Health care industry executives establish adequate operating controls, procedures and mechanisms to ensure that personnel perform tasks in accordance with industry practices, regulatory guidelines and corporate human resources policies. Central to these controls are financial management activities that allow top management to rein in health care operating costs and improve profitability in the short and long terms.
Health care management represents tools, equipment and strategies that the medical industry deploys to monitor operating activities, ensure financially solid institutions and provide first-class service to patients. Health care management also includes strategies that corporate leadership charts to ensure that personnel abide by laws and regulations when assuming responsibilities, according to the U.S. Department of Labor's Occupational Information Network (O*NET OnLine).
Financial management covers corporate activities and procedures that ensure accurate and complete transactional data reporting, enabling companies to record operating activities through debits and credits to financial accounts, indicates the U.S. Bureau of Labor Statistics. Financial management procedures provide insight into corporate financial solidness, emphasizing accounting reports and statements, such as balance sheets, statements of profit and loss, cash flow statements and retained earnings statements.
Professionals in the health care industry distinguish between health care management and financial management, although both terms often interrelate. As a practical matter, medical institutions — such as hospitals, research labs and clinics — need to implement adequate financial controls in operating processes, just as any other company, say Louis C. Gapenski and George H. Pink, health care financial management experts and faculty members in the Department of Health Services Research, Management and Policy at the University of Florida.
In their best-selling book "Understanding Health Care Financial Management," Louis C. Gapenski and George H. Pink explain that health care financial management paves the way for a sound operating administration at medical organizations, providing department heads and segment managers with the expertise necessary to improve patient service. The authors emphasize the importance of the health care environment, basic financial management concepts, capital acquisition techniques and financial considerations concerning capital structure. Health care financial management also serves as a key barometer for corporate performance because it helps senior management allocate corporate funds, analyze and forecast corporate financial condition, monitor personnel productivity and prepare accurate accounting reports.
O*NET OnLine indicates that personnel assuming health care financial management responsibilities typically include health and social service managers, program managers, clinical directors and practice administrators. To perform the necessary tasks adeptly, these professionals generally use the tools of the trade, including calendar and scheduling software, database user interface and query software, practice management applications, document management software and medical financial classification software.