THE BUDGET – PREPARATION & IMPLEMENTATION

THE BUDGET – PREPARATION & IMPLEMENTATION

OBJECTIVES

At the end of the lecture, the students will be able to

  1. What
    is budget

  2. Classification
    of budget

  3. Role
    of budget in the development of an organization

THE BUDGET
– PREPARATION & IMPLEMENTATION

DEFINITION

A budget is  an  instrument 
through  which  hospital administration ,management  at 
departmental  levels  & 
the  governing  board can review the hospital’s  services 
in  relationship  to 
a  prepared  plan 
in  a comprehensive  & integrated form expressed in
financial  terms

GOALS OF BUDGET

       Development  of 
standards of performance

       Comparison
of actual results with these standards 
thus identifying deviations

       Subsequent  analysis of deviations to determine whether
they are controllable or uncontrollable

FACTORS

       Personal
considerations

       Development
of confidence among other officials

       Institutional
– philosophical  pressures

       Demographic  pressures 

PERSONAL
CONSIDERATIONS

       PC
-Individual reputations are important

       Individual
acquired a reputation –stands a better chance of having his current budget
proposal approved

       Someone
who has earned a reputation of having furnished previous budgets, that have
been thoroughly based on research and supported by substantial justification
stands a better chance of having his current budget proposal approved

DEVELOPMENT OF
CONFIDENCE

       Director  of pharmacy 
service or chief pharmacist has to secure  collaboration & support

       Supports  from other departments provides the necessary
strength to secure administrative approval for carrying out their schemes for
development

INSTITUTIONAL
PHILOSOPHICAL CONSIDERATIONS

       Consists
of the goals & objectives of the hospital & its developments

       Since
many state planning agencies require hospital to submit  1 & 5 year plans,  short & long range programs, its
important that the programs of the pharmacy service coincide with the overall
plan of the institutions

DEMOGRAPHIC (LOCAL)
PRESSURE

       The
consumer public requirements are taken into accounts

       In
USA several boards of trustees have consumer representatives from the local
communities serving with a knowledge of the demographic, epidemiological &
characteristics  of attitudes  of the communities

       Budget
must be clearly understood by those in managerial positions since it is a short
range plan for future plans of operations

       Prior
to starting management must define the purpose of the plan and establish
policies for its operations and prospect of the hospital’s growth

       Plan
should be reasonable & attainable

       It
should not forecast the results which are not possible under the prevailing and
the future conditions

       Budget
is a carefully determined values based upon a knowledge of the prevailing
financial operating conditions and their relationship to the future periods

DIVISIONS OF THE
BUDGET

       Revenue  accounts

       Expense  accounts

       Capital
equipment requests

REVENUE (INCOME)
ACCOUNTS

       The
department  of pharmacy  or the accounting department maintains a
daily ,weekly ,monthly  or annual total
of the cost of the pharmaceuticals issued to various patient services as well
as to the special service  departments

       This,
total when added to that obtained from the processing of patient’s
prescriptions and requisitions, represent the true income of the department

       Predictors of volume of activity of
the department of pharmacy

       Number of prescriptions according to
the sub categories

       Number of prescriptions dispensed by
each pharmacist

       Hours of work put in

       Prescription volume per hour of
service

       Medication cost per patient day

       Medication cost per clinic visit

       Average drug cost per prescription

       Average salary cost per prescription

       Average supply cost per prescription

Sale of
drugs to the patient can be sub divided further based up on patients ability to
pay or their employment status if they are employed by the hospital

  1. Those who pay fully

  2. Those who pay partly

  3. Those who cannot pay at all

  4. Physicians

  5. General employee

EXPENSES ACCOUNTS

       Divided
into 4 general categories

→Administration & general

→Professional care of patients

→Outpatient & emergency

→Other expenses

Department of pharmacy – professional care of patients

Various category of expenses for the department of pharmacy
are

  1. Salaries
    & wages

  2. Supplies
    & expenses

  3. Drugs
    & pharmaceuticals

  4. Purchased
    services

  5. Miscellaneous
    supplies & expenses

SALARIES & WAGES

       Includes  salaries & wages of

  1. Pharmacists

  2. Assistants

  3. Clerks

  4. Others

SUPPLIES &
EXPENSE

       In
developing the supplies and expense position of budget, it is important for
the  Head of the department  to have readily available rupee  amount budgeted  for each expense for the financial  year

       Its
further necessary to have financial statement showing the present actual costs
of materials & supplies

       If
the budgeted figure and the estimated actual figure agree, the previously
prepared budget was well prepared

       However,
if the figures are divergent, it shows that either there was a mistake in the
calculation of the previous year’s expense budget or something has happened or
is happening in the present financial year which was not foreseen and
therefore, needs looking in to and re-evaluation

DRUGS &
PHARMACEUTICAL EXPENSES

       Include
those dispensed by prescriptions or from hospital pharmacy department

       Drugs
used in outpatient & emergency departments should be charged there &
not to this account

PURCHASE SERVICES

       Include
the cost of  prescriptions  purchased from an outside  pharmacy in case if the hospital doesn’t have
its own pharmacy

MISCELLANEOUS
SUPPLIES & EXPENSES

       Bottles,
labels, glassware, stationary, narcotic and alcoholic permit fees, pharmacist’s
uniforms, reference books etc

       Parts
required to repair & maintain equipment , repairs made by outside concerns
should be charged in this account

CAPITAL EXPENSES

       Includes
cost of the construction and purchase of equipments which is a financial burden
in development of budget

EQUIPMENT &
CONSTRUCTION BUDGET

       In
hospitals necessary funds are provided

       Unit
cost of Rs.1000/- or more –capital equipment

       Total
cost exceeding Rs.1000/- or more –major

       Rs.1000/-
, kept low  intentionally- to control the
budget

PROFESSIONAL EQUIPMENT’S

       Balance

       Cabinets

       Water
distillation stills

       Mixing
tanks

       Stirrers

       Metallic
filters

       Homogenisers

       Capsulating
machine

       Tablets,
manufacturing equipment

       Autoclaves,
hot air sterilizers

       Prescription
cabinets

       Pressure
and vacuum pumps

       Refrigerators

       Weighing
machines

       Type
writers

       Work
tables

       Meters
conductivity

ADMINISTRATIVE
EQUIPMENT

       Book
cases

       Notice
boards

       Calculators/
computers

       Cash
registers

       Clocks

       Desks

       Filing
cabinets

       Lockers

       Work
tables

SUMMARY

       A
budget is  an  instrument 
through  which  hospital administration ,management  at 
departmental  levels  & 
the  governing  board can review the hospital’s  services 
in  relationship  to  a 
prepared  plan  in  a
comprehensive  & integrated form
expressed in financial  terms

       It
is divided in to revenue  accounts,
expense  accounts, capital equipment
requests

       The
department  of pharmacy  or the accounting department maintains a
daily ,weekly ,monthly  or annual total
of the cost of the pharmaceuticals issued to various patient services

 

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