Unit 14 Managing Financial Resources in Health and Social Care (MFR) HNC/D Assignment


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Finance is an important component which helps in effective performance of different functions of organisation working in any sector. It is the duty of the manager to understand about the principles and techniques of accounting which helps in effective management of financial resources. Financial resources means the  money which is available to them in form of cash and liquid securities which help in performance of day to day operations. Securing such resources helps in effective and efficient operations to attain success. Management of financial resources also hold an important position in health care sector. In this regard, manager of organisation needs to monitor different budgets and documents like profit and loss account, balance sheet, etc. NHS foundation trust provides clinical services in the UK (Ahnquist, Wamala and Lindstrom, 2012).

In the present report, principles of costing and business control systems as well as information which helps in management of financial resources, regulatory requirements, different kind of sources of income and factors which have influence upon availability of financial resources and different types of budget expenditures will be discussed. Also, management of financial shortfalls, budget monitoring arrangements and information which helps to make effective decision-making, impact of financial considerations upon individual using health and care services and ways to improve health and social care service will be studied here.


1.1 Principles of costing and business control systems

Costs: It is the value of money which is paid for acquiring something new which helps in effective performance of operations. Different items which are needed to consider includes efforts, risk associated, time consumed and material required as well as different resources. Cost which is related to prior period is not considered. For example: NHS foundation trust acquires equipment then cost includes production and delivering charges of such equipment.

Income: It is considered as the money received by NHS foundation trust in respect of  services which are provided to their patients. It is further used to operate day to day activities effectively.

Cost benefit analysis: It helps in evaluation of the decisions taken by management. The benefits which are received from business activities are added and all costs which are incurred in this regard are subtracted.

Expenditure: In context of NHS foundation trust, expenditure means money spent on acquiring medical equipment. Money is spent in the form of cash or cash equivalents. It can be of two types i.e. revenue and capital expenditure. Revenue expenditure is incurred by care home regarding operations of day to day functions. On the other hand, capital expenditure is incurred on purchase of fixed assets and machineries.

Cost centre: It is considered as a business control system. It is a separate department in NHS foundation trust which is responsible for the costs incurred. They do not take care about the activities regarding generation of profit through use of their assets. It helps to control  costs below the budget and contributes indirectly to improve their profits.

Break-even: This analysis helps to determine the activities which are needed to perform well to attain their break-even point. It is the point where cited care home reaches to the situation of no profit and loss. So, it plays an effective control regarding controlling of different costs like fixed and variable (Almalki, FitzGerald and Clark, 2011).

1.2 Information needed to manage financial resources

Management of financial resources is important for NHS to attain success in their business operations. In this regard, large number of various information are required regarding different aspects. It helps the manager of NHS to draw important conclusion and improve their decision making. Different business information needed are mentioned as below:

  • Employees: The workforce which is working in NHS has main aim is to effectively provide their medical services in UK. Determination of number of employees helps in effective disbursement of amount of salaries.
  • Finance:It includes determination of the amount of funds which is required for the performance of their diversified services regarding basic medical facilities, optical care, etc. It provides an opportunity to raise funds as per the requirements.
  • External factors: There are many factors which affect the financial resources. Such factors include change in policies, competitive factors and legal requirements. Non fulfilment of legal requirements affect the government support towards NHS. So, it is duty of  manager to follow all legal requirements which help in raising the funds from their different investors and governmental authorities.
  • Equipment:In health-care industry, there are frequent changes that happen in medical equipment which makes the services better. It brings an obligation upon the management to adopt such technologies to improve their performance. It requires effective management of funds as per the requirements.

