Core Competencies in Hospital Pharmacy Practice: Department Financial Management

Abstract

This series of articles in the Director's Forum continue to review key core competencies necessary for a pharmacy department to define their value in patient care. Competencies of medication order review, medication order dispensing, preparing intravenous admixtures, and data management provide a foundation in patient centered services. The goal of the Director's Forum throughout 2006 is to provide readers with information on all of the necessary core competencies of hospital pharmacy practice, comprising a “toolkit” in establishing a patient-centered pharmacy department.

Full text

Hospital Pharmacy 689
Director's Forum
Hospitals and health care
organizations depend on
data and information to
manage clinical care and opera-
tions. For example, hospitals use
information and data to project
and track their revenue and
expenses and to establish appro-
priate patient care programs. All
hospitals have a financial respon-
sibility to their respective gover-
nance to monitor both costs and
quality, and publish information
internally and externally. Impor-
tantly, the yearly budgeting
process in hospitals is solely
dependent on information on
financial performance from the
previous year along with projected
expenses for additional programs
for the upcoming budget year.
Managing the finances of a
pharmacy department is not a sta-
tic process of calculating the year-
ly budget and writing variance
reports to explain budget discrep-
ancies. Financial management of a
pharmacy department is a dynam-
ic process that adapts to changing
environments within the organiza-
tion. The pharmacy director must
be able to quickly and effectively
assess and use financial informa-
tion to maintain the department’s
ability to meet the strategic goals
of their organization.
Every hospital pharmacy
director must have the ability to
analyze and measure the financial
performance of a pharmacy
department on a daily, weekly,
monthly, and yearly basis. In fact,
a less experienced or new pharma-
cy director may have little or no
experience in the financial man-
agement of a department. Their
thorough understanding of finan-
cial details of a pharmacy may
determine their success as a
department head.1
Close monitoring of a depart-
ment’s finances may seem like a
daunting task; the key to this close
monitoring is to use information
from various sources in the hospi-
tal and develop a system for con-
sistently reviewing and acting
upon information. An analogy
that applies to managing a hospi-
tal pharmacy’s finances in real-
time is how most hospitals
respond to sentinel events. All hos-
pitals have access to specific infor-
mation through their reporting
systems that provides them with
data to make decisions and
improvements in care to prevent
serious errors. This same philoso-
phy should apply to the finances
of the pharmacy department, with
information being readily accessi-
ble and easily analyzed to promote
effective decision making.
This article reviews fundamen-
tal concepts in managing the
financial aspects of a hospital
pharmacy department. The goal of
this article is to provide hospital
pharmacy directors with a summa-
ry and explanation of steps and
strategies in hospital pharmacy
financial management. The specif-
ic aims of this article are to (1)
describe a dynamic approach to
financial management that pro-
motes patient-centered services;
(2) review specific information
and steps to monitor the financial
performance of the department;
(3) describe a proactive approach
used by the University of Pitts-
burgh Medical Center (UPMC) to
manage drug expenses. Hopefully,
the lessons learned from this arti-
cle can be applied to establish a
system for financial management
that promotes a patient-centered
Hospital Pharmacy
Volume 41, Number 7, pp 689–694
2006 Wolters Kluwer Health, Inc.
Core Competencies in Hospital Pharmacy Practice:
Department Financial Management
Robert J. Weber, MS, FASHP*
*Associate Professor and Department Chair, University of Pittsburgh School of Phar-
macy, Executive Director of Pharmacy, University of Pittsburgh Medical Center, Pitts-
burgh, PA.
This series of articles in the Director’s Forum continue to review key core
competencies necessary for a pharmacy department to define their value
in patient care. Competencies of medication order review, medication
order dispensing, preparing intravenous admixtures, and data manage-
ment provide a foundation in patient centered services. The goal of the
Director’s Forum throughout 2006 is to provide readers with information
on all of the necessary core competencies of hospital pharmacy practice,
comprising a “toolkit” in establishing a patient-centered pharmacy
department.