A balance sheet in healthcare

A balance sheet is a detailed account of an organization’s assets, equity, and liabilities. To continue operations without the risk of liquidation in the foreseeable future, an organization’s assets must balance with its liabilities plus equity. Only by keeping a balance sheet for all transactions completed during a specific fiscal period can it be determined whether the two sides are balancing. As a result, any organization, whether for profit or not, is required to keep a balance sheet for each fiscal year. The same rule applies to clinical service operations management. The financial management of healthcare needs to oversee the financial conditions of the organization which includes estimating costs and profits, planning for the coming year through a comprehensive budget. Also, the purchase of the new equipment and borrowing decisions should be made considering the current financial position of the organization (Gapenski, 2012). All these are possible if the finance manager is prepared with the balance sheet to summary all the transactions made by the body in every financial year.

On a regular basis, the finance director of a healthcare organization is expected to update the balance sheet just to ensure that the proposed accounting standards are observed, and the organization is on the right track to meet its financial goals. The update would also ensure that some errors made during the transaction are detected at the appropriate time and addressed to prevent any extra cost that would be incurred by the organization. During the update, all purchases for assets are analyzed and compared with records in other financial statements to enhance transparency in the transaction. Therefore, updating balance sheet on a regular occasion is a way to manage personal expenses by spending only if necessary.

Reference

Gapenski, L. C. (2012). Fundamentals of healthcare finance, 2nd ed. Chicago, IL: Health Administration Press. ISBN: 978-1567934755.