Financial Management Practices and Growth of Public Hospitals in Nyeri County, Kenya
Abstract
The provision of health care is among the social pillars in the vision 2030. The health sector has been characterized by many challenges ranging from recent strikes by health workers, poaching of workers by private hospitals and health workers looking for greener pastures outside the country because of poor management of the sector and poor infrastructure. Despite the support from the government, public hospitals in Nyeri County are straining to meet their financial obligations. Challenges ranging from inability to meet daily expenses, delayed payment of workers, delayed national government reimbursements and diminishing patient’s expectations. The objectives of the study were to investigate how budgeting, internal control systems, financial tracking, and waiver affect financial management practices and growth in government hospitals. The management and movement of funds as aligned to the budget is critical for a public hospital’s growth. But experience and exposure in finance management reveal that the financial management processes of public hospitals are generally weak and dominated by conditions of resource scarcity vis-a-vis the ever-increasing agenda of development activities on which such funds could be spent. The study used a descriptive survey design. The study targeted 202 respondents who were the employees of the four county public hospitals under study. Stratified simple random sampling was used, and a sample of 101 respondents was selected. The study used both primary and secondary data sources for data collection. Data was analyzed by the aid of the Statistical Package for Social Studies (SPSS) computer software through frequencies, means, percentages, correlation coefficient as well as regression method. Tables and graphs were used for data presentation. The findings indicated that there has been an increase in the number of operational cost in majority of the hospitals. Majority of the public hospitals experience a lot of challenges and delays before budget is approved. The findings indicated that there are several steps that should be followed before authorization of any payment in hospital. The results presented poor control of revenue in the hospital and lack of proper coordination and monitoring. The study findings indicate that financial tracking procedures are hard to follow and that the procedures are not very clear to all the employees. Majority of the respondents argued that there is lack of management support when it comes to financial tracking in the public hospitals in Nyeri County. The relationship between audit practices and growth of public hospitals is strong and positive and the relationship between financial tracking and growth of public hospitals is weak negative and significant. The study concludes that the relationship between audit practices and growth of public hospital was positive and significant and that a positive change in audit practices would result to a positive change in the growth of public hospitals. The study recommended that sufficient funds to the public hospitals should be disbursed early enough to enable proper planning and budgeting. The study also recommended that employees working in the public hospitals in Nyeri County should consider financial tracking as a daily task and that there is need for the County officials to be trained on the audit requirements and audit procedures.
References
Allison, M., and Kaye, J. (2015). Strategic Planning for Nonprofit Organizations: A Practical Guide and Workbook, John Wiley and Sons
Amit, C. (2013). Innovating Growth through Six Sigma. A strategic approach for combining Robustness with Flexibility. Available at Http: //www. findarticies.BCom (Accessed 25 Sept. 2005)
Anthony, R., and Young, D. (1994). Management Control in Not-for-profit organizations, Boston: Richard D. Irwin, Inc.
Barney, J. B., 2012. Gaining and sustaining competitive advantage (2nd ed.). UpperSaddle River, NJ: Pearson Education, Inc.
Blazek, J. (2006). Financial Planning for Not-for-profit Organizations, New York: JohnWiley& Sons, Inc.
Booth, P. (2013). Accounting and Accountants in Organizational context: A case study of Voluntary Organization. Unpublished Ph.D. Thesis, Griffith University
Booth, P. (2014). Accounting and Accountants in Organizational context: A case study of Voluntary Organization. Unpublished Ph.D. Thesis, Griffith University
Burke, J.C., Modarresi, S. (2010). To keep or not to keep performance funding? Signals from stakeholders, The Journal of Higher Education, Vol. 71 No.4, pp.432-53.
Burns, J., Fraser, R.W. (2010). Conceptualizing Management Accounting Change: AnInstitutional Framework, Management Accounting Research, Vol. 11 Pp.3-25
Cameron, K. S., and Whetten, D. A. (2011). Perceptions of organization effectiveness across organization life cycles. Administrative Science Quarterly, 26: 525-544.
