Budget Preparation

1. BUDGET PREPARATION &
IMPLEMENTATION IN HOSPITAL’S
By:- Dr. Manish Pal Singh,
Associate Professor
1Agra Public Pharmacy College, Agra
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2. What is Budget ?
“Is a financial or quantitative interpretation prior to a
defined period of time, of a policy to be pursued for that
period to attain given objectives”
‘HALMA’-
“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”.
Agra Public Pharmacy College, Agra 2
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3. Agra Public Pharmacy College, Agra 3
Reasons for Hospital Budget Preparation
Demographic
Consideration
Institutional
Consideration
Personal
Consideration
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Function
of
Budget
For Preparing & Filling tenders
To regulate hospital
financial activities
Smooth the
departmental
functions
Estimate to
completing
objectives

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•2 yearsShort term
budget
•5-10 yearsLong term
budget
Types of Budget Preparation
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7. Agra Public Pharmacy College, Agra 7
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Types of Budget’s
Objective
Budget
Zero-based
Budget
Fixed
Budget
Flexible
Budget
Investment
Budget

9. Preparation of Budgets
Each budget is classified into 3- divisions-
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Expenditure
A/C
Equipment &
Construction
Budget
Income A/C

10. 1. Income Account
❑ Total income must be calculated for the implementation of the budget.
❑ Income is calculated by maintaining daily/weekly/monthly/annual records.
❑ The avg. total sum up represents income of the department from various
sources.
❑ Pharmacy department or accounts department maintains daily, weekly,
monthly & annual cost of the pharmaceuticals issued to the patient services.
Agra Public Pharmacy College, Agra 10
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11. ❑ Hospital income further depends upon the type of patients, i.e. category of
patients-
❑ 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
Agra Public Pharmacy College, Agra 11
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12. 2. Expenditure Accounts
❖ Expenditure A/C further divided into following expenses-
▪ Administrative and general expenses.
▪ Professional care of the patients.
▪ Out-patients and emergency expenses.
▪ Miscellaneous expenses.
Agra Public Pharmacy College, Agra 12
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13. ➢ The expenditure accounts includes the following categories-
➢ Salaries and wages
➢ Supplies and expenses
➢ Drugs and pharmaceutical expenses
➢ Purchase expense
➢ Miscellaneous supplies and expenses.
Agra Public Pharmacy College, Agra 13
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14. ➢ Salaries & Wages:- To give permanent & temporary staff salaries; the chief
pharmacist should sub-divided the staff in to three important categories-
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Administration
Professional
Non-professional

15. Supplies & Materials:- Budgeted for each item presenting actual cost of
material and supplies. It includes the cost of prescriptions purchased from an
outside pharmacy. This help in preparation of estimate for next financial year.
For addition of new material & supplies, the chief pharmacist should ascertain
its cost & submit them for next budget.
Drugs and pharmaceuticals:
✓ Those dispensed by prescriptions.
✓ Those used in the outpatients and emergency departments.
✓ Charges for the latter are submitted to the respective departments.
Agra Public Pharmacy College, Agra 15

16. 3. Equipment & Construction Budget
➢ It requires major monetary funds.
➢ Budget for immediate arrangements of a new model equipment.
➢ Budget for remodeling and replacement of equipment.
➢ Construction of building.
Implementation of Budget
❑ Need for implementation in hospital budget can be clearly illustrated by
comparing two captains sailing down a wide & shallow river.
❑ The usual budget proposal are annually prepared but it can vary form 3-5
years duration to take into account long term planning.
Agra Public Pharmacy College, Agra 16

17. ➢ A proper budgeting system facilitates the hospital administration to take
right decision according the local needs, requirements & the order of
priorities.
➢ It includes the following parameters-
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Requirement of
different departments
Actual fund
position
Utility of particular
item
Cost of
products
Quantity of products

18. ADVANTAGES OF PLANNING THE
BUDGET
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BETTER FINANCIAL
PLANNING
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

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Factors Affecting Budget Preparations:
LOCAL
CONDITIONS AND
COMPULSION
MANAGEMENT
POLICY
CONFIDENCE OF
HIGHER
AUTHORITIES