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Journal of the Academy of Hospital Administration

Book Review: Managerial Accounting for Hospitals

Author(s): Reviewed by: Rajiv Kumar Jain*

Vol. 16, No. 1 (2004-01 - 2004-06)

Author: G.R.Kulkarni,

Publisher: G.R.Kulkarni B-43, Ashiana, Sh.John Baptist Road, Bandra, Mumbai 400050.
Year of Publication, Pages, Price: 2003,235, Rs 320,US $ 30.

There are many books in the market on Management Accounting but there are very few which focus on Management Accounting in Hospitals. There is a definite need for these kind of books specially in developing countries. It is all the more so in view of the vast changes in financing pattern taking place in Health Services as well increasing globalization of trade in Health Services. Management Accounting has proven to be a tool in the hands of the Hospital Management for improving performance and operating efficiency. The book is a novel attempt in this regard.

The book, if, properly used by hospital managers can help in1 preparing a plan of action,2 understanding financial implications,3 Establishing costs for various services rendered by the hospital and derive unit rates,4 design a management information reporting system,5 investment appraisal, and6 ensure proper management of capital and working capital funds. It is no surprise that the author has taken 8 long years of painstaking effort to get the book published.

The book is organized into 12 main chapters and supplemented by a detailed Introduction, Bibliography and Index. Even then to be able to confine to only 235 pages is an achievement. Each chapter starts with an anecdote and briefly tells what the reader will read in that chapter. The chapters are properly organized and sequenced e.g., budgeting precedes cost accounting, Accounting Controls precede Accounting Review. There are chapters on computerization of hospitals, productivity and chart of Accounts. But, the most useful section for hospital administration is Investment Decisions. It shall be possible, after going through this chapter, for a hospital administrator to not only understands the principles of Capital Expenditure but also realize the importance of application of methods of financial appraisal like payback, Accounting Rate of Return, Present Value Method, Net Present Value, Internal Rate of Return and Equivalent Annual Cost. The difference between physical life and economic life has been clarly brought out in this chapter.

Hospital administrators in the private and Corporate Sector shall find the chapter on ‘Source of Funds’ useful. Sources of both long term and short-term funds like term loans, private loans, debentures, leasing companies, cash credit, credit authorization scheme, Security Margin, have been discussed at reasonable length. The book shall not be able to meet the need of professional cost accountants but that’s an advantage. There are sufficient good quality books available for them. No detailed knowledge has been planned to be provided through this book.

One deficiency which strikes non-professional Financial Manager is absence of graphics and use of various formats, and fonts to present the matter in more user-friendly format. This is required in today’s environment where time is the most precious resource.

The patient, in general, carries an impression that the hospital owners/managers are overcharging him while the hospital owner/manager knows the unremunerative nature of currently organised hospitals in towns and cities of India. This is specially true of small (less than 50 beds) hospitals. Cost accounting/managerial accounting systems shall improve this discrepancy and dissonance.

The author shall gain more readers if he uses more real-life examples of beneficial effects of managerial accounting, inclusion of graphics, charts, highlight points in boxes, extending bibliography further. Having a co-author from the mainstream field of Hospital Administration shall be of advantage both to the author and prospective readers. But, still the book in the present form is equally useful.


* Deputy Chief Medical Director, Indian Railways Medical Services, New Delhi, India.
For correspondence:
157/4, Railway Officers Flat, Northern Railway Colony, Basant Lane,
New Delhi 110 055, India.
E-Mail: [email protected] and [email protected].

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