Use of financial reports in managing pharmacies

The use of financial reports for preparing and monitoring the pharmacy budget is reviewed. Internal reports are generated within the department or hospital and are used to compare actual financial performance with budgeted projections. External reports are usually prepared by outside agencies and are used to compare the productivity, operations, and financial performance of one hospital with others in a predetermined group. The level of detail used in preparing financial reports determines the level of detail that can be used to monitor the budget. Internal reports on revenue, nonlabor expense, and labor expense are discussed, and the limitations of external reports comparing hospitals are presented. Effective use of financial reports is important in accurate budget forecasting, and pharmacy managers must seek out the financial information that will be of most value to them.