FINANCIAL MANAGEMENT ESSENTIALS FOR NSW HEALTH MANAGERS FINANCIAL MANAGEMENT IN A HEALTH CONTEXT WELCOME • Acknowledgement of Country and Elders • Acknowledgement of Carers HOUSEKEEPING • Break times • Phones/iPads/Laptops • “Parking” list • Water • Questions • Restrooms • Emergency evacuation 1
PROGRAM OVERVIEW Financial Interpreting and Management in a Responding to Health Context Financial Information DAY TWO DAY ONE FACE-TO-FACE FACE-TO-FACE EDUCATION SESSION EDUCATION SESSION Tasks: Tasks: Pre-program survey Workplace Report discussion Discussion, activities, reflections Full Time Equivalent overview Workplace Report guidance Cooinda case study assistance Post program Survey Post Day One Survey Four to Six Weeks INTRODUCTIONS 2
YOUR EXPECTATIONS 1. What outcomes would you like to achieve as a result of attending this program? 2. What do you consider is effective cost centre management? Provide three examples NSW HEALTH VALUES • Collaboration • Openness • Respect • Empowerment 3
FOCUS OF DAY ONE 1. Planning and Prioritisation Financial 2.Budgeting: Management 4. Decision costs, making / Context: activity and corrective principles, funding action responsibilities sources and policies 3.Budgetary Control: Variance analysis HEALTH FUNDING • The cost of providing health care has been steadily rising over the past few decades • A focus on efficiency and accountability is essential and will remain central to provision in the future • Although the National Health Reform Agreement has now ended, it’s objectives remain NSW Health priorities: - Improve patient access - Ensure sustainability of funding - Improve transparency of health organisation funding 4
FINANCIAL MANAGEMENT IN HEALTH PRINCIPLES Ownership Accountability Transparency Financial Integrity Consistency Stewardships Accounting Value for Standards Money FINANCIAL MANAGEMENT IN HEALTH RESPONSIBILITIES Develop a realistic Understand and Reduce waste and Plan and prioritise budget control your costs increase utilisation Operate within the Monitor results and Risk monitoring and Information, integrity financial delegations take corrective action awareness and reliability and comply with when necessary regulations Evaluate new Safeguard assets activities 5
PRINCIPLES AND RESPONSIBILITIES Considering the principles and responsibilities of financial management: 1. Identify three areas that you feel are the most important for the success of your organisation. 2. Explain why. ACCOUNTABILITY “Accountability is something you choose to exhibit – it is not assigned to you. In short, you can be given responsibility, but you have to take accountability." The Oz Principle: Getting Results Through Individual and Organisational Accountability 6
CONFLICT OF INTEREST Conflict of Interest Public Private Duty Interest Potential Actual Perceived DEALING WITH CONFLICTS OF INTEREST Register • via a conflict of interest declaration form Restrict • the involvement of the individual Remove • the individual from the conflict matter Relinquish • the private interest Recruit • a disinterested third party to oversee Review / Renew • the decision making process • from the public sector agency Resign 7
CONFLICTS OF INTEREST For the allocated scenario discuss: 1. What type of conflict of interest exists and 2. what could be done to manage it. DELEGATIONS Risk Level 1 Secretary Deputy Deputy Level 2 Secretary Secretary Level 3 Level 3 Level 3 Level 3 Level 4 Level 4 Efficiency Level 5 Level 5 8
DELEGATIONS REFLECTION a. Why do delegations of authority exist? b. What delegations do you have and how do they compare with others in your group today? PROCUREMENT Segregation of Duties Operations Procurement Operations Finance Finance Goods Purchase Requisition Receipt Invoice Payment Order Note 9
