Management expenses

It is crucial that pharmacy managers understand the impact of third-party payers on pharmacies as well as understand and use the decision-analysis tools described in this chapter to evaluate carefully third-party contracts. It also is important that pharmacy managers and owners manage expenses carefully and think creatively about developing new sources of revenue. Third-party payment for prescriptions will continue to be an important issue in pharmacy in the future, and pharmacy managers need to be aware continually of changing reimbursement levels and other third-party issues. 

In the veterinary as in the human patient, neoplasms are often metastatic and widely disseminated throughout the body. Surgery and irradiation are limited in use to weU-defined neoplastic areas and, therefore, chemotherapy is becoming more prevalent in the management of the veterinary cancer victim (see Chemotherapeutics, anticancer). Because of the expense and time involved, such management must be restricted to individual animals for which a favorable risk—benefit evaluation can be made and treatment seems appropriate to the practitioner and the owner. In general, treatment must be viewed not as curative, but as palliative. 

An estimate of total product cost is an important part of economic evaluation and management planning. Total product cost can be viewed as the sum of the manufacturing cost and the general expense. 

Book-Bas s Depreciation. The book-basis depreciation is arbitrarily determined by management on a year-to-year basis, subject to acceptable accounting practice. This is not an out-of-pocket expense. It is simply a charge for the recovery of capital ia earnings calculations and is available as capital for reinvestment or distribution. Some consistent treatment for recovery of capital must be assumed ia profitabiUty analysis. 

Distributed Darnings. The dividends distributed to stockholders provide the earning on equity capital ia the same way that iaterest is the earning on the debt capital. However, the dividends are an after-tax expense and represent an arbitrary management decision. 

It is also becoming necessaiy to insure against factors not normally considered until recently. These include possible lawsuits for polluting the environment. The cost of insurance increases the annual total expense Af . Thus, overinsurance can lead to an unnecessaiy decrease in profitability. The management of a company must ultimately judge its own risks. 

Income statements are veiy useful tools to assist management in controlling a business and planning for the future. Since management needs to follow the trends of the normal expenses, extraordinaiy expenses such as those incurred as a result of a major fire or flood should be shown separately. 

One of the most important items in an income statement is depreciation expense. Although depreciation should not be thought of as a means to build up a fund to replace plant, it nevertheless does enable money to be retained in the business by reducing the profit available for distribution to stockholders. It is of course a duty of both accountants and management to see that sufficient money is retained in the business to replace assets and to invest such money in other processes or outside investment. 

A financial analyst looking at a company from a potential common stockholders point of view is hkely to classify preferred stock as debt. In contrast, bondholders and general creditors are likely to regard preferred stock as additional eqmty. Since preferred stock is a hybrid type of security, it may be issued by a company whose management is divided over the question of whether to use equity or debt to finance additional assets. However, preferred stock does have the disadvantage that the dividends are not allowed as a tax-deductible expense. 

Management and Cost Aeeounting In any given time period, cost may be divided into expired and unexpired cost. An expired cost is an expense an unexpired cost is an asset. This division is the basis for income statements and balance sheets. 

Static and Flexible Budgets Overhead cost can significantly affect the profitability of a projec t and is the only cost outside the control of the project manager. The project is expected to contribute a definite amount toward the expenses of the company and will be charged this amount even if the production rate is zero. This is the fixecTcomponent of the overhead cost and will include directly allocable costs such as depreciation and a proportion of general costs such as office salaries and heating. 

This is the simplest and least expensive method. The manager will sit down with the employee and diseuss the JHA. Only obvious hazards are identified in this initial session. These observations are based on the reeolleetions and observations of employees who have performed the job. This information is valuable beeause it relies on the experienee of employees elosely linked to the job. 

A PSA for a large process is a large and expensive project that requires the support of higher management to provide the resources for its completion and to use the results. The PSA manager... 

As discussed in Chapter 2, most of the basic resources you will need are fairiy self-evident time of staff will almost certainly be the latgest single cost. Support expenses and travel also require funding. In addition, in the course of yourwork to date you may have identified specific resource requirements, such as computer software for hazard analysis or project management, or consulting services that fill in specific gaps in the knowledge base. 

In a front-wheel-drive car, the drive wheels experience not only the road-induced vertical motion of the rear wheels hut also must rotate about a vertical axis to accommodate steering. Several different configurations of constant-velocity universal joints have been developed to manage such motion. These constant-velocity joints are larger and more expensive than the joint described above. 

This surprising equality arises because an efficient appliance saves expensive electricity at the meter, at an average retail price of 8 cents/kWli whereas one kWh of new wholesale supply is worth only 2-3 cents at the power plant. Thus, even if electricity from some future new remote power plant is too cheap to meter, it still must be transmitted, distributed, and managed for 5—6 centsAWh. It is impossible to disentangle the contribution of standards and of accelerated improvement in technology, but clearly the combination has served society well. 

---