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ABOUT THE AUTHOR

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Dr. Gettman is a professor in the Department of Pharmaceutical, Administrative, and Social Sciences at the D’Youville College School of Pharmacy. He received his BS in pharmacy from the University of Montana, an MBA from the College of William and Mary, and PhD in pharmacy health care administration from the University of Florida. He has practiced pharmacy in numerous settings, including community, hospital, nursing home, hospice, and in the U.S. Navy and Air Force. In addition to pharmacy management, Dr. Gettman has taught pharmacy law, health care ethics, health care delivery, pharmacoepidemiology, pharmacoeconomics, biostatistics, and research design. The author of numerous publications, he has made over 100 presentations to professional health care groups at the state, national, and international levels.

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LEARNING OBJECTIVES

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LEARNING OBJECTIVES

After completing this chapter, readers should be able to

  1. Explain the relationship between financial planning and the master budget.

  2. List and explain five purposes of budgeting systems.

  3. Describe the similarities and differences in the operational budgets prepared by pharmaceutical manufacturers, health system pharmacies offering value-added services, community pharmacies selling merchandise, and nonprofit pharmacy organizations.

  4. Explain the concept of activity-based budgeting and the benefits it brings to the budgeting process.

  5. Describe each of the budget schedules that make up a master budget.

  6. Discuss the role of assumptions and predictions in budgeting.

  7. Describe a typical pharmacy organization’s process of budget administration.

  8. Understand the importance of budgeting product lifecycle costs.

  9. Discuss the behavioral implications of budgetary slack and participative budgeting.

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SCENARIO

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Mary Quint, pharmacy student, has just started a 6-week elective advanced pharmacy practice experience (APPE) at Home TPN Care. On this APPE, Mary is working with Anne Smith, PharmD, who manages the production and distribution of total parenteral nutrition (TPN).

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Home TPN Care is part of a local university’s health system that includes a large teaching hospital, several clinics, and numerous ancillary services. Procurement, receiving, insurance verification, claims processing, and cash application operation activities all take place at the Home TPN Care facility, located 5 miles away from its main hospital. Home TPN Care consistently generates a positive net margin that contributes to the health system’s margin targets and support of nonrevenue-generating activities. Clinical, patient care, quality, and process improvement programs are integrated into the health system’s strategic plan.

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Home TPN Care is a licensed pharmacy and home infusion provider responsible for providing a wide range of products and services to safely and effectively facilitate care to patients in the convenience and comfort of their homes. Since 2001, Home TPN Care has been providing infusion medications, nutritional therapy, specialty drugs, high-tech infusion nursing, and care management services throughout the region. An interdisciplinary team of pharmacists, nurses, and dietitians, along with technical, administrative, and support staff, provides pharmacy manufacturing (i.e., compounding), equipment management, dispensing, delivery, and care management services to ensure that patient home regimens are safe and effective ...

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