1.3 Regulatory requirements which helps in management of financial resources

There are many rules and regulations are provided by the government of UK regarding health acre facilities which is need to implement by NHS while providing their functions. It provides the opportunity regarding effective management of their functions as per such requirements. It also contributes in managing financial resources. Such different regulatory requirements are mentioned below:

  • Legislations and code of practice:There are many legislations which are followed by NHS. One of the important legislation is Health and safety work Act 174. As per this act, management of NHS has the obligation is to take adequate measures which provides the safety of medical representatives and patients. It helps in their prevention from unnecessary penalties impose by government. On other hand, application of the code of conduct provides the direction to workers which improves their performance and effective use of funds (Boulware And et. al., 2016).
  • Accountability: It is the broad concept which includes the provision of management and costing accounting. It helps the management of NHS is to prepare different kind of reports like job costing, performance, inventory management etc. which is used by the internal parties to take effective decisions. It helps in management of their funds as per the information attained regarding operations of different departments in NHS. It provides the opportunity regarding preparation of budgets which directs the employees to meet such standards.
  • Audit:It is considered as the process of examination by independent professional about all the activities which are happened in NHS. It helps in identification of the issues which are irrelevant. So, it provides the opportunity regarding improvement of their existing medical services and saving of costs through removal of unnecessary functions. They directs regarding effective disbursement of funds in different departments as per their needs.

1.4 Analysis of the systems which helps in managing financial resources

There are many systems which provides the opportunity to the manager of NHS is to mange their financial resources effectively. Through implementation of such systems large number of benefits are gathered by NHS like satisfaction of patients, build good image, development of their existing facilities etc. Such different systems are defined below:

  • Sources of income: There are many sources of income which can be used by NHS in future to raise finance. Such sources are categorised as public, private, voluntary. Public source of finance includes the grants provided by government, private sources includes about bank loans, funds from financial institutions etc. and voluntary funds comes from local and national mediums. Such amounts are considered as charity and donations (Hunter, 2016).
  • Accountabilities:It includes the application of accounting principles and provisions which helps to determine the information about departments working in NHS. Different kind of reports helps in management of different areas which in turns improves overall performance. It improves the decision making of internal parties regarding effective management of funds.
  • Formulation of budgets:Preparation of financial budgets helps in effective allocation of funds to different departments. It directs them to optimally utilise their funds to attain maximum returns.


2.1 Diverse sources of income encountered in health and social care

NHS is public organisation which provides free medical facilities in UK. The main aim of organisation is to provide basic medical facilities to all the individuals of society. To provides their functions on effective basis requires sufficient amount of funds. There are many sources from which management of NHS raise their funds are mentioned below:

  • Public: It is the biggest source from where the large number of funds are coming to support the activities of NHS. Under this option, funds are come in the nature of grants from governmental authorities. Such sources of funds are called public. Such grants are free from interest or carry less interest rates. It is difficult to raise funds from public sources as management is need to fulfil different governmental requirements in this regard (Cascio, 2018).
  • Private: One of the easy available source of funds in front of the management of NHS. This includes the private organisations, banks and investors. Such funds are come in the nature of loan. One of the important source under this is bank loans which is easily available to NHS. It carries the high rate of interest which is need to by the management within stipulated period of time.
  • Voluntary:It is the one of the source from where funds are coming from the outsiders on voluntary basis. It can be come from two paths like local and national. The amount which is come from local entities are called as subscriptions which is used by the management of NHS to improve their particular services for which such funds are provided to them. On other hand, donations are come from national entities with the aim of developing the facilities which are provided to society. In this regard, not need to provide any returns.

