INTRODUCTION
Budget preparation is an important task of the pharmacy
department of any hospital and requires all factors into consideration.
Preparation of a budget is planning which calls for the compilation of all
relevant facts and figures.
‘Budget’ according to the Institute of Cost and Works
Accountants, London, “is a financial or quantitative interpretation before a
defined period, of a policy to be pursued for that period to attain given
objectives”. In the words of Halma, “budget is an instrument through which
hospital administration, management at the departmental levels and the
governing board can review the hospital's services about a prepared plan in
a comprehensive and integrated form
expressed in financial terms”.
Larson quoted certain political aspects of budgeting
in hospitals and believes that hospital pharmacists should consider them for an
effective budget. These factors are:
• Personal considerations
• Institutional considerations
• Demographic considerations
The budget plan should be reasonable as most pharmacy
activities affect other departments of a hospital. It is the duty of the chief
pharmacist (director of the superintendent of the pharmaceutical services) to
take all necessary measures to ensure that the different departments or
functional budgets are compatible with each other or complementary to each
other. The activities of all departmental budgets are generally in harmony with
each other ensuring a smooth going for a hospital.
1. Budget directs capital
expenditure in the most profitable direction and results in more economic use
of capital.
2. Hospital pharmacists can
reduce wastage and losses to a minimum and can thus ensure an increase in
productivity as regards hospital equipments and medicines.
3. Budget provides data for
preparing questions and filling tenders.
4. It acts as a safety
signal for the chief pharmacist/ administrator and indicates when manufacturing
can be safely undertaken.
5. It acts as a friend and
guides the management by offering more efficient working in a hospital.
6. It helps to over-rule
the possibility of hasty decisions because all the policies are carefully
framed under the heads of the department along with available statistical
evidence.
PREPARATION OF BUDGETS
Each budget is classified into the following three
divisions.
Income Account
To prepare a budget, income is calculated by maintaining
daily/ weekly/ monthly/ annual records. Thus, the average total sum represents the
income of the department from various sources. Generally, the income in the
hospital pharmacy is limited to the sale of drugs to in-patients as well as
out-patients. It further depends upon the type of patients i.e., the category
of patients:
1. Those who give full
payment.
2. Those who give partial
payment.
3. Those who cannot pay at
all.
4. Employees of the hospital.
To provide detailed statistical data, the following steps are to be considered:
1. Number of prescriptions
received according to the categories mentioned above.
2. Total number of
prescriptions dispensed.
3. Number of working
hours.
4. Medication cost per
prescription.
5. Medication cost per
patient/ day.
6. Medication cost per
clinic visit.
7. Average drug cost per
prescription.
As the income is generated from a combination of
sources hence it is desirable to separate each of them to give a much more accurate
evaluation and statistics.
Expenditure Accounts
Fixed expenses generally remain fixed/ same at all
levels. Expenditure accounts are further sub-categorized into the following
expenses:
• Administration expenses
• Expenses for professional care
• Expenses for out-patient
• Emergency expenses
• Miscellaneous expenses
The pharmacy department prepares expenditure accounts
using the following expenses:
1. Salaries and wages:
These include salaries and wages of pharmacists, assistants, clerks, and
others. Salaries and wages include a complete break-up of all salaries and wages
paid to permanent and temporary staff (full-time and part-time). This chart should
be prepared in a tubular form to give an overall view at a glance. The chief
pharmacist/ administrator should sub-divide the staff into three important
categories; administration, professional and non-professional staff. The total
of all these expenses constitutes the anticipated salaries and wages,
expenditure for next year.
Fig.1: Break up for Salaries and Wages
2. Supplies and materials:
The head of the department should prepare a financial statement showing the amount
in rupees budgeting for each item presenting the actual cost of materials and
supplies. This helps in the preparation of estimates for next year's financial year.
If the budgeting figures and estimated figures match each other, that means the
previous budget was well prepared. On the other hand, if the figures are
different, it needs a re-evaluation of the previous budget as well as the estimated
budget. For the addition of new materials and supplies, the chief pharmacist
should ascertain its cost and submit them for the next budget.
3. Drugs and pharmaceuticals:
Preparations are categorized as those dispensed by hospital pharmacy or those
used in OPD emergency and other departments. Charges for the latter are
submitted to the respective department.
4. Purchase expenses:
The budget should include the cost of necessary purchases from an outside
pharmacy (cost of prescription but it includes those intended for outpatients).
5. Miscellaneous supplies:
Miscellaneous expenses include; glassware, labels, stationary, uniform, repair,
maintenance, etc. in practice, there should be a close connection between the
chief pharmacist and the accounting department for the maintenance of
statistical data.
Equipment and Construction Budget
In the hospital, always a separate budget is prepared
for equipment and construction because it requires major monetary funds. While
preparing budgets for machinery, and equipment both professionals and
administrators consider depreciation values.
• Professional equipments: Balance, cabinets
(metal, wooden), water distillation stills, mixing tanks, stirrers, metallic
filters, homogenizers, capsulation machine, tablet manufacturing equipment,
autoclave, prescription case/cabinets, pressure pumps, vacuum pumps, refrigerators, weighing
machines, typewriters, work tables, etc.
• Administrative equipments: Nook cases (metal,
wooden), notice boards, calculators, computers, cash registers, clocks, desks
(wooden), lockers, filing cabinets (metal), and work tables.
IMPLEMENTATION
As budgeting is an essential tool in the process of
planning and control and is an instrument of forecast to achieve your
objectives. It is not only the responsibility of the budget division but should
be the joint effort of a committee consisting of the heads of the entire
functional department.
The need for implementation can be clearly illustrated
by comparing two captains sailing down a wide and shallow river. Both know
roughly the direction in which it is flowing but the first one is provided with
a proper guideline and the other with nothing. The former will be able to reach
his destination as soon as possible while the latter will have to rely upon
judgments to avoid obstacles.
The usual budget proposals are annually prepared, but they
can vary proper budgeting system facilitates the hospital administrator to take
the right decision according to the local needs, requirements, and the order of
priorities.