Health Care Finance and Cost Containment Determine how financial ratios determine financial health of an organization. One of thehighest costs that health care facilities incur is acquisition of high tech equipment. Therefore, asset management ratios can be beneficial in helping the managers assess how much they accrue from their acquired asset. Secondly, the other important ratio in health care is cash flow indicators. This can be helpful in helping the managers identify how much cash is being collected over a certain period as compared to the uncollected profits. The third is important ratio is the profitability ratio, which gives the managers an overview of the general health of the organization (Rapoport, 2008).
The higher the gross margin of the organization, the more it can make profits as compared to the costs it incurs. Lastly, there are the debt ratios. Most banks use this ratio in order to analyse whether a company will be capable of paying pay its loans in the future. If the debt ratio is low, the health care facility is more likely to be able to get low interest rates on long-term financing.
2. Strategies for inventory control and cost reduction in healthcareSome of the strategies that health care facilities can use for inventory control and cost reduction in healthcare include benchmarking, invest in inventory control staff, establish a vendor scorecard, invest in systems and ensuring that the day’s work is cleared in the same day. Benchmarking will help in understanding what other competing health care facilities are doing and whether it is working or not. The inventory control staff will help ensure that that the health care does not suffer any loss that may be because of oversight and incompetence (Rapoport, 2008).
The vendor scorecard will help in evaluating the supplies and ascertaining whether there is a need to change them or not. Lastly, ensuring that all data within the organization is done away with and compiled on a daily basis reduces the bulk. The benefits that accrue to the health care facility are that it ensures that all vendors abide by their contracts and that the investments are protected and effectively managed. ReferenceRapoport, J., Jacobs, P., & Jonsson, E.
(2008). Cost Containment and Efficiency in National Health Systems: A Global Comparison. Weinheim: Wiley-VCH.