2.2 Factors which impacts the availability of financial resources in health and social care

There are many sources from where funds are easily available to provides their business functions. It is the capability of the management is to effectively identifies the factors which impacts their capacity to gather funds from different resources. There are many factors like funding priorities, agency objectives and policies, private finance, government policies, geography, type of service etc. which impacts the availability of financial resources. Consideration of all these factors helps in providing better medical facilities to individuals of society. Such different factors are mentioned below:

  • Funding priorities:One of the factor which reduces the amount of resources from where NHS is able to raise their funds. This includes about need of funds for different objectives like basic needs, healthy communities, vibrant democracies, purchase of medical equipments etc. So, as per different needs sources of funds are reduced in number. It means priorities has negative impact upon the availability of funds (Chartier,  2014).
  • Government policies:There are many regulations which are provided by government about effective regulation of financial system. This will restricts them not to provide the funds to any organisation or institution without fulfilment basic requirements. Also, provide policies which applies on health and social care homes regarding raising of funds. This will also has adverse impact upon availability of financial resources.
  • Geography: This factor also has large impact upon the availability of resources from where the funds are available to operate their business functions. If geographical area is not developed then less amount of sources like banks, financial institutions are available. But in present case, UK is developed nation where are large number of banks and Financial institutions are present to provide funds to NHS (Singer and et. al., 2011).

2.3 Different types of budget expenditure in health and social care organisations

The main aim of preparing different kind of budgets is to set the standards which directs the workers and medical representatives of NHS in providence of their effective functions. Through such budgets actual performance of workers is determined and compare with such standards for identification of the deviations. It provides the opportunity to the manager of NHS is to develop their skills and accomplish their targets. The different kind of budgets are mentioned below:

  • Cost centre:It is different area in NHS which helps in controlling costs. This department is responsible for costs which are incurred in organisation. They does not focus on earning of the profits and making of investment related decisions. It also known as expense centre where all cost which are incurred by NHS while providing their business activities are pooled at one place. They have the main aim is to make different budgets and control costs for keeping them under such limits. It provides the opportunity to the management of NHS is to effectively utilise their different resources in smarter ways (Shanks, 2016).
  • Project management:Such team of NHS provides the functions regarding management of particular projects and complete them within stipulated period of time. It includes the application of skills, knowledge, tools and techniques which provides the opportunity regarding fulfilment of the different requirements of project. The different steps which helps in directing and controlling the project is mentioned below:

- Project conception and initiation: Determination and examination of the idea about identification of the benefits received by NHS (Chartier,  2014).

- Project definition and planning: Planning about the overall activities and designing of framework regarding preparation of budget.

- Project execution: Tasks are distributed among the different teams and disbursement of responsibilities.

- Project performance and control: Comparison of actual performance with budgeted to control their work.

- Project close: It is the last stage where all activities are completed and project is accomplished.

2.4 Analysis about the decisions which are taken in health-care organisation regarding expenditure

NHS provides their activities with the aim that nobody deprives from basic medical facilities. They want to help the society for improving their living standard. To provide their functions effectively, management of NHS is need to take various decisions regarding different aspects like expenditures, current facilities, view of patients etc. One of the major factor which helps in managing funds in NHS is controlling of expenditures. So, the decisions which are taken by management in the regards of expenditure is defined below:

  • Financial risk:Identification of risk helps in preparation of contingency provisions which provides opportunity regarding reduction of their future expenditures through removal of uncertainties (Kakuma and et. al., 2011).


3.1 Identification of the information which helps to make financial decisions

To make effective decisions need to gather important information regarding different aspects which helps to make better financial decisions. In this regard, need to consider annual report which include financial statements and balance sheets, provides the information regarding their incomes, expenses, liabilities and assets. It is observed that there are large number of difficulties are faced by the management for achievement of their cost reduction targets. Different aspects which helps to take financial decisions are mentioned below:

  • Available information: The information which is available to make better financial decisions is that issues are arising in staffing related costs. It helps making of effective policies which makes the whole process of staffing more effective. It is observed that around £1 million is invested to improve their building and equipments. These information is gathered from financial statements, balance-sheet etc.
  • Priorities: Priorities also affects the financial decision making of management. Their main motive is to provide better services. In this regard. Around £1 million is invest in renovation of the building and implementation of new equipments which helps to provide better services to patients (Kringos Adn, 2013).
  • Sources of income:Determination of current available sources provides the opportunity to make effective financial decisions. Management of Airedale NHS knew that they have opportunity to raise funds from government. So, it has direct impact upon their decisions regarding improvement of existing services.

