Budget preparation and implementation

1. Presented by:-
P.Haripriya
Ⅳ PharmD
14AB1T0018

2. CONTENTS:-
Definition
Objectives of budget
Advantages
Types of budget
Income or revenue accounts
Expenditure accounts
Preparation of budgets
Implementation of budget
Factors effecting budget

3. DEFINITION:-
Budget is described as an instrument through which hospital administration, management at the department
levels and the governing bodies can review the hospital services in relationship to the prepared plan in a
comprehensive and integrated form expressed in financial terms.

4. OBJECTIVES:
Development of standards
Comparision of actual results with standards
Identification of deviation or fluctuation
Analysis of deviation
The responsible person will use the budget details to
determine whether the proposal is economically feasible and
realistic.
To monitor the hospital financial activities.
Estimate the cost of completing objectives identified in the
proposal.
ADVANTAGES OF PLANNING THE BUDGET:
Develop better financial planning.
Gives a better focus on decision making to the
management.
Effectively manage the financial aspects of the
hospital.
Exposes the reasons of over expenditure.
Helps to focus on hospital priorities
Enhance efficiency of staffs and others

5. TYPES OF BUDGET PREPARATION:
Based on the duration of budget,it can be divided in to:
Short term budget (2 years)
Long term budget (5 - 10 years)
DIVISION OF BUDGETS:
1. Income accounts or revenue accounts
2. Expenditure accounts
3. Asking for capital investments

6. INCOME ACCOUNTS OR REVENUE ACCOUNTS:
•Total income must be calculated for the implementation of the budget.
•Pharmacy department or accounts department maintains daily, weekly, monthly & annual cost of
the pharmaceuticals issued to the patient services.
The other statistics includes:
No of prescriptions
No of prescriptions dispensed by each pharmacist
Hours of work put in
Prescription volume per hour of service
Medication cost per patient day
Average drug cost per clinic visit
Average salary cost per prescription
Average supply cost per requisition

7. Hospital administrator prepares
assumptions, in statistical terms,
about the kinds of services
(outputs) the hospital expects to
provide (produce)
The hospital administrator
prepare the economic forecasts in
respect of new developments, or
other factors
The hospital administration to
outline the budget goals and
policies as per the directives
The financial manager prepare a
budget package and forward it to
all the departments
Each department head to analyses
financial and statistical data
generated by his department as
well as provided to him by the
finance department
A budget hearing is organised by
the Finance Officer at the
departmental level where the
department head presents his or
her draft budget
The Finance Officer developes the
department’s revenue budget,
summarise departmental expense
budget, and forward the
department’s budget hearing
summary to the concerned
department head.
The Finance Officer prepares a
preliminary operating revenue
budget for the whole hospital, by
summarising and collating the
individual department’s budgets.
The Finance Officer to summarise
the total budget (including capital
budget and cash budget) into a
proper budget format including
statistical summaries.
The budget is presented by the
Finance Officer to the governing
board or board of trustees or to
the finance committee for their
approval.
PREPARATION OF BUDGET :-

8. IMPLEMENTATION OF BUDGET:
It includes the following parameters
1. Requirement of different departments
2. Actual fund position
3. Utility of particular item
4. Cost of products
5. Quantity of product

9. FACTORS AFFECTING BUDGET:
•Local conditions and compulsion
•Management policy
•Confidence of higher authorities
•Ability of higher authorities

10. REFERENCES:-
•Programming, Budgeting, and Control in Health Care Organizations: The State of the Art BY
Robert A. Vraciu
•S.balaSubramanian,N.Narayanan,A Text Book of Clinical and Hospital Pharmacy,2ndedition,pg
no:54-62
•DR.Ramesh .K.Goyal,DR.R.K.Parikh, A Text Book of Hospital Pharmacy,12th edition,
pg no:87-93
•www.parklandhospital.com
•www.slideshare.net
•www.shareyouressays.com