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Week 6 Discussion: Financial Performance & Evaluation

Valentina Gonzalez

The financial health of a healthcare organization greatly influences both its daily operations and long-term strategic planning. On a routine level, financial health ensures that hospitals can afford staffing, supplies, utilities, and patient services without interruption. In the long term, an organization with a sound financial footing can invest in infrastructure upgrades, adopt new technologies, expand its service lines, and sustain community-based programs. According to Henson (2022), hospitals experiencing poor financial metrics often face such consequences as delayed capital projects, higher staff turnover, and decreased patient satisfaction-all factors that impinge directly on clinical outcomes and organizational effectiveness. Strong financial management also provides a better response in the case of emergencies or changes in healthcare policy, thus assuring resilience and adaptability in a dynamic environment.

From my experience in BHMC 413, three main things that have really impacted the way I consider healthcare financial operations are:

The Importance of Liquidity and Cash Flow Management:

What it really is not having money, but it's about how fast an organization can get money to fulfill short-run obligations. Days cash on hand and current ratios provide an actual picture of an organization's survivability during financial stress. Song & Reiter, 2022. In the absence of satisfactory liquidity, profitable hospitals face problems in paying salaries or buying supplies.

How Financial Ratios Drive Decision-Making:

Until this course, I had a limited understanding of how financial ratios - operating margin, debt ratio, and return on assets - were utilized not only for reporting but also to drive leadership in strategic decision-making. These metrics help determine if a hospital is overleveraged, profitable, or efficient in its utilization of assets (Henson, 2022).

The Role of Variance Analysis in Performance Improvement: Performing variance analysis has taught me how comparing budgeted versus actual results may point out operational inefficiencies, shifts in patient volume, or reimbursement issues. This process is essential for financial transparency and quality improvement. I will apply these lessons to improve both patient and organizational outcomes in the future as a healthcare administrator. First, by closely monitoring liquidity, I will ensure that the facilities I manage maintain strong cash flow and can absorb unexpected disruptions, such as surges in patient volume or delays in reimbursement. Second, I will utilize financial ratios not only for compliance purposes but also as active tools in evaluating new investments, staffing models, and strategic partnerships. Third, I will set up regular variance reviews within the operational teams to find bottlenecks and implement cost-effective solutions. For example, if a department consistently goes over its budget, I'll collaborate with the staff to reassess the resource allocation or negotiate vendor contracts. By applying financial insights learned in BHMC 413, I intend to make evidence-based decisions that support quality care while maintaining fiscal responsibility. As highlighted by Song and Reiter (2022), sound financial planning promotes better meeting of patient needs while sustaining organizational viability.

References

Henson, R. M. (2022). Financial Management in Health Care Organizations (5th ed.). Delmar Cengage Learning.

Song, P. H., & Reiter, K. L. (2022). Fundamentals of Healthcare Finance (4th ed.). Health Administration Press.