The details of your veterinary practice are in the data
Revenue, profit, revisit rates. Even though these numbers don't always tell the story we'd like to hear, the good news is we're paying attention. As the adage goes, you can't manage what you don't measure. By tracking the right data, you can easily see when something's awry and figure out how to treat it—sooner rather than later.
YOU ARE WHAT YOU MEASURE
Dr. Dennis McCurnin isn't a number person, he says—at least not by nature. He practiced veterinary medicine for six years before moving to the teaching side and later administration at Colorado State University and Louisiana State University veterinary schools. After 28 years, he's learned a thing or two about what to measure. For example, he says, say you see your expenses going up. Naturally you want to trim back. But you don't want to just cut anywhere. To really make a difference, you need know where you spend the most. In addition, Dr. McCurnin recommends looking at a combination of metrics to get the bigger picture. "It doesn't do any good if your revenue's up 15 percent but expenditures are up 25 percent," he says.TRACKING TRENDS
Too many practice owners don't look at their numbers frequently enough, says Dr. McCurnin. "If they look at the numbers every six months and see their expenses are up or revenues down, they've missed that period of time to make improvement," he says. By looking at the data monthly and comparing it to the last 24 or 36 months in your practice, you can quickly see what's changed and identify any trends. (Head to http://dvm360.com/metrics to download the cheat sheet.) Examine the numbers and then ask: Are things getting better, staying the same, or getting worse? In addition, you may also want to compare your numbers against industry benchmarks, available from the American Animal Hospital Association, National Commission on Veterinary Economic Issues, or the Benchmarks series of Well-Managed Practice studies.
THE SECRET'S IN THE SOFTWARE
Many veterinary teams don't know their practice management software well. "You go into a practice and ask for reports and try to get financial data," Dr. McCurnin says. "They know it's in the computer, they just don't know how to get it out." He recommends ensuring that someone in the practice thoroughly understands the software and uses it on a regular basis. Call your vendor to get free training if necessary.
A GRAPH IS WORTH A THOUSAND NUMBERS
Given that most veterinarians are visual learners, Dr. McCurnin says, graphs and charts are better than tables when it comes to digesting information and seeing trends. "It doesn't take long to understand a line graph and pie chart versus a black-and-white table," he says. For example, if you charted your last 12 months of average charge per transaction on a line graph, you could easily see where the peaks and valleys are and what's happening.
A SUMMARY POINT OF VIEW
Building on that idea, Dr. McCurnin is a proponent of pulling key data and graphs into a simplified profit-and-loss statement that you review regularly. Pulling from information in your practice management and accounting software, your CPA can help you create this sheet. "You should be able to look at it and in five minutes know where your practice is financially," Dr. McCurnin says.