Dig deeper to find the source of your income
It's very easy right now to be focused on cutting expenses at your veterinary practice—at almost any cost. But at some point this strategy becomes self-limiting, and ultimately it can hurt your practice. So cut costs where you can, but also take a look at where your revenue comes from and seek to build up certain areas.
Your veterinary software program can tell you your income by treatment category, so pick six to eight categories to follow and emphasize at your practice. For instance, how much of your practice revenue comes from dental procedures? According to Benchmarks 2009: A Study of Well-Managed Practices, published by Wutchiett Tumblin and Associates and Veterinary Economics, 2.5 percent is average. If your practice is doing more than this, great. But if you're doing just 1 percent, that's an area to work on.
While it's useful to compare the whole practice to professional norms, I find it even more rewarding to compare doctors' averages within the same practice. Take laboratory work, for example—a target of 18 percent is a good goal. If I have one doctor at 20 percent and one at 16 percent, I can try to learn from the higher-producing doctor what he or she is doing to beat the average.Ultimately, we all have our strengths and weaknesses. Identifying these is invaluable because within our weak spots lie opportunities to grow the practice. Don't overlook the fact that sagging revenue figures may also indicate that your quality of care is suffering. By the same token, above-average scores typically indicate very high quality of care. For instance, it's hard to argue that the doctor or hospital that excels at diagnostics is not providing high-quality care.
Finally, look at your income-by-treatment numbers monthly. If you are a multidoctor practice, set individual meetings with doctors monthly and let them know how they compare with other doctors and what they can do to improve their scores. In addition, follow the trend of your hospital's income by treatment areas monthly and from year to year so that you catch areas that are improving and those that are falling off. Making these efforts to improve your practice's finances will boost your quality of care as well.
Veterinary Economics Editorial Advisory Board member Dr. Jeff Rothstein, MBA, is president of Progressive Pet Animal Hospitals and Management Group in Michigan.