Editor’s note: This is the 5th in a series of monthly articles that discusses the insightful viewpoints of four of the most respected and well-known financial experts in the veterinary business today, who came together in late 2014 and 2015 at the invitation of Henry Schein Animal Health, Ceva, Elanco, Merck, Merial, Purina, and Virbac to share their expertise and informed opinions in the areas of pharmacy, nutrition and data.
They are: Dr. Karen E. Felsted, CPA, MS, DVM, CVPM, CVA of PantheraT Veterinary Management Consulting; Gary I. Glassman, CPA of Burzenski & Company, P.C.; Dr. Marsha L. Heinke, DVM, EA, CPA, CVPM of Marsha L. Heinke, CPA, Inc.; and Fritz Wood, CPA, CFP, HF of Wood Consulting. The mission of the “Veterinary Pharmacy Diets and Data Solutions Workshop” is bringing expert advice and actionable business solutions to increase the practice success of the veterinary customers we serve while reinforcing the veterinarian to the pet owner as the best source of healthcare and product choices for longer healthier lives of the pet family member. Be sure to visit henryscheinvet.com/betterbusiness to watch live video clips excerpted from the workshop that accompany each monthly article.
Your pharmacy and the value of
In our previous four articles, we’ve discussed the importance of identifying and being
guided by your practice’s value proposition and standard of care, and how to be price-sensitive
and competitive with your pharmacy products and services.
While that all may make sense to you, does it translate as clearly and powerfully with
Practically everything your practice does – in words and actions – conveys some kind
of message to your clients and potential clients. Whether it’s a reminder on an invoice
or email, an e-newsletter, a receptionist’s greeting or smile, or a poster on the wall –
they all serve as visual and verbal cues to your clients. That’s why it’s so important to
never miss a single opportunity to communicate positive messages that will grow your
business and keep your clients satisfied and loyal.
An oft-heard cliché in veterinary medicine holds that pet owners need to hear the same
message at least 10 times before it finally sinks in. Follow up your reminder about an
upcoming heartworm test with an article or video about heartworm disease in your
weekly newsletter or on your client web portal. Post tweets or posts about heartworm
disease trends on Twitter or Facebook. Write a blog conveying helpful tips for keeping
your pet hearthealthy. In addition, your distributor partners likely have good quality
materials you can make available in your exam room or reception area. And don’t
overlook the abundance of free educational videos you can share from respected
veterinary websites, as well as YouTube.
You want to send clear, unambiguous messages about the value of your pharmacy; that
pricing for popular items such as heartworm and flea/tick preventative is competitive,
that your stock is plentiful, and that the quality of your products are unsurpassed. But
is that enough?
You also need your messages to convey the competence of your practice, and its
core mission of keeping your patients healthy – whether it’s maintaining good health or
restoring it after an injury or illness. Strong, consistent communication is the foundation
of a trusting relationship your practice has with its clients.
One popular communication training method is scripting, which employs written
message points that everyone on your staff needs to understand and follow. Nothing
can damage your messaging more than conflicting signals. Scripting ensures
everyone on your staff sends a consistent message in every client encounter – from
the front desk to the exam room to email to the whole gamut of verbal and non-verbal
communications that happen daily. Call on your practice consultant to inquire about
media training, another technique that helps your staff refine their public written and
verbal communication skills.
Clear communication also works to mitigate misconceptions the public or your clients
may have about your practice. If your clients or potential new clients are saying things
in public that are counter to the messages you and your staff are conveying, you may
have a serious trust gap. Make it a point to monitor social media websites to see what
people in the community are saying about veterinarians in general, or your practice. You
can’t control those messages, but you can manage them. Use the client comments
and reviews to make positive changes in your services and products offered.
Here are some additional tips:
- Consider having customer service calls forwarded to a staff member in a separate,
discrete room away from public areas in your practice. This not only allows
unencumbered two-way conversations, but also keeps them private.
- When interviewing office staff for open positions, don’t overlook the value of the
candidate’s communication “soft skills.” How your employee maintains eye contact
and listens with empathy and attentiveness are just as important as what they say
- Train your reception staff on how to turn phone shoppers into loyal clients. Show
them how to transition a simple “hit and run” query about prices into a simple, direct
yet powerful discussion about why they should consider getting their meds from you.
In the end, your reception staff could be adding to the growth of your practice in a
very important way.
- Finally, enlist the help of your distributor representative for guidance on messaging,
communication, and educating clients about specific products.
Fueling a consistent and positive
conversation about diets - Nutrition
Much of what we’ve just discussed about pharmacy communications can easily apply
to your nutrition business.
According to the World Small Animal Veterinary Association guidelines, a nutritional
assessment and a specific nutritional recommendation be made on every pet every
visit. This is the 5th vital assessment following temperature, pulse, respiration and pain.
Remember every pet every time!
Consistent and clear communications about therapeutic and wellness diets can
take many forms – from client reminders about upcoming preventive care exams or
therapeutic refills to positive blogs or website articles espousing the benefits of healthy
diets in dogs and cats.
As in pharmacy, your communications will go far in conveying messages about
your practice’s dedication to maintaining your patient’s health, your competence in
recommending diets comprised of the highest quality ingredients, and your sensitivity
to competitive pricing.
Your message should reinforce your practice philosophy about the important role of
nutrition in extending their pets’ lives.
And again, scripting ensures that everyone on your staff continues to use the same or
similar messaging about nutrition, pricing and quality.
One very powerful non-verbal communication technique with nutrition is product
placement. Having a healthy stock of your nutritional products on display in your
reception area with posters in your exam rooms sends visual cues to your clients that
your practice has plenty of product on hand.
