Ethical Standards in Health Care Accounting Essay Example for Free

Ethical Standards in Health Care Accounting Essay As a health care manager, there is a need to understand the basic accounting principles and the need to be able to look at a financial report and understand what it says. Without these keys and a good ethical compass, there could be serious consequences and could result in loss of revenue, funds, termination, or even prison time. Now this may seem like an extreme statement, but without using the four elements of financial management and some good common sense, it might not be a far stretch of the truth. This paper will address the four elements of financial management and how good ethical standards and common sense ensure the best results. The Four Elements of Financial Management Financial management is simply put managing the financial aspect of a business. That involves cash coming in and cash going out. There are four elements of financial management which include planning, controlling, organizing and directing, and decision making. These four elements are important and need to be discussed separately. Planning â€Å"The purpose (of planning) is to identify objectives and then to identify the steps required for accomplishing these objectives† (Baker Baker, 2011, p. 5). Planning allows a manager to understand what his or her organization is about, or what it wants to achieve. This stage allows a manager to lay out the basic roadmap for what needs to happen. This does not meant that this is exactly what will happen, but still it provides a starting point. Creating a plan also requires thought into developing checks and balances. Who will be in charge of what, and who will be watching over whom. Plan to make it difficult for someone to make unethical decisions. According to Chuck Gallagher, a business ethics and fraud prevention expert; â€Å"Unethical behavior(s) that morphs into fraud will always have (need, opportunity, and rationalization) at their core† (Gallagher, 2009, p.41). Planning helps eliminate the opportunity for fraud. Controlling â€Å"The purpose of controlling is to ensure that plans are being followed† (Baker Baker, 2011, p. 5). At this stage managers use reports to see what areas are and what areas are not following their plans. The manager uses reports to ensure that financial targets are being met and that fraud is not occurring. Depending on the size of the organization, there may be many layers of controls put into place. It might be best to have someone that keeps everyone honest, at multiple levels. According to a quote in an article in Healthcare Financial Management, â€Å"’every organization ought to have a set of fairly detailed internal controls that protect its key assets. These controls should be reviewed by external and internal auditors or staff to make sure they are being adhered to’† (Sandrik, 1993, p. 4). Organizing and Directing Organizing is determining how best to use existing resources to achieve the goals of the company or organization. A few examples of this could be whether to have multiple nurses in the pediatric department today when they are needed in the ER, or whether to keep an ultrasound machine that is rarely used in a clinic, when it could best be served somewhere else. Directing is the day to day job of ensuring that resources are organized or designated in the most efficient manner. Decision Making Decision making is done continually throughout the other three elements or stages. Every time something is planned, controlled, or organized, it was because someone made a decision. Remember when making decisions to base them on the four principles of business ethics, â€Å"autonomy, which assumes every human being is capable of making his or her own choices; justice, which requires actions and practices to be fair and nondiscriminatory; beneficence, which promotes human welfare; and non-maleficence, which ensures protection of individuals from harm† (Sandrik, 1993, p. 5). Keeping transparency in a business is a great way to keep people honest as well. In July, 2010, The Healthcare Group Purchasing Industry Initiative (HGPII) received rave reviews for it â€Å"activating a formal process to ensure prompt and fair resolution of supplier complaints† and for â€Å"implementing an Independent Advisory Council to have outside observers make sure they are doing everything possible in terms of ethical standards† (Freeman, 2010, pp. 3). Conclusion Financial accounting might look like pages of numbers or gibberish; however they are the key to unlocking income potential, and success. Whether a manager is directly in charge of the reporting or in charge of something completely different, understanding these reports can help make an organization more efficient, able to offer more services, or even more profitable.