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

 For PDF Notes Click on Download Button