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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