What have we learned from our workshop series that covered Your Practice Profit, Your Dashboard, Your Team and Your Clients? Over the last 12 articles we shared great ideas from our expert panelists that can really help drive your practice success. So now you should be reaping the rewards…right? Well, only if you actually implemented and managed the ideas. If you didn’t, you can get started now. This article has a few highlights from each area of the series.
Our annual HSAH Veterinary Solutions Workshops explore a myriad of insightful viewpoints from four of the most respected and well-known financial experts in the veterinary business: Dr. Karen E. Felsted, CPA, MS, DVM, CVPM, CVA, PantheraT Veterinary Management Consulting; Gary I. Glassman, CPA, Burzenski & Company, P.C.; Dr. Marsha L. Heinke, DVM, EA, CPA, CVPM Marsha L. Heinke, CPA, Inc.; and Fritz Wood, CPA, CFP, HF Wood Consulting.
The 2016 Workshop was sponsored by Henry Schein Animal Health, Ceva, Elanco, Merial, and Zoetis.
The mission of the “HSAH Veterinary Solutions Workshops” is to elicit 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.
Your practice profit
One of the most important financial measures, if not THE most important, is practice profitability…making more money than you spend. So you have to manage and analyze both your revenue and expenses. Most practices spend time managing the expense side and neglect managing the revenue side. There are revenue opportunities in building your client base and providing more diagnostic and preventive care services. Utilize forward booking to keep your clients active and to increase visits. This will help ensure client compliance of the services and products you offer. These key activities will increase revenue. A very large % of the costs to run your hospital are fixed…things like rent and utilities that can’t be decreased no matter what happens to revenue. About 25% of the costs are truly variable like your Cost of Professional Service (COPS). The largest expense is labor which can be both fixed and variable. Focus your scheduling and overtime to manage the variable piece. Some variable expenses are good. Your COPS may increase as production increases and that can be good for profitability. It is also very important to manage your inventory and turn it into a profit center. You may have $70k, $80k or more in excess inventory on your shelves that could be eroding your profits. Utilize your practice software inventory management modules too. And work with a great CPA to set up best practices for managing both revenue and expenses to increase your practice profit.
Measuring and analyzing data provides insight into your business so that you can make decisions on the actions you need to take to maximize the successful trends and correct the negative ones. You need to first “know your numbers”. What is happening with your clients, patients, visits, revenue, expenses, and profits? Consult your CPA or accountant to determine the best metrics to measure and monitor for your practice. Then do it consistently to first understand your own trends. Next…”know their numbers”. Compare your numbers to reliable industry benchmarks but be careful to remember that your numbers are unique to your business and may not correlate exactly with other benchmarks. Benchmarks are good to help you question your own numbers but they may not be right for your business. Now “share your numbers”. Get your team engaged by sharing appropriate numbers and trends. Your team may only see the money coming in and may not be aware of all the money going out. Let them know their role in “moving the numbers” for increased practice success. There are many tools available now to make your practice data and trends easily available for you. Consult your practice management software for options.
You cannot run a successful business without a successful team and you cannot have a successful team without great leadership…period. Leaders have a responsibility to set the course and inspire the team on a successful journey. All leaders need to hone their skills. Take a quick gut check and ask yourself if you are leading your team effectively and if not seek out training opportunities. Your team is the most important asset of your business. Hire the best, provide great training, pay them well, and create a culture that attracts and retains great talent. Turnover is costly financially and creates team stress. A high performing veterinary practice is completely dependent on a high performing veterinary team. You can’t separate the two. The practice depends on happy clients that come in every year to fully utilize all the services and products offered for their pet. And that is completely dependent on the team’s training and skills to keep those clients coming back and highly compliant. Each team member needs to be able to execute their own responsibilities as well as work well within the team to execute practice strategies and standards of care. A great team provides greater patient care for your clients and business success.
Do you know if your client base is growing or declining? Are you keeping your active clients coming back while attracting new clients? Did you know that 20% or more of the clients you saw last year may not come back this year? What impact does that have on your revenue? Many practices are struggling to grow new clients and half of the new clients may never come back at all. This goes back to “know your numbers”. Client growth and retention is key. You must deliver value to keep your clients coming back. Value is not just price. It includes the client experience too. Did they have to wait? Did you communicate with words they understand? Are you providing the services they want like preventive care? Are you surveying your clients to find out if they are happy and would recommend your practice to others? And are your clients saying “yes” to your recommendations? Ensure your practice trends are positive for total active clients, new clients, client retention and compliance. This is the practice foundation for success and growth.
Watch for our new series in June
Henry Schein Animal Health understands that a successful veterinary practice depends on both great medicine and business development rooted in sound, fundamental, and actionable information. Our next series will be digging into practice transitions. Our expert panel will be discussing key areas of buying and selling veterinary a practice…and more. We’re confident our next series will continue to energize, enlighten and inspire you toward even greater financial success.