4 staples of a healthy veterinary practice
Before this recession pounded our profession like a meat tenderizer, most veterinary practices saw exceptional cash flow. We rarely worried about paying the mortgage or making payroll. We became complacent in our business skills and stewardship. "Practice management" and "the business of medicine" seemed to apply only to overly ambitious veterinarians who cared more about profit than pets. Clients came in and paid their bills quietly, which meant our bills got paid too. And so for 40 years, our practices took care of themselves. Until now.
Hardships and challenges notwithstanding, the current economic state is an opportunity veterinarians shouldn't waste. In fact, it's a wake-up call to stock up on the basics. Here are the four staples of a healthy practice. Have you been neglecting them? Regardless of how busy you are—or aren't—take some time to examine whether you're stocked up on these key ingredients every month. If you don't, you could find yourself financially malnourished.
In a slow economy, it's natural for your gross revenue and average transaction fee to dip. But if these are the only key indicators you track, you may panic unnecessarily. Examine the number of transactions, or client visits, you're seeing. A practice owner I know is distraught because her gross revenue is down 10 percent. Her initial reaction is to slash employee costs, lower her fees, offer deep discounts, and extend practice hours. Here's the problem: She's not monitoring any change in the number of transactions at the practice. If she were, she'd notice that her transaction volume has dipped only 3 percent.
A practice that sees a dip in its average transaction amount while maintaining a stable number of transactions probably doesn't need to take extensive action. Even though clients are spending less, they're still coming in. You have ample opportunity to promote your services and drive that transaction fee back up.
Examine how your team recommends income boosters such as senior wellness tests (both blood and urine), diets and supplements, and dentistry. With confident communication, you may see more clients complying with these recommendations. On the other hand, look at what you charge for common pet products and medications. If you're not competitive, you should be. Sharpening your communication skills, being competitive whenever possible with product sales, and offering superior client service can boost your average transaction fee without layoffs, discounts, or longer hours.
This leads to a question about the downturn: Do you think the recession will be short-lived or are we entering a many-year depression? If you're like me, you're betting that within a year or two the economy will rebound and growth will resume. But that doesn't mean you don't take action now. Rather, it means you respond prudently and rationally. As long as you don't see a significant, concurrent drop in all three income indicators—gross revenue, average transaction amount, and number of client visits—the fundamentals of your practice are probably sound. Take this opportunity to improve your standards of care and service, and when the rebound comes, your practice will be poised for incredible growth.