Wish you made more? Wish your practice was worth quite a bit more? Wish you had more time off? Hope you'll eventually fund a worry-free retirement when you sell your practice? Strong management practices are key to achieving all of these goals. So start with these four key areas, and lay the foundation for success.
1. Practice profitability
While gross is good, positive net cash flow is more important to building the value of your practice. As the saying goes: Gross is for your ego; net is for the family. After all, your practice needs to generate a profit to pay for new equipment, eliminate debt, and help create value. You can improve profitability by:
12 signs of a good buy
Once you've set appropriate fees, you shouldn't feel compelled to discount charges or give away services. And if you do, each discounted or lost charge represents pure profit that you're handing straight back to the client.
- developing a fee schedule that addresses cost-based, value-based, shopped, and, on occasion, flexible fees
- seeing more clients
- performing more needed services for the patient
- reducing any accidentally forgotten or discounted charges
- and keeping expenses at or below national benchmarks.
If you find many charges escaping, it may be time to rethink your policies. If the fee is fair for the client and the practice, then I think any missed charges need to be brought to the attention of the offending doctor. And I'd consider subtracting the fees he or she gave away from his or her gross receipts.
2. Revenue growth
Is the practice growing at a reasonable rate? If the practice is growing only 3 percent each year, it's just keeping up with the average annual rate of inflation.
Of course, new clients lead to growth. But you also need to make sure your team is satisfying established clients and maintaining their bonds with the practice.
Maintaining established relationships is critical partly because it costs less than it does to continually attract new clients. So use high-quality medicine, strong communication skills, and both internal and external marketing to create clients who act as advocates for the practice. Advocates willingly seek out and pay for your services and often refer new clients to the practice.
3. Your healthcare team
Your team members are one of your practice's biggest assets. Yet for too long, practice owners looked at staff members' salaries and labeled them as a liability.
One of the biggest reasons for this mindset: Owners felt they should be the sole source of knowledge for the practice. Thankfully the pendulum is moving in the other direction. Doctors have begun leveraging staff members—and boosting productivity—by letting the veterinarian focus on medicine while other team members manage other responsibilities.
A knowledgeable, well-trained healthcare team with defined job expectations can make great contributions to practice productivity. And if you share your vision, these team members will be even better armed to improve the lives of the horses and clients the practice serves. Your team members will help you achieve your mission, if you let them know what your goals are and how they can help.
4. Manage key financial issues
Here's a hard truth: You'll never create a valuable equine practice if you just show up for work—even if you manage to generate a high gross and pay the bills. You need to really manage the financial side. Three key questions you should ask: