Financial Planning in Healthcare Organizations

Paper Info
Page count 1
Word count 390
Read time 2 min
Topic Health
Type Essay
Language 🇺🇸 US

The driving force for any organization is the maximization of profit. Healthcare services are usually provided while keeping in mind the sustainability of the process. Financial planning is essential when questioning the entire healthcare organization’s future survival (Ginter et al., 2018). Therefore, understanding the daily expenses and assigning resources for future utilization is a crucial activity that defines the duration of which a health organization can comfortably provide its services.

Financial planning provides insightful thought when making long-term decisions. Being essential providers of sensitive services to the public, healthcare organizations should analyze their current financial status before making any long-term decisions. For example, before expanding an emergency room, it is crucial to first examine whether it will generate more revenue or put the hospital under financial stress (Ginter et al., 2018). Therefore, the implementation of such strategies should be linked with the future anticipated financial position of an organization.

Financial planning ensures the fair distribution of resources among the health services departments. Financial managers should calculate each department’s daily expenditure in the organization since they are all associated with unique expenses. For example, the pharmacy department has a relatively higher running cost than the record-keeping section (Harrison, 2016). Therefore, with financial planning, it is easy to allocate the available resources according to each department’s needs.

Financial planning also establishes the current state of the healthcare organization regarding risk management. Critical areas such as capital planning and operating budgeting can be effectively managed if the financial resources are well managed (Harrison, 2016). There are essential activities that dictate an organization’s success and may include hiring qualified doctors or nurses. In case the organization faces financial stress and fails to finance its daily activities, senior managers can seek loans. However, the amount of loan needed can only be established with the help of financial plans already made.

There are several approaches used to analyze the validity of financial planning effectively. Data analysis techniques provide consistence processed data that help develop the required financial planning models. The capital investment model assists in assessing the anticipated capital expenditure’s financial consequences (Ginter et al., 2018). The financial mathematics technique utilizes the input values that are then transformed into straight-line and double-declining balance methods. Lastly, data generation works with the principle of a simple extrapolation of the already kept data to analyze the possible future trends.


Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2018). The strategic management of health care organizations. John Wiley & Sons.

Harrison, J. P. (2016). Essentials of strategic planning in healthcare (2nd ed.). Health Administration Press.

Cite this paper


NerdyBro. (2022, October 17). Financial Planning in Healthcare Organizations. Retrieved from


NerdyBro. (2022, October 17). Financial Planning in Healthcare Organizations.

Work Cited

"Financial Planning in Healthcare Organizations." NerdyBro, 17 Oct. 2022,


NerdyBro. (2022) 'Financial Planning in Healthcare Organizations'. 17 October.


NerdyBro. 2022. "Financial Planning in Healthcare Organizations." October 17, 2022.

1. NerdyBro. "Financial Planning in Healthcare Organizations." October 17, 2022.


NerdyBro. "Financial Planning in Healthcare Organizations." October 17, 2022.