Analysis of medicines expenditure for fiscal year 2014/2015 at Lodwar County Referral Hospital
Kokonya, Daniel Masiga
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Major causes of stock outs in public hospital are inadequate fund to purchase the medicines and inefficiencies in the pharmaceutical supply chain. Good pharmaceutical management can result in efficient use of funds for purchasing medicines and improvement of the pharmaceutical supply chain. The objective of this study was to analyse pharmaceutical supply chain costs at Lodwar County Referral Hospital in order to get insight of how the funds were used and use this information to improve pharmaceutical management. This study was conducted using the retrospective case study methodology. A total cost analysis of pharmaceutical supply chain costs was done (pharmaceutical acquisition cost, Inventory holding cost, purchasing cost and shortage cost) for fiscal year 2014/2015 was conducted to identify key cost areas. Pharmaceutical acquisition costs were then subjected to ABC and VEN analysis to narrow down on groups requiring greater fiscal and managerial control The study showed that the total pharmaceutical supply chain cost of Lodwar County Referral Hospital for fiscal year 2014/2015 was KES 53,228,625. Pharmaceutical acquisition costs accounted for 92.3%; inventory holding cost 6.3%; purchasing cost 1% and shortage cost 0.4 % of the total costs. ABC– VEN analysis resulted in identification of three groups requiring different level of managerial control. Class I drugs comprising of 74 of the 200 products (37%) accounted for 82% of the total cost. This group was identified for stringent fiscal and managerial control. In conclusion the total cost analysis aided in identification of pharmaceutical supply chain costs that should be controlled. And the ABC – VEN analysis aided in identifying a comprehensive group of drugs among the essential medicines list that may require higher managerial control.