Financial Planning in a Healthcare Organization

Subject: Healthcare Financing
Pages: 2
Words: 405
Reading time:
2 min
Study level: Bachelor


Financial planning is a necessary tool for managing health organization’s activities. But this process is individual for each particular medical institution. It is compiled on the basis of the priorities of the action, the model of the provision of services, and the approaches of management teams regarding the development of the healthcare provider. The adopted priorities of the organization will require resources for their implementation and should be reflected in the financial plan. However, a number of challenges that any healthcare organization can face might occur.


One of the main challenges is the possible variability in the number of patients registered in a particular medical institution. It may happen due to noticeable seasonal outflows of patients; for instance, in connection with the admission of school graduates to universities and colleges in other cities. It will affect the income received, especially in specific months. The other crucial issue that financial managers deal with within the scope of healthcare institutions is changing insurance and Medicare compensation rates. Medical insurance, being a foundation of the US healthcare providing, impacts sustainably any hospital’s financial plan even by a little change in compensations prescribed. If to compare the mentioned challenges to the ones that a non-healthcare organization can face, it might be suggested that the first issue is similar to the outflows of clients of any enterprise. However, although non-healthcare organizations provide their personnel with insurance, these firms are affected by Medicare and insurance fluctuations to a lesser extent as they are not directly involved in the healthcare dimension.


For-profit hospitals are accountable to their shareholders; thus, they are founded on a particular business model. The main benefit of these institutions might be that they can use their financial flows to buy the best expensive medical equipment and facilities. Then, “for-profit corporations that own many hospitals can make use of many of their own resources, such as in-house legal counsel and specialized consultants, rather than having to hire outside professionals” (Price, 2018, para. 7). It might be suggested that the rational use of sustainable financial flows by for-profit hospitals may lead them to high-quality medical services provided by the best staff and equipment in the industry. However, the crucial challenge that these organizations face is property and income taxes, which reduces their profit margins (Price, 2018). The other issue is that sometimes shareholders do not allow for-profit hospitals providing charity care as it affects their income severely.


Price, N. (2018). For-profit healthcare organizations vs. not-for-profit healthcare organizations [Blog post]. Web.