THE BUDGET – PREPARATION & IMPLEMENTATION
OBJECTIVES
At the end of the lecture, the students will be able to
- What
is budget - Classification
of budget - 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
- Those who pay fully
- Those who pay partly
- Those who cannot pay at all
- Physicians
- 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
- Salaries
& wages - Supplies
& expenses - Drugs
& pharmaceuticals - Purchased
services - Miscellaneous
supplies & expenses
SALARIES & WAGES
• Includes salaries & wages of
- Pharmacists
- Assistants
- Clerks
- 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
