Tip of the Week: Pharmacists, Students, Other Employees Can Benefit from Financial Literacy

Last week’s Management Tip dealt with managerial accounting and covered a case study of accounting systems for a large pharmacy chain that would have involved decision-making by company executives presumably well versed in accounting and control mechanisms.

However, pharmacists at every level would benefit from knowledge of at least some basic accounting principles and at least some level of financial literacy. Such knowledge would be helpful in managing their stores and departments, promoting their own career mobility, training other employees, and making financial decisions that impact their personal lives.

Researcher Maryam Rangchian, PharmD, and her colleagues evaluated pharmacy students’ levels of financial literacy, given that many students will likely not have had much exposure to these concepts.¹ The study asked students objective questions in several areas of accounting and financial literacy, employing multiple choice, fill-in-the-blank, and short answer questions.

These included basic definitions of personal financial accounting, asset liquidity, apartment leasing costs, basic profit calculation, basic tax calculation, creditworthiness, rules for issuing checks, reasons to buy insurance, portfolio priority, stock risk, bank accounts characteristics, investment funds return, rules of investment funds, bonds pricing, time value of money, and other topics.

Correct answers on the question categories ranged from a low of 5.2% for portfolio possession to a high of 79.77% for apartment leasing costs. Overall, the students demonstrated rather low levels of financial literacy and knowledge of basic accounting, with the lowest scores overall dealing with investment aspects.

Additionally, students who demonstrated higher financial literacy gave priority to fast entrance into the job market compared to other suggested career paths. They also were more likely to be responsible for family decision-making and have a history of information-gathering from other people. Students at higher levels of their pharmacy education scored better. There were no differences between students’ performance by gender.

The study revealed that students were gaining some level of literacy through pharmacy school, presumably as a result of coursework and through additional life experiences. It is interesting that students who report a habit of seeking information from others performed better on the financial literacy test.

Still, students performed poorly overall. When students complete their studies and gain life experience, they will invariably become somewhat better at accounting and financial literacy. However, some might never become very astute in this area, and early mentoring is warranted.

Having a better sense of these financial issues will also spur better decision-making in pharmacy and help understand processes that lead to more efficient patient care. Managers and experienced pharmacists should take the opportunity to provide advice and mentoring to young pharmacists. Larger corporations might consider holding some sort of financial literacy training for pharmacy employees.

Additional information about Financial Reports and Managing Yourself for Success can be found in Pharmacy Management: Essentials for All Practice Settings, 5e.

About the Author

Shane P. Desselle, RPh, PhD, FAPhA, is a professor of social and behavioral pharmacy at the Touro University California College of Pharmacy.

Reference

Rangchian , Nezami S, Seresht DJ, Harchegani AL. Pharmacy students’ level of financial literacy and its differences among students with various career intentions. Curr Pharm Teach Learn. https://doi.org/10.1016/jcptl.2019.10.008