New Year's veterinary practice checklist: 7 things to do right now
The "Management Matters" blog features the writing of veterinary practice management consultants Monica Dixon Perry, Mark Opperman and Sheila Grosdidier. Come back every month for their unique take on current and future trends in veterinary practice as well as tried-and-true tips for improving patient care, team member morale and practice revenue.
1. Set specific goals
Goal planning is a big key to your success this year. Think about it—we spend more time planning our vacations than we spend planning for the success of our businesses. January is a good time to plan a management retreat. Take your management team away from the practice for a day or two and really focus on setting goals for the upcoming year. You’ll be amazed at how much you can actually accomplish if you set specific goals and work toward them.
2. Update your fee schedule
I normally recommend that fee schedules be updated twice a year, and January is a good month to do one of those updates. When updating a practice’s fee schedule, I like to do a competitive fee schedule analysis with other practices of a similar niche, focusing on “shopped and exposed” fees. This information can help you decide where you want to price yourself relative to the market.
For in-hospital fees, I suggest you recalculate your overhead costs per minute per veterinarian and make any appropriate adjustments to your service fees. Or, as an alternative to this method, you might want to increase your fees at double the cost of living. The cost of living is running around 3 to 4 percent, so a 6 to 8 percent increase on fees (excluding shopped and exposed fees) would be appropriate.
When setting fees, I prefer to round service fees off to the highest 50 cents or dollar. If you price service fees to the penny—$54.04, for example—clients might feel you’re nickel-and-diming them and that can cast your practice in a negative light.
Also, review outside laboratory fees to make sure they’re based on the most current fee schedule from your laboratory. The normal markup on your outside laboratory services should be 2.5 times cost or two times cost plus $5—whichever is greater.
Since inventory is entered into the computer as it is received, these markups should be correct, but you might want to update pharmacy preparation fees and the minimum Rx charge in your computer system.
3. Take inventory
Speaking of inventory, you should have done a physical inventory at the end of 2013. If you didn’t, get it done in January. Inventory should be counted down to the pill, and every item to the actual quantity left on the shelf. Updated inventory numbers need to be entered into the computer the same day you conduct the physical inventory.
What do you do if you find discrepancies in your inventory figures? If the quantity in the computer is significantly different that the actual physical inventory quantity, you might have a problem. It’s normal to have a slight variation (less than 10 percent), but if your numbers are way off, this could indicate a problem that needs to be further investigated.
4. Check your fees and charges
This is a good time to check your bank fees and credit card merchant service charges. Credit card service