Until recently a Hospital Phamacy has been a revenue center. However as reimbursement margins shink and Pharmacy moves in a direction of only wanting to provide Clinical Services, which are normally not being paid for, Pharmacy will become a cost center. Pharmacy needs to remember that in the current model of Practice, the revenue generated from Pharmacy is in the dispensing of medications. The dispensing of knowledge (Clinical skills) brings no or very little revenue into the department. Expanding Clinical services, which means additional staff and receiving the same dispensing reimbursement, lead to a negative cash flow or a cost center.
Pharmacy needs to re-think where we are going
Pharmacy departments can be both a cost center and a revenue center. They are typically a cost center as they incur expenses for staffing, medications, and operational costs. However, they can also generate revenue through medication sales, clinical services, and reimbursements from insurance companies. The extent to which a pharmacy department is a cost or revenue center may vary depending on the organization and its specific operations.
Cost center.
cost center investment center profit center revenue center
Cost center is a non-revenue producing element of an organization where costs are separately figured and allocated and for which someone is held personally responsible. And a revenue center is distinctly identifiable place, department or unit that directly generates the revenue through sales of good or services.
A revenue center is where the program manager focuses on bringing in revenue for the program, and an expenses center is where a program manager is responsible for their own expenses. Having a center that is responsible for their own expenses helps keep cost down as they are an everyday part of the program managers job, revenue center also help subsidize programs which can be used to allow flexible cost on certain target groups.
A cost unit refers to the actual products. The cost center refers to all the departments in a business organization.
Cost Center: it is that department of a company whose manager is responsible for cost spending only like production department.Revenue Center: it is that department whose manager is only responsible for revenue for example sales department.Profit Center: it is that department whose manager responsible for cost as well as revenue of department that department is called profit centre like "Autonomous Business Units".
Shadow cost centers provide detailed reports for cost center departments, division, and extensions.Shadow cost centers provide detailed reports for cost center departments, division, and extensions.Exist as budgets on paper only. For example, rent and utilities and depreciation of plant and equipment are large-budget items for any organization.
Think about this for a second. Who are nurses? They are PAID employees. Therefore, a "Nursing Department," is a group of PAID employees grouped together for simplicity within a business. Do nurses generate a revenue for the hospital? No. The HOSPITAL itself, through services (which includes nurses) generates the revenue. Nurses cost money. Got the answer?
Yes for revenue purposes. But it is also a cost centre for other purposes. And in disciplines other than finance, it will have other appropriate descriptors.
it doesn't cost is cost revenue is revenue
cost/revenue x100%
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