Financial Management for Pharmacists: A Decision-Making Approach, Second Edition

American Journal of Pharmaceutical Education, Summer 1998 by Kelly, Edward T III

NORMAN V. CARROLL. Financial Management for Pharmacists: A Decision-Making Approach, Second Edition. Baltimore MD: Williams & Wilkins, 1998. xi 273 ppp., 81 figs., $30.00.

This book is well written and presents complex financial management concepts in an easy to understand manner. The author recognizes that as the health care scene is evolving so to is pharmacy practice and the demands placed on pharmacy managers. His presentation enables the reader to apply financial management concepts to various arenas of practice. Unlike the first edition the text contains hospital, community, consulting and managed care pharmacy applications and can truly be used by a variety of individuals regardless of their practice preferences. Moreover, this reviewer feels that many of the concepts are applicable to the every day life of an individual. The author provides information in a well organized, clear and concise manner enabling the reader to understand how to plan and control for fiscal matters.

The book is organized to present the basics of financial statements and accounting at the outset. the first four chapters present the basic statements to be used in financial analysis and the terminology germane to each statement. This section also presents the process by which financial statements are developed. Many of the basics of accounting for goods and services are presented in Chapters Three And Four. From Chapter Five on, the author presents techniques and applications of financial mnagement. Chapter Five is a very good coverage of financial statement analysis. This chapter includes ratio analysis and makes it easy for the reader to work through the various ratios connecting them with their appropriate decision area. The chapter concludes with a presentation of the DuPont Model Of Profitability which aids the manager in judging the performance of their particular operation. The author proceeds to include chapters covering Budgeting, Capital Budgeting and Break Even Analysis. It should be pointed out that Chapter Nine which is concerned with pricing includes both product and service pricing and considers examples beyond the usual and customary consideration of the pricing of prescriptions alone. This is particularly timely in this era of concern for equitable pricing/payment for cognitive services.

Chapters Ten to Thirteen are entitled Differential Analysis, Capital Investment Decisions, Sources and Uses Of Cash and Improving Cash Flow. These chapters cover material crucial to the decision making process of managers in various practice settings. The chapters focus on the consideration of investing in new programs, management of resources and most importantly the management of cash. These chapters speak to issues that occur in the daily practice for pharmacists, especially those who wish to investigate the profit potential of niche markets.

Chapter Fourteen emphasizes Inventory and Inventory Control. This chapter is concerned with a topic that is of crucial interest to managers. The management of inventory is critical since it is usually the largest asset that pharmacists manage. Inventory management may become the key to success of many practices. The final chapter deals with pharmacoeconomics. This chapter is a broad overview of the area and covers the bare essentials of the topic.

Overall, this is a very useful text for students and managers and I would recommend its use in an introductory course in pharmacy management. The concepts and applications are well presented. The author expands on the first edition by including a wide array of pertinent applications. Each chapter is laid out for easy reading and contains excellent applications of the chapter topics. The study questions and problems at the end of each chapter further support the value of the text.