Overview of the Financial Issue
While a reduction in compensation of health care workers may be influenced by organizational constraints, health care organizations may at times be compelled to trim workers’ wages and salaries due to poor financial management (Bai, Gu, Chen, Xiao, Liu, and Tang, 2017). The most recently reported financial management issue is a reduction in nurses’ compensation from 300 to 250 United States per month due to improper allocation of funds, which resulted in purchase of equipment that is not urgently needed by the organization.
RacKol Health Care organization specializes in delivering cancer care to the community. The company has been experiencing a rapid rise in nurse turnover rates over the past two months. This has resulted in an increase in patient mortality rate from an average of 3 people week to 10 people every week. It is anticipated that the number of nurses who are leaving the organization is on the rise due to the recent reduction in their salaries that is majorly attributed to poor financial management (Dong, 2015).
To determine the actual cause of the financial issue, the Chief Finance Officer and the Senior Accountant have been interviewed, and they have been asked to share their opinions concerning a possibility of mismanagement of funds in the organization. The Chief Finance Officer is charged with the responsibility of preparing financial plans for the organization and for keeping records of those plans.
The Senior Accountant is responsible for compiling accounts information of the organization by checking whether there is a balance between assets and liabilities (Johns, 2013). According to the Chief Finance Officer and the Senior Accountant, the recent reduction in nurses’ compensation is solely attributed to improper allocation of funds during budgeting that made the organization to purchase cancer care equipment for pediatrics. The two interviewees have explained that the organization has tried to address the current issue for the past one month.
Finanacial Management: Measures that have Been Taken to Address the Issue
Officials in the finance department have taken two measures to address the financial management issue that is currently faced by RacKol Health Care. One of the measures is a move to align organizational plans with available funds without compromising the performance of health care workers. Initially, the health care organization did not take any actions to evaluate whether it has available funds to help it accomplish future financial plans.
Since they faced the challenge of compensating nurses, the Chief Finance Officer in collaboration with the Senior Accountant has begun to align future financial plans of the organization with available funds at any given time, as this helps the organization to only allocate funds to useful projects (Dong, 2015). The other measure that is currently implemented by the organization to prevent improper allocation of funds is involvement of departmental heads in financial decision-making.
Before the current financial issue, officials in the finance department did not involve heads of other departments in making financial decisions. As supported by Walsh (2016), involving departmental heads in financial decision-making facilitates proper allocation of funds because it prevents the purchase of equipment that is not urgently needed by the organization.
Future Steps that Have Been Planned to Address the Issue
RacKol Health Care is highly committed to ensuring that the current financial issue does not repeat itself in future. For this reason, officials in the finance department have documented a plan of how they will improve financial management in the organization over the coming months. For instance, they have a plan to hire an Information Technology professional with competent knowledge of data analytics.
The organization anticipates that with an expert in data analytics, it will be able to understand the specific financial needs of various departments and allocate funds based on the urgency of these requirements. In this manner, it will be able to avoid using funds to make purchases that are not urgently needed by the organization (Walsh, 2016).
Moreover, RacKol Health Care is planning to create a feedback loop that will allow free reporting between executives and the management. With a properly implemented feedback loop, executives on the finance department will be able to understand and strive to address concerns of various departments as far as quick financial allocation is concerned (Dong, 2015).
Potential Blocks in Resolving the Issue
The Chief Finance Officer and senior accountant, however, foresee some problems that may prevent the organization from successfully addressing the financial issue that it is currently facing. One of the problems is the lack of motivation by departmental heads, which may make them to be reluctant to take part in financial decision-making and the creation of the feedback loop.
Moreover, these officials feel that heads of various departments in the organization may lack sufficient training on important issues related to financial management (Bai et al., 2017). Again, managers may lack knowledge and skills to apply in financial management due to unavailability of sufficient financial, managerial tools for use as a reference.
To mitigate these challenges, RacKol Health Care should train all heads of department on basic issues related to financial management. This will enable them to utilize the acquired knowledge and skills to prevent the occurrence of similar financial issues in future (Bai et al., 2017). Personal perception on the current financial issue is similar to the perception of those who are working on finances in the organization.
Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D. & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences, 4(2): 122-127. https://doi.org/10.1016/j.ijnss.2017.03.007
Dong, G. N. (2015). Performing well in financial management and quality of care: Evidence from hospital process measures for treatment of cardiovascular disease. BMC Health Services Research, 15: 45. doi: 10.1186/s12913-015-0690-x
Johns, M. (2013). Breaking the glass ceiling: Structural, cultural, and organizational barriers preventing women from achieving senior and executive positions. Perspectives in Health Information Management, 10(Winter): 1e.
Walsh, K. (2016). Managing a budget in healthcare professional education. Annals of Medical & Health Sciences Research, 6(2): 71-73. doi: 10.4103/2141-9248.181841
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