Health Financial Management: Definition


Among the various fundamental aspects of life, health stands among the most important ones since it greatly determines how long one lives. The healthier you are, the higher your chances are of living longer, and so is the vice versa of this statement. Of course, there are other factors like accidents that come into play here; but those are things we can not control so it is better to leave them for now. More importantly, it is inherent to state that the current commercialized world means that so much of what we get or have today (including health), immensely depends on how financially empowered we are (Jopling et al, 2004).

It is for this reason that health financial management is an important part of not just the people who require good healthcare, but also for policymakers who are charged with the mandate of making laws that govern what kind of healthcare we get (Finkler, 2007).

A recent study conducted by the (NHHRC ) National Health and Hospitals Reform Commission (2009) in Australia indicated that despite the huge progress that has been made by the healthcare system, there were still many things that are needed to be done to improve the current system in place. It is in fact for this reason that the commission was importantly incepted. Principally, the 2009 NHHRC Report focuses on reforming the Australian healthcare system by tackling three broad issues. Firstly, it focuses on redesigning the health system such that it can aptly deal with the rampant cases of unsolved emergencies. Secondly, it deals with the problem of equity and equality in the access and distribution of health facilities.

Thirdly, and lastly, it focuses on creating a responsible public that will be able to take care of their health for the long sustainability of life. Since all the three facets are broadly explained, the main focus of this writing is going to be on the redesigning of the health system to meet emerging challenges; with the other two facets being just highlighted in part. Notably, much of what is contained in this circumspective write-up is going to be based on their findings, as well as many other authoritative books and articles that will be blended to critically analyze the issue of health financial management in Australia, to be specific,—and the world in general.

Summary of reform topic

Concerning our subject of concern—redesigning of healthcare to cope with the various challenges that constantly arise, the intrinsic areas of concern are: primarily, the establishment of a health system that encourages early prevention of ailments/health problems as well as laying a platform for early intervention when a health problem arises. Ferguson (2007) in a case-mix with Clinton (2004) says that being able to deal with a problem as soon as it arises will be able to reduce the various unsolved health cases that keep dragging the Australian healthcare system. Another area of importance in our topic is the establishing of a good link between the healthcare and the aged care systems that are currently in place.

This is to majorly deal with the problem of negligence in aged care that has been a recurring issue that impedes the efficiency of the health system in Australia (Drummond et al., 2005). The final aspect of importance in this topic is the creation of medicine and better technologies that will not only deal with the current health problems but also solve the “next-generation Medicare” issues (NHHRC Report, 2009). This deals with how the various corporate managers (like the government, health department, and medical experts) will come together and redesign a system that solves the current underlying issues and those that are prospected to come in the future.

Consider the financial impact of the reform

As earlier aforementioned, the issue of finances on healthcare is very important and should thus be handled importantly. In considering the financial implications of any health reform; (Courtney & Briggs, 2004) say that one has to weigh the input versus the output of finances. In other words, if the finances required incepting the program are going to be more than its projected benefits, then it’s better not to go ahead with it. But if there are more benefits to be realized, then it is okay to go ahead with it.

Additionally, Drummond et al. (2005) propose that when considering financial implications, we must fundamentally consider the cost-effectiveness of the reforms, economic evaluation of the country at the time as well as the priorities at that particular time, equity and equality considerations, and last but not least, the potential benefits of the reforms. Together will his fellow authors, he further says that observing the above, greatly reduces the chances of being a victim of ideological pitfalls which are very common with programs that are not thoroughly calculated.

Even more importantly, Baker and Baker (2006) say that in considering the financial impact, we must ensure that we view the whole reform program against salient economic and health theories that can candidly depict whether the reform is financially worthwhile or not. Having said the above, what then are the financial impacts of this reform?

As for the potential financial benefits, the overall implementation of all the reforms is estimated to save Australians over 4 billion per year by 2032 0r 2033. This will not only be a relief to the Australian public, but it will also give the government surplus money that can be used for many other important areas (NHHRC Report, 2009). Moreover, the implementation of all the reforms is expected to lead to an increase in GDP of “projected health and residential aged care expenditure” from the current 12.2 percent to 12.4 percent in 2012.

More specifically to our main issue of redesigning health issues to combat health challenges; the NHHRC Report (2009) says that on top of the abovementioned monetary benefits, implementation of a program like getting Medicare solutions for the future offers other positive financial implications. For example, it will make Australia be ahead in terms of having advanced healthcare systems which other countries can benefit from—at a particular fee.

NSW Department of Health (2006) articulates that implementation of any medical reforms—just like any other important reforms that are economically oriented—require great financial sacrifices from both the government and the general public. So in our case, redesigning the healthcare system will demand preliminary sacrifices from the government of Australia, its citizens, and other concerned parties. NHHRC Report (2009) augments this fact by saying that the public will primarily be required to cope with the increase in prices of some few services. As for the government, more funding is required from them to support this rather expensive but highly beneficial program.

This is the same school of thought ascribed to by Baker and Baker (2006) who observe that a small increase in the pricing of health products or services is not such a bad thing, so long as it leaves you feeling better. On the contrary, Finkler (2007) argues that however important health programs are, it is important that the pricing is lowered to make it affordable for the common man—who is amassed to get sick more often than the well-to-do people.

