Healthcare financial management refers to the methods by which healthcare centers control costs and handle money matters. Medical practices must do this to maintain business growth, keep the cost of services reasonable so that insurance companies will pay, and continuing to benefit patients with quality services. How healthcare financial management takes place depends on several factors, including medical equipment and treatment costs, unpaid claims and malpractice risks, as well as general accounting processes.
A solid healthcare financial management plan takes into consideration how a hospital or physician group can grow over time. For any healthcare provider, having access to the best medical technology, practitioners, and treatment options is critical to this growth. All of this takes careful planning and investment of money to make sure that only the best doctors, equipment, and treatments are available for patients. When planning for growth, factoring the actual costs of treatment is often at the top of management’s list.
Another part of the healthcare financial management plan has to do with the handling of risk within this industry. Patient medical benefits and payment plans must be managed with care to ensure that all medical claims are paid in a timely fashion. For many healthcare centers, unpaid claims can amount to millions of dollars in lost revenue annually. This means the medical center must continually stay on top of ways to keep a positive cash flow by preventing claims denial or delays.
Additional risk in health financial management strategy includes damage or death that occurs as a result of faulty equipment, physician mistakes, and other unforeseen occurrences. A healthcare financial management plan must include adequate malpractice lawsuit and legal coverage in the event these problems. It is critical to handle such matters with tactfulness so as not to damage the reputation of the healthcare facility, so the public relations department often becomes involved, as well. Failure to do this can cost a medical center even more revenue over time.
Naturally, a healthcare financial management plan also includes a process for handling the necessary accounting functions of a hospital or doctor's office. Patient insurance co-pays and deductibles must be collected. Medical claims must be submitted for payment. Past-due medical bills must be settled. All of these activities must be managed as efficiently as possible to reduce operational costs and improve growth initiatives.