in previous years. However, in many cases, these advancements are expensive, which means that the organisations must invest heavily in equipment and ensure that they still provide care affordably to patients, who are their clients. The environment in which social and health care organisations operate currently is highly uncertain and has extreme cost pressures (Zelman et al. 2014). These conditions make the health and social organisations to search for ways of improving the quality of their services while maintaining an affordable cost of the care. These institutions need to ensure that they maintain the initial goals of care, which are affordable cost, high quality, and easy access to social and health care services.

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The factors that affect the cost of social and health care include those that aim to increase it and those that seek to decrease it. The issues that could increase the value of care include a rising number of aging people. As people become older, their health and social care demand also increase, and they become costly. Another issue is the rise of people that now seek health and social care services. This increase results from the provision of improved health insurance cover to people, which encourages more people to seek these services. This rise in the number of patients will make care organisations seek ways of serving them, which will increase the overall cost of care.

Another factor that increases the cost of care is the emergence of better medical technology. These advancements provide better care to patients. However, they are expensive, and therefore, an organisation that uses these technologies typically increases their cost of care. Moreover, an increase in the demand for care leads to a rise in the number of practitioners. This rise increases the cases of malpractices, and therefore, it leads to an increase in the cost of health and social care (Zelman et al. 2014). Finally, the increase in cases of chronic diseases also leads to a rise in the overall cost of care. Specifically, most of these conditions, such as asthma, obesity, and diabetes, are associated with the elderly (Zelman et al. 2014). Thus, when the percentage of the elderly in society increases, the overall cost of care will also rise.

Other than the factors that seek to increase the overall cost of health and social care, other issues work to reduce the cost of delivering care. These issues include a shift in the tendencies of some employers to shift some of the cost of medical insurance to their employees (Zelman et al. 2014). When workers start paying for their insurance, they become better consumers and change behaviours that could affect their health. Consequently, they end up having lower health care needs. Health and social care organisations have also started using advanced information technology (IT) to improve their operations by reducing errors. Moreover, some of these institutions now use six sigma and lean initiatives in their management to improve their service provision.

One factor that increases the cost of care is the price of medical supplies. These organisations have decided to deal with this problem by purchasing their requirements in bulk, thus using economies of scale. This practise leads to a lower cost of health and social care. Another issue that could also reduce the cost of care is the emergence of generic drugs after pharmaceuticals go off-patent, which decreases the cost of drugs (Zelman et al. 2014). Finally, employers are developing wellness programs that help their workers to have better health. These factors decrease the overall cost of care. Now, based on the need to reduce the cost of health and social care, organisations need appropriate ways of achieving this goal. Analysis of the financial statements may focus on financial ratios to decide the proper steps to take in the management of an institution. This section considers the evaluation of financial statements using financial ratios and how to use this information to make decisions in social and health care organisations.

Evaluation of Financial Statements Using Financial Ratios

Financial statements of businesses are usually of interest to internal and external parties. Health and social care institutions can be classified as not-for-profit, government-owned, or investor-owned organisations. Care facilities in each of these categories usually use financial statements that show their fiscal operations to attract funding from investors and other stakeholders. The main statements that businesses use to report their financial states are balance sheets, statement of cash flows, income statement, and statement of operations (Ginter et al. 2018; Zelman et al. 2014). The balance sheet of a business shows the assets, equity, and liability of an entity at a point in time. For instance, when the institution prepares the document once a year, it will show the report of the business as of the last date of the fiscal year. On the other hand, the statement of operations summarises the expenses and revenues of an entity over a period. The statement of cash flows seeks to show the origin of cash and where it went.

Analysing these statements provides a person with a view of the financial operations of a business or a care organisation. For instance, the balance sheet shows the assets that a company has, its liabilities, and shareholders' equity. This statement shows the amount of debt that a business has and its assets. These factors can influence the decision of an investor that seeks to invest in the organisation. Moreover, a statement of cash flows shows the money that a business made from operating, financing, or financing activities. By considering this statement, a person can see whether the bulk of the money that a company made was from its operations, investment, or other financing actions. These factors can influence the decision of a person, whether the individual is inside or outside the organisation.