Some additional tips about nutrition messaging:
- Follow-up communications are critical with diets. Many clients may hesitate to ask for
a second bag because of “sticker shock.” Reinforce the message that your products
are competitively priced and affordable by comparing the cost-per-serving or costper-
day when compared with popular brands from big box retailers.
- Call the client about 7 days after they go home with the first bag to make sure the
pet is doing well with the transition to a new diet. And remind them when they are
ready for a refill. Pets usually eat about half their body weight per month so it is easy
to calculate when they need a refill. A 20 pound dog eats about 10 pounds monthly
and a 10 pound cat will eat about 5.
- Make use of an exam room patient report to make written nutritional recommendations
– whether you are recommending a therapeutic diet for a disease like obesity or if
you are recommending a high quality wellness diet. You may also want to include
a distributor partner’s promotional or educational materials as well.
- Seize opportunities to query your clients about their pets’ eating habits during
routine exams or after weighing in. Include a body condition score in the exam.
Conversations can spring from that about wellness and therapeutic diets. Invite
them to bring in a photo of everything their pet eats.
- Enlist your reception staff to call clients just before an office visit and offer to have
refills of their therapeutic or wellness diets ready when they come. Offer home delivery
with automatic refills. Convenience is a powerful sales tool.
- Enlist the help of your distributor and manufacturer representative for messaging and
product placement advice. They may have coupons, merchandising and training
available. Take advantage of the free, self-paced nutrition courses.
- Promote good nutrition on your website and social media.
- And consider loyalty programs for your clients.
Remember – everyone in your practice plays an important role in educating clients on
how to provide the best care for their pet. Every opportunity you miss to engage clients,
ask how their pets are doing, suggest products and communicate your messages is
a lost opportunity to provide the very best care for your patient.
Tracking and trending your data: A look at
revenues and liquidity
(First of two parts)
In previous articles we’ve discussed some of the key performance indicators and other
kinds of data that are critical to running a successful veterinary practice. Once you’ve
identified important data, you need to develop a plan for tracking and monitoring it to
ensure revenue growth, stay within your budget, plan for improvements, and keep tabs
on key changes in your client base, employees, inventory, etc.
Tracking and trending data can be as simple as keeping a spreadsheet showing
revenues and expenses – by category, date, or numerous other parameters. But few
businesses could survive without the ability to see where they’ve been, where they are
now, and where they are headed. Tracking and trending data often involves comparing
one key piece of information with another, such as revenue per doctor or practice
expenses as a percentage of gross revenue. This allows you to see the effect of one
aspect of activity on another, and makes forecasting much more meaningful.
It’s also important to keep in mind that your practice trends could be different than other
practice trends. For example, if non-DVM labor costs run between 18% and 22% in a
typical veterinary practice and yours have been consistently 28% for years, it may not
be cause for alarm if your practice is in a robust job market compared to the rest of the
country and other well-controlled costs of operations support a healthy profit margin.
And yet, that knowledge may still lead you to question, and probe further for answers.
Following is a look at some of the tracking and trending possibilities with revenues
- Sales – There are hundreds of ways to slice and dice sales data. Some yield more
meaningful results than others. Accountants typically like to give their veterinary clients
a daily breakeven point to help them to understand how much sales they need to
generate each day just to break even. Going further, it’s often useful to track monthly
sales and monthly break-even points. When you create an average daily or monthly
break-even point, you can then compare periods to better understand why some
months were slower when others were robust. This kind of exercise is a quick and easy
way to get a snapshot of gross revenues and identify weak spots.
- Transactions – Another way to evaluate revenue is how it’s produced. Breaking
down revenue production by practice doctors, for example, can yield some revealing
and powerful information. You may find one doctor produces more revenue than
another doctor. One doctor may be promoting additional services or products that
produce more revenue while still meeting the practice standard of care. Often such
tracking and trending can give you a strong picture of each doctor’s production and
level of care. For example, if your practice just raised its preventive care exam fees by
$5 and the average transaction charge for a particular doctor stays the same, you may
want to look into the reason for that.
- Receivables – You may also want to track and trend accounts receivable balances.
Is the team letting client credit extension spin out of control? Is that receivables balance
increasing because your credit standards have changed and all of a sudden someone
at the front desk isn’t promoting payment options? And where’s that going to show up?
It’s going to show up in the tracking and trending of your accounts receivable activity.
Most veterinarians today can quickly tell you how much cash they have in the bank,
but fewer and fewer are keeping much of it for rainy days. Many practices today are
running closer to the edge than they used to, and few could tell you what impact a 5%
drop in revenues would have on their business. This is not unique to our profession; it’s
symptomatic of many industries in the midst of an economic recovery.
When your practice doesn’t make a concerted effort to reinvest its profits, your
debts are paid slower and you run the risk of being unable to weather a downturn.
Reinvestment helps your practice build equity and financial strength. Many practice
owners think reinvestment only applies to big capital expenditures for equipment or
remodeling or renovation projects. But reinvestment also applies to building healthy
cash balances and emergency funds.
Veterinary medicine is a seasonal business. Many months are strong. Some are weak.
All the more reason to track and trend your financial data to maximize every opportunity
to build liquidity. Make a commitment today to reinvest cash on a quarterly or annual
basis. Establish an emergency fund.
Note: Part 2 next month will explore key tracking and trending issues with expenses,
and client and employee data.
About the Author
Dawn Burdette, Executive Director, Sales Leadership and
Development has served HSAH for over 25 years. Dawn has served in a variety of
positions in sales and management. This includes training our sales force on the
business of veterinary medicine and bringing business solutions to our customers
that increase financial success for veterinary practices. Dawn currently serves on
the AVMA’s Veterinary Economic Strategy Committee.