FINANCIAL MANAGEMENT

BY AMANTE P. CABATU JR RMT

 FINANCIAL MANAGEMENT

► Involves planning the procurement and utilization of funds and controlling the
financial operation to assure effective utilization of funds.
► FUNDS refers to money or cash.
 FINANCIAL PLANNING

► Is the setting of financial goals, the determination of future

financial requirements and the possible sources of funds which
should be available at the least cost when needed.
► The tool of management in financial planning is BUDGET.
 BUDGET

► Is a systematic programming of organizational activities based on their cost and the

amount of available resources.
► TWO KINDS OF BUDGET:
► A. MASTER BUDGET is prepared for the anticipated income and expenses
► B. DETAILED BUDGET is prepared for use by the various units in the organization.
 HOW TO PREPARE A BUDGET:

► DIVISION:
► 1. ANTICIPATED INCOME is projected on the basis of patient days, services rendered
per patient days and the charges that may be made for theses services.
► 2. ANTICIPATED EXPENSES is based on personnel cost which amount to about 70%
of total expenses, materials, lease and contracts and overhead cost.
 OVERHEAD COST

► It includes:
► 1. Interest on indebtedness
► 2. Utilities
► 3. Phone
► 4. Building maintenance
► 5. Other cost that cannot be allocated to a specific area.
 PERSONNEL COSTS

► It includes:
► 1. Salaries of permanent employees who are already working at the start of the fiscal year.
► 2. Additional personnel maybe anticipated and adjustments must be made for their
impact.
 SUPPLIES

► It can be estimated on the basis of previous experience.If new equipment is anticipated, it

can be figured out in the totals that was already established.
 CHART OF ACCOUNTS

► Is the grouping of expense categories for budgetary purposes.

 LABORATORY CHART OF ACCOUNTS:

► 1. SALARIES
► A. Exempt
► B. Non-exempt
► 2. SUPPLIES
► 3. EQUIPMENT
► A. Purchase
► B. Rental;
► C. Lease
► D. Maintenance
► E. Depreciation
……..LABORATORY CHART OF ACCOUNTS
► 4. Reference Laboratory Fees
► 5. Continuing Education and Travel
► 6. Subscription and dues
► 7. Hospital Administrative Assistance
► 8. Telephone
► 9. Housekeeping
► 10. General Maintenance
► 11. Electricity
► 12. Building depreciation
► 13. Taxes
► A. Payroll
► B. Sales
 ……..LABORATORY CHART OF ACCOUNTS

► 14. Insurance
► A. General liability
► B. Workman’s Compensation
► C. Group Health
► 15. Miscellaneous
► Laboratory budgeting is an ongoing process that culminates annually with the expense projections for the coming year. The forecast are
made in accordance with the chart of accounts and are divided into quarters. These three month intervals represent the best times for
expenditure modification
TOOLS FOR FISCAL DECISION MAKING

► 1. Laboratory Workload Reporting

► 2. Cost finding
LABORATORY WORKLOAD REPORTING

► WORKLOAD UNIT is defined as one minute of technical, clerical and Aide time.
► In an ideal situation, There should be productivity of 60 workload units and that is
equivalent to 60 minutes of productive work for each hour of worked time.
► The closer the workload unit per hour to 60, the nearer the laboratory to be operating at
100% efficiency.
► In actual practice, The average workload productivity in most laboratories is within the
range of 30 to 55 workload units per hour.
 COST FINDING

► It is a means by which a laboratory documents the cost of performing a particular

procedure and then establishes its charges based on the direct and indirect cost.
► Cost finding should be done by laboratory personnel in consultation with the fiscal staff
of the hospital. This combination is necessary, since the laboratory staff can analyze steps
involved in performing procedures, while fiscal personnel are needed to provide the
indirect or overhead expenses and to assist in preparing the data for submission to the
hospital administration, board of trustees and third party payers for approval.
 COST FINDING EXAMPLE

► TEST: ROUTINE URINALYSIS

► I. Direct Cost
► Technologist time at P0.07/min-15 min………………….P 1.05
► Clerks time at P0.04/min -15 min……………………0.20
► Reagents and Controls
► Combistix……………………………………………………………1.32
► Clinitest………………………………………………………………0.25
► QC-Urinalysis………………………………………………………..0.02
► Exton’s……………………………………………...………………..0.10
 ……….COST FINDING EXAMPLE

► DISPOSABLES:
► Cover slip………………………………………………………………………..0.11
► Slide………………………………………………………………………………0.25
► Lab forms……………………………………………………………………… 0.26
EQUIPMENT MAINTENANCE………………………………………………………….0.50
TOTAL…………………………………………………………………………………….P4.06
II. INDIRECT COST
Overhead…………………………………………………………………………P1.21
Depreciation……………………………………………………………..............2.00
Contribution to hospital Operation……………………................................4.66
TOTAL 7.87
GRAND TOTAL…………………………………………………………………………..P 11.93
SUGGESTED PRICE……………………………………………………………………..P12.00 – P.15.00
END