PROCUREMENT CARDS (Pcards) The NSW Health policy on Procurement Cards (PCards), published February 2016, states that all NSW Health entities are required to use PCards where practicable for purchase of all goods and services valued at or below $5,000 (and in line with user Delegation). This limit may be increased at the Chief Executive’s discretion . PCards are a type of credit card with features that provide expenditure control. They are a cost effective way of purchasing high volume, low value goods and services. PCards replace the need to create purchase orders for these types of transactions. They also intend to reduce the number of invoices received and the delay in delivery of goods. PROCUREMENT CARDS (Pcards) If you are not currently using a PCard, you might discuss the suitability of having a PCard with your direct line manager and/or the finance department of your health organisation. If you have an existing PCard and are having issues, you can contact the PCard Support team: Email: HSNSWPCardSupportTeam@health.nsw.gov.au Phone: 1300 883 965. Further information regarding Procurement can be accessed via the NSW Health Goods and Services Procurement Policy Manual. 10
PROCUREMENT 1. What are the separation of duties and why do they exist? 2. What is the purpose of a PCard and how is it consistent with effective controls and segregation of duties? PLANNING Planning Planning starts from State NSW Government Premier’s Priorities Government and is cascaded throughout the NSW Health Plan: Towards 2021 organisation Health Org Plan Health Unit Plan Performance Budget Performance Budgeting NSW Health Reporting NSW State Budget monitors and allocates manages resources NSW Health Budget NSW State Reporting resources to meet to meet service service demands demands and Health Org Reporting Health Org Budgets and achieve achieve desired Health Unit Budgets desired outcomes Health Unit Reporting outcomes 11
PLANNING - VALUE FOR MONEY Community Needs and Expectations Resource Management Program and Service Maximising delivery effort over time Delivery Design Review Alloc. Activities Impacts on Community Best Program Resource Mix Goods and Funding Community Needs and and Service (Inputs) Services (Outcomes) Expectations Mix (Outputs) Efficiency Value for Fiscal Money Effectiveness Strategy Appropriateness ALLOCATING SCARCE RESOURCES The Apex Local Health District Using the project proposal summary table and background information provided, 1. identify which projects you will fund and 2. document your rationale 12
ALLOCATING SCARCE RESOURCES The Apex Local Health District 2. What other information would you need for each proposed project to make a properly informed decision? 3. Explain how you balanced short and long-term return on investment decisions 4. How will the ongoing cost for these initiatives be funded APEX LHD CORE VALUES 1. How were CORE values demonstrated as you tried to reach a decision on funding priorities? 2. What are some actions you can take to involve staff in the financial management process in your workplace? Link each of your ideas to one or more of the CORE values. 13
BUDGETING • What is a budget? - Put simply, it’s your operational plan in dollars and cents • Budget components: - Revenue - Expense • Cost centres TYPES OF BUDGET Capital Recurrent / Operating Buildings Salaries and Wages Machinery Good and Services Equipment Maintenance 14
SERVICE AGREEMENTS • The NSW Government establishes an annual Service Agreement with each NSW Health Organisation • The Service Agreement exists between the NSW Health Organisation and the Ministry of Health • It is aimed at promoting budget integrity BUDGETS 1. What is the relationship between the budget and Key Performance Indicators? 2. What is the link between activity and a budget? 3. What are the benefits of budgeting? 15
NET COST OF SERVICE Eg: • Salaries and wages • Goods and Services Expenses • Maintenance • Private patients • Department of Veteran Affairs Less: Revenue • Grants • Disposal of assets Less: Gain/(Loss) on disposal • Bad debts Less: Other gains/(losses) INTRODUCTION TO MURRABA HOSPITAL 16
MURRABA HOSPITAL BUDGET 1. What is the Net Cost of Service for Murraba Hospital? 2. What is the total expense budget for Murraba Hospital? 3. What is the difference between Net Cost of Service and Capital? MURRABA HOSPITAL BUDGET Murraba Hospital (150 Bed) Full Year Budget - Year Ending 30 June 2017 $ Administration 2,852,922 Allied Health 315,953 Meals & Entertainment (47,576) EMPLOYEE RELATED 30,223,003 VISITING MEDICAL OFFICERS 3,796,354 Food 17,754 Administration 1,044,210 GOODS & SERVICES 20,054,425 REPAIRS & MAINTENANCE 782,260 TOTAL EXPENSES 54,856,042 Accommodation (4,071,009) Other Revenue (226,585) TOTAL REVENUE (6,938,440) TOTAL NET COST OF SERVICE (NCOS) 47,917,602 CAPITAL 200,000 17
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