Camisón, C. (2005). On how to measure managerial and organizational capabilities.Multi-item models for measuring distinctive competences, ManagementResearch, Vol. 3 No.1, pp.27-48
Chen, S., and Dodd, J. L., 2001. Operating income, residual income, and EVATM: Whichmetric is more value relevant? Journal of Managerial Issues, XIII(1). 65-86.
Cooper, D., and Schinder, P. (2013). Business Research Methods (8th Ed.). New Delhi: Tata Mcgraw Hill.
Cox, J. C., and Morgan, M. (2014). Option pricing: A simplified approach. Journal of Financial Economics, 7: 229-263.
Dorothy, A. (2009). Financial Management, Center for Philanthropy and Nonprofit
Leadership
Earl, N. (2000). How planning and capital budgeting improve SME performance. LongRange Plan, 31(6). 848-856.
Ebrahim, A. (2005). Accountability myopia: Losing sight of organizational learning, Nonprofit and Voluntary Sector Quarterly, Vol. 34 No.1, pp.56-87.
Flint, D. (2002). True and Fair View in Company Accounts. London: The Institute of Chartered Accountants of Scotland: Gee and Co (Publishers) Limited.
Financial Management Act (2012), Management of Public Financial Resources in Kenya
Gitman, L. J. (2007). Principles of Managerial Finance. New York: Addison Wesley.
Gloy, B., and LaDue, E. (2003). Financial Management Practices and Farm Profitability. Agricultural Finance Review: 57-174.
Hoopes, D.G., Madsen, T.L., and Walker, G. (2003). Guest editors' introduction to the
special issue: why is there a resource-based view? Toward a theory of competitive heterogeneity, Strategic Management Journal, Vol. 24 No.10, pp.889-902.
Kiel, D., and Elliott, E. (1996). Chaos Theory and Social Sciences. Ann Arbor: University of Michigan Press.
Lewis C. W., (2005). The Field of Public Budgeting and Financial Management, CRC
Press, Mumbai
Lewis, V. B. (1952). Toward a Theory of Budgeting. Public Administration Review, 12(1) 42-54
Lightbody, M. (2000). Financial Managers in a Church Organization. Understanding their Experience. Unpublished Ph.D. Thesis. University of Adelaide
Maseko N, Manyani O (2011). Accounting practices of SMEs in Zimbabwe: An investigative study of record-keeping for performance measurement (A case study o fBindura). Journal of Account and Tax, 3(8). 171- 181.
Mautz, R.K., and Sharaf, H.A. (2011). The Philosophy of Auditing. Sarasota, Florida:
American Accounting Association
Mobegi, H. N. (2009). A survey of the extent of implementation of an integrated financial management information system (IFMIS) as a tool for sustainable financial management in government. Unpublished MBA Project, University of Nairobi.
Mugenda, A., and Mugenda, O. (2003). Readings in Research Methods: Quantitative and Qualitative Approaches. African Centre for Technology Studies, Nairobi, Kenya
Premchand A (2004). Government Budgeting and Expenditure Controls: Theory and
Practice Published by International Monetary Fund
Shah, A. (2009). Budgeting and budgetary institutions. World Bank Publications.
Spira, LF, and Page (2003). Risk management: the reinvention of internal audit and the changing role of internal audit, Accounting, Auditing, and Accountability Journal, Vol. 16 No. 4, pp. 640-61.
Srinivasan, U. (2000). Current Budgeting Practices in US Industry, Quorum Books, NewYork, NY,
Waddell, S. (2000). Complimentary Resources: the win-win rationale for partnerships with NGOs, in Bendell, J. (Eds), Terms for Endearment, Greenleaf Publishing, Sheffield, pp.193-206.
Wagacha, M. (2000). Review of Kenya’s Budget and Fiscal Strategy: 2000/2001. Institute of Policy Analysis and Research, Nairobi.Institute of Policy Analysis and Research, Nairobi.
Copyright (c) 2020 Beatrice Wairimu Muturi, Dr Mungai John
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
