Finance &

Accounts
Department

Dr. Siddharth Darji MBBS, DCR, MBA (Healthcare)

Symbiosis Institute of Health Sciences
(SIHS)
 Scope of the Financial
Management Unit in Hospital

• Basic Accounting (Billing, Balance

Sheet, P & L Statements, Bank A/c )
• Costing & Pricing (Cost Accounting,
Financial Accounting, Depreciation)
• Income Tax
• Capital Management
• Budgeting (Capital, Revenue)
• Mediclame & Insurance
• Salary & Wages, Professional’s Fees
• Finance
• Purchase and Procurement
(Equipment, Drugs, Consumables,
etc)
• Petty Cash
• Investment decisions
• Fund mobilization
•
 Structure
 Board of Directors
 Executive Committee
 Director- Finance / Chief Financial Officer
(CFO)
 Chief Executive Officer
 Vice President (Finance)
 GM (Accounting & Finance)
 Manager (Finance, Audit and Accounts)
 Asstt. Managers
 (Billing, OPD, Mediclame, Pharmacy, Lab, Store,
Equipment etc.)
 Sr. Clerk/Sr. Executive
 Locations

• Billing at Ground floor or near

reception
• Mediclame Dept – near billing
• Accounts & Finance – in
Administrative block, must be
separate from routine patient flow
 Unit Costing (Hospital Costing)
• OPD - per out patient attended
• Wards - per indoor case
• Medical Supplies – per patient per day
• Radio Therapy - per course of
treatment per day
• Diagnostic X-Ray - per 100 units
weighted points value
• Pathology - per 100 requests
• Boiler House - per 1000 lbs steam
raised
• Power, Heating, Lighting etc-per 1000
• Laundry - per 100 articles laundered
• Medical Record - per weighted units
• Works & Maintenance - per 1000
cubic feet
• Administration - suitable % of
Turnover
• House keeping – per sq feet (around
3% of total cost, out of which 90-95
% is labour)
• For Wards – per bed per day @ Rs. 7-
10
• Eg. 100 bed hospital – 10 X 100 X 30
 Depreciation
ion of Expired DeferredRecovery
Cost & Maintenance
Special Methods

On the basis of Use

e basis of Time 1 .Revolution
2 .Depletion
3 .Compound Invest
4 .Inventory System of Depreciati
1 .Working Hours 5 .Retirement
2 .Production Unit 6.
3 .Mileage

e d In sta llm e n t ( S LM ) 1. Sinking Fund

inishing Balance ( WDV ) 2. Annuity
3. Insurance Policy
4.
 Sum of Year’s Digit Method (Rule of 78
Method)
• It is a variant of Diminishing Balance
Method
(Written Down Value Method). In this
method also amount of depreciation
reduces constantly. It is normally
applied on assets whose economic life
is very long (capital equipment)
• This method is also known as “Rule of
78” as it is based on the sum total of
12 months arrived as follows:
1+2+3+4+5+6+7+8+9+10+11+12=78

• Formula normally used is S = n(n+1)

• If cost of an asset is Rs. 1,00,000 and the
estimated life is 5 years; the sum of the years
digi can be calculated as :
• S = 5 (5 + 1) / 2 = 15
• The figure 15 is arrived as follows:
5+4+3+2+1=15
Year Opening Rate Depreciation Cumulative Closing
book Value Charged Depreciatio Book
n Value

1 100,000 5/15 31,667 31,667 68,333

2 68,333 4/15 25,333 57,000 43,000
3 43,000 3/15 19,000 76,000 24,000
4 24,000 2/15 12,667 88,667 11,333
5 11,333 1/15 6,333 95,000 5,000
 Income Tax
• Hospital fall under healthcare industries.
They render services like hotels,
canteens, soft wares etc. ownership
wise the hospitals, nursing homes etc.
can be categorized as:
• Trust (up to Rs. 10k@ 10%, 10-20k @
20%, >20k @ 30%)
• Firms (Private/Partnership Hospitals) @
30% plus surcharge @2.5 %
• Corporate Bodies (@ 35% plus surcharge
@ 2.5% )
• Individuals
• Healthcare unit run by Govt. or aided by
Govt. & are run for philanthropic
 :Reference:

• A Handbook on Accounting for

Hospital Management by D.K.
Chatterjee
• Managerial Accounting for Hospital
by G.R. Kulkarni
• Notes from Dr. Santosh Kakade
•
•
0
Thank
You