8. Which of the following statements about the role of finance in healthcare org

Question

8. Which of the following statements about the role of finance in healthcare organizations is incorrect?

a. Over time, the finance function has become increasingly focused on strategic issues, such as joint venture decisions.

b. Today, the most critical finance function is cost identification.

c. The finance function often supports cost containment efforts and third-party payer contract negotiations.

d. The primary activities of the finance function can be summarized by the four Cs: costs, cash, capital, and control.

Explanation / Answer

All the statements are correct   for the following point-wise justifications :

1. Financial management has gained rapid importance over the last few years with many types of joint venture decisions , for example- physicians and hospitals, hospitals and various service- providers, hospitals and insurance companes/ third party administrators,etc.

2. Finance is the life line of any venture. Everything involves cost, the identification of which will help in optimisation of costs for maximum benefits - to the management as well as the patients.

3. Cost containment/cost control is the natural corollary to cost identification, which again helps in cost management that ultimately reduces costs to the end users viz. patients.

4. costs(ie. expenditures) , cash(liquidity ), capital(investment), and control(controlling costs where-ever possible through cost- identification and cost -analysis).- all the four are equally important for carrying on a financially- healthy- healthcare organisation - for the benefit of of the promoters and the patients.

For the above reasons ,the health care people need to work in close and competent association with financial

management team ,for effective and cost-efficient service to stay in the sector ,as also to render good service

for a healthy society. It is to be noted that the consumers/ end-users/ patients are becoming increasingly

knowledgable and demanding and aware of mani-fold alternatives available in the industry. They are sure to turn to

cheaper ones.

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