Analysis of the financial statements of an organisation can allow a person to see the state of the business. It helps an individual know whether the institution is profitable and how effective it is at collecting its receivables. This analysis also shows the position of a healthcare organisation to pay its debts and bills. The statements can help an individual see the effectiveness of the institution at using its assets and whether its equipment needs repair or replacement. Finally, they can also tell a person whether the organisation can take additional debt (Zelman et al. 2014). Now, based on these uses of the financial statements, they are of high importance to a person analysing them. However, despite their advantages, it is not always possible to obtain this information from the statements alone. One needs to be able to extract this data using ratio analysis of the statements, which then provides these details.

Methods of analysing the financial state of a business using its financial statement include horizontal, vertical, trend, and ratio analysis. Horizontal analysis focuses on the operations of a business in one year compared to a subsequent year. This tool shows whether the organisation performed better or worse than it did in the previous year. On the other hand, the vertical analysis focuses on the operation of one product compared to a different one and shows the best performing product. While these two analyses can provide good information regarding the operation of a company, sometimes they fail to show the overall performance of a business over a long period. In this case, the trend analysis helps by providing information about the performance of a business over several years, such as over five years.

Ratio analysis provides a better way of analysing the in-depth performance of a business. It shows the relationship between two financial values of a business as a single number (Zelman et al. 2014). These ratios can be classified into four groups, which are liquidity, profitability, capital structure, and activity ratios. The liquidity ratios show how an organisation is positioned to handle its short-term obligations; capital structure ratios show how the business' assets are financed. Moreover, activity ratios provide information about how an organisation uses its assets to produce revenues, while the profitability ratios give information on how profitable an organisation is. This information is useful to a person investigating the fiscal state of a business, and they can help the management in decision-making.

Liquidity ratios include current ratio, acid-test ratio, and quick ratio. The current ratio is the relationship between current assets and current liabilities of the organisation. On the other hand, the quick ratio of a care organisation takes the sum of the cash, net account receivable, and marketable securities. It divides it by the current liabilities of the organisation. Finally, the acid test ratio uses the sum of cash and marketable securities against the current liabilities. These ratios measure the relationship of different current assets to current liabilities. Of the three, the acid-test ratio provides information about the liquidity of a business (Zelman et al. 2014). These ratios help determine the ability of an organisation to deal with its current liabilities in the shortest time. Another beneficial ratio is the activity ration, which shows how much revenue is being generated from the invested amount. It considers the revenue divided by the assets in the organisation.

Using the Information to Improve Decision Making in Care Organisations

After assessing the financial state of a health or social care organisation from its financial statement, a person can use this information to improve decision-making in the institution. For instance, the current ratio can help a person decide on the organisation's investment strategies. If the analysis shows that the facility can repay its current liabilities quickly, then the organisation can decide to get more funding to improve its performance since it knows that it can pay them quickly. Moreover, it can help the institution determine how much loan it can take at a time. Considering the activity ratio of a business can help an individual decide which activities to invest in based on how much they generate to an organisation.

This information is helpful in a health or social care organisation. Without it, a person may not know how to invest money, but with this data, the decision-making process becomes more efficient. Specifically, a person using this information decides based on the outcome of the ratios, and therefore, the decisions are likely to yield desired results.

Proposal of Managerial Decisions for Care Organisations Based on Financial Analysis

There is a need to find ways of reducing the cost of care while maintaining its quality. Moreover, just like other businesses, health, and social care organisations normally develop financial statements, such as balance sheets and statements of cash flows. These institutions use the statements in decision-making and for seeking funding from investors. Moreover, they use this information to decide the direction to follow. Specifically, these statements can help health and social care institutions develop strategies for achieving their goals. External forces usually determine what these facilities sh...