Happy Hospital

Happy Hospital Accounting

Raeneesa Grimes

ACC/HC 561

June 6, 2011

Paula Thielen, Ph.D., MBA, CPA

Happy Hospital Accounting

Accounting is a big important part of all organizations. Through accounting organizations are able to manage the financial aspects of the company. Managing the financial aspects include creating and maintaining budgets, reviewing performance reports, taking responsibility for financial decisions, and remaining ethical throughout the process. Happy Hospital is a medium sized hospital which houses 115 beds. The financial personnel of the Happy Hospital have not been making sound accounting decisions. The author will explain how budgets, performance reports, and ethics can help Happy Hospital accounting practices.

Budgets and Performance Reports

Individuals and organizations use financial documents to help forecast and prioritize income and expenses, such documents are called budgets. Budgets, if used properly, can help an organization avoid overspending and protect revenue. According to Michael Byrne (2007), “In addition to setting the performance agenda for the year ahead, (revenue) budgets in the healthcare sector can facilitate tighter financial control, more responsive decision-making and staff motivation” (abstract). Unfortunately, Happy Hospital did not use budgets, rather they spent money carelessly. At the beginning of 2008 Happy Hospital had a substantial amount of money. Without a budget, the hospital spent money on different ventures without knowing and preparing for the consequences that would occur at the end of the year. If the hospital would have done a budget prior to purchases and acquiring loans, perhaps it could have been in a better position with its operational cost. Financial personnel can instill a budget to help Happy Hospital get back on track and try to recoup lost revenue.

While creating a budget, it is important for Happy Hospital to recognize its performance report of years past. The performance...