3.2 Relationship between a health and social care service delivered, costs and expenditures

The level of service would provided by taking vital information from NHS, while making their cost expenditure will gather various aspects by which they can take consideration in examine effectiveness of an organisation.

  • Cost-benefit:It is utmost responsible of managers to check and regulation over all expenses that are being delivery by NHS. This can be done by using proper evaluation as important tools so that cost and benefits in association can easily be manage. It also regulate financial feasibility of an organisation over presence of resource of the company.
  • Pricing policies:According to the mentioned NHS pricing policies that are carefully decided to look their purposes for the betterment of an organisation be evaluating major factors. They are delivery certain concession to old age people in treatment or medicine. As they are working as non-profit organisation they would increase cost of services as their sole motive and they take small portion as profit margin (Kringos, Boerma, van der Zee and Groenewegen, 2013).
  • Purchasing arrangements: This would create maximum responsibilities of managers those are held responsible for maintaining superior service and quality in more adequate cost. This would assist and motivate patient to by taking proper accountable for every issues that make comfortable. Henceforth, care service in health and social safety would not be attained without evaluating costs or expenses those are associated in various activities (Luo and et. al., 2012).

3.3 Impact of  financial considerations upon individual using health and social care

The financial considerations which are taken by the management of Airedale NHS has huge impact upon the individual which uses their services are mentioned below:

  • Quality of service:It is observed that £1 million is invested on buildings and equipments which helps in improving their existing services. It helps to satisfy the different requirements of patients  and ensures their maximum health.
  • Access to service: New medical vans are operated which helps to provide the service which are not not able to come care homes. It helps to provide services as per their needs (Naledi,  Barron and Schneider, 2011).

3.4 Ways to improve health and social care service through change in financial systems

various type of financial problems occurs with in health and social care sector. For better operation and utilisation of financial resources it is required to analyse the requirement of financial resources at initial level. It is considered that there effective analysis of financial requirement helps to reduce the idleness and misuse of financial resources. There are four major ways are defined subject to improve health and social care services through financial system:

Investing in innovations

this is one of the essential aspect which helps to utilise the resources in optimum manner. An organisation can use the financial resources in innovative ideas and plans such as adopting new technology, investing in technical tools, equipments etc.   

Utilisation of finance within leadership programs

Utilisation of finance in leadership programs also one of the common way adopted by organisation. By providing proper knowledge and skills subject to managing and administration of health and social care sector.

Planing and structure of finance plan

Pre planing and forecasting of financial resources is also one of the key aspect which helps to reduce the burden of financial management. More over the task requirements remain associated with finance plans and management (Richard and Shea, 2011).  


It has been concluded from the above report that Birmingham Women's NHS foundation trust needs to use effective principles of accounting which help in preparation of important reports for making effective internal decisions. Management needs to implement different regulatory aspects like code of practices, audit, accountability, etc. which help in managing financial resources. There are many sources of finance like public, private, voluntary, local and national used by care home to properly conduct their operations in an effective and efficient manner. Through this, large number of benefits are gathered by care home like better services to patients, building a good image, higher profitability, etc.


  • Ahnquist, J., Wamala, S. P. and Lindstrom, M., 2012. Social determinants of health–a question of social or economic capital? Interaction effects of socioeconomic factors on health outcomes. Social Science & Medicine. 74(6). pp.930-939.
  • Almalki, M., FitzGerald, G. and Clark, M., 2011. Health care system in Saudi Arabia: an overview/Aperçu du système de santé en Arabie saoudite. Eastern Mediterranean health journal. 17(10). p.784.
  • Boulware, L.E. And et. al., 2016. Race and trust in the health care system. Public health reports.
  • Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
  • Chartier, Y. ed., 2014.  Safe management of wastes from health-care activities. World Health Organization.
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