Happy Hospital Senario

Happy is a medium sized community hospital with 115 beds that follows a tradition of providing high quality care to all the individuals and serving them with dignity and honor regardless of ability to pay. It has been exempted from paying taxes as IRS recognized it as a 501(c) 3 Corporation. Happy hospital has had two difficult income years. CEO of the hospital Mr. Harm O. Knee feels that this is the right time to invest in new technologies that can improve efficiency and help reduce medical errors. He has already been talking about the need to automate some of the medical records and move toward an electronic medical record system. At present Happy hospital is facing a financial stress. There is a serious need to think about the ways of improving the situation. Setting objectives and a strong plan that would help in attaining those objectives is required.

Happy hospital must consider using budgets and performance reports as these reports are very essential tools for business planning and decision making. Report on material, usage, revenue generation and production will help identify past mistakes. Hospital could see where unnecessary expenditure was made and limiting factors that did not allow proper utilization of resources. It could start budgeting accordingly and work towards improving present situation. Budgeting is an important tool for planning and once planning is done unnecessary use of expenditure could be avoided. Planning is about setting company objectives and departmental effective strategies and policies should contribute to objectives and plans. Company plans would only be more consistent and effective when strategies and policies are clearly understood (Ghazaleh, 1986).

Along with using reports happy hospital must follow the ethical accounting while making decision for the hospital. Accounting helps to collect report on financial status of the organization, means it mainly provide information on money related aspects. How much business is worth, how much profit it made in the past few years and how much cost is involved in its operation, all this can be measured in money terms. It is a process of capturing information about the transactions and events of a business and creating reports that can be used by persons interested in the entity (Principal of accounting, 2010). But other important aspect that tells about the overall workplace atmosphere, satisfaction or non satisfaction of the staff and management towards organization plans and policies do not come under accounting as they cannot be measured in monetary term. In happy hospital, accounting could provide information on current financial situation of the hospital and steps management could take to improve it. It could emphasize that the staff cost of the hospital is high and it must cut cost but hospital might not do so thinking about the consequence of such decision on its workers lives. Accounting may also bring up the need for

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