Expenditure as per the report

Preliminarily, the NHHRC Report (2009) indicates that the total estimations for implementing all the reforms proposed in the report are between $2.8 billion and $5.7 billion. This excludes the periodic investment of capital for five years which ranges between $4.3 billion and $7.3 billion. The report further states that these figures were arrived upon after careful considerations of the intrinsic requirements of Australia as a nation and what forms of improvements in healthcare would assist in propelling it both economically as well as health-wise.

In addition, several health experts and economists sat together and arrived at the most fitting figures that would not strain the already struggling economy in the country (Jopling et al, 2004). As a further justification, the advancements in technology and the current high global prices of goods and services make it difficult to operate on a low budget.

Explain the impact of the reform on Australian health services

According to Courtney and Briggs (2004), the positivity or negativity of health reforms—just like many other reforms—greatly depends on not just how it is implemented, but also on the management that controls it, its preliminary design to withstand the test of time, the complexity of the program, its ability to be customized or flexed to fit dynamic situations and the timing of its implementation among other vital factors. As of today, some parts of the redesigning issue have been started while many more are still expected to be rolled out shortly. Consequently, in viewing the impacts of the reform, I will mostly look at it from the expected 2009 NHHRC Report’s perspective while I concurrently do a slight mentioning of the latest documented impacts.

As was partly aforementioned, the redesigning of the healthcare system is bound to embed a new system that can ensure early prevention as well as an early intervention on health problems (NHHRC Report, 2009). Here, everyone is charged with the responsibility of taking good care of himself/herself through the ardent taking of health precautions to prevent illnesses and ailments. The report explains that this can be impacted by the establishment of health promotion as well as a prevention agency, spending more money on preventions rather than cure, an increase of doctors as well as health institutions to deal with emergencies, and importantly, educating the general public on how to prevent themselves from various self-caused health problems

Finkler (2007) supports this idea by saying that most “health injuries” that doctors have to treat nowadays are “self-inflicted” for example high blood pressure, diabetes, and cancer which mainly result from human activities. He goes ahead and similarly advises that we should be our caretakers—and by extension, be our neighbors’ keepers. So far, very little has been documented with regards to the success of this preceptor not. However, recent surveys tend to depict that there has been a quick response from the numerous health facilities in Australia in responding to medical emergencies (NRHSN, 2010).

With regards to the issue of redesigning the health system through integration of health and aged care services; the NHHRC Report (2009) says that this program will fundamentally deal with the issue of primary healthcare which, for so long, has been greatly neglected. In doing this, Drummond et al. (2005) propose the instituting of channels that not only deal with health problems faced by “influential” people in the society but also remembers to spread the health services to those at the grassroots of the society. It is commendable to note that, as of late, there have been reported cases of increased primary healthcare even to the previously neglected societies. A good example is the aboriginals who have been able to get better medical services (NRHSN, 2010).

Yet still, the redesign of the Australian healthcare system through the inception of “next-generation” Medicare is note-worthily underway. As proposed by the NHHRC Report (2009), there has been more collaboration between health experts to get solutions for the current medical issues as well as prospected health issues. Additionally, there have been reported cases of Australian health experts teaming and working closely with health experts from other parts to ensure progress in their healthcare (Amadeo, 2010)

Lastly, and on a rather dual-level, there have been reductions in the prices of some health products and services while others have increased. As expected, this has drawn mixed reactions from the Australian public—with the majority unsatisfied.

The NSW Department of Health (2006) however says that such reactions are bound to happen since change is something that is rarely accepted positively—even if it is for the better. It further continues that with time, this trend may change; especially if the reforms perform well as purpose.

Viability of the reform

Based on the precepts mentioned by Amadeo (2010); Isouard et al. (2006) and considerations highlighted by Drummond et al. (2005) in assessing the viability of reform, I strongly believe that with enough time, patience and support, the program is implementable. Most of their theories are testable, their steps and recommendations are practicable and there is overall goodwill from Australia to implement it—which, I believe is the right platform for its viability and implementation.


Finally, in the words of the NHHRC Report (2009), “The financial implications of reshaping the Medicare Benefits Schedule are potentially significant.” so in as much as the implementation of the reform might seem quite financially straining, time-costly and difficult to be easily accepted on its inception, its projected benefits are immense which makes it an viable venture for Australia.


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Drummond, M., Sculpher, M., Torrence, G., O’Brien, B. and Stoddard, G. (2005) Methods for the Economic Evaluation of Health Care Programmes (3rd Ed.) Oxford: Oxford University Press. 338.433621 11.

Ferguson, L.J. (2004). Casemix: Key issues for health care managers. In M.Clinton (Ed). Management in the Australian Health Care Industry, 3rd Edition. Sydney: Pearson Education Australia. 362.1068 12.

Finkler, S.A. (2007) Budgeting Concepts for Nursing Managers and Executives. (3rd Edition). Edinburgh: Elsevier Saunders. 362.173 31.

Isouard, G., Messum, D., Briggs, D., McAlpin, S. and Hanson, S. (2006) Improving organisational performance in health care. Managing Health Services Concepts and Practices (2nd Ed). (pp. 349-380). Sydney: Mosby Elsevier. 362.1068.

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National Health and Hospitals Reform Commission (NHHRC), (2009). A Healthier Future for All Australians. Web.

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NSW Department of Health. (2006). Funding Guidelines 2008/2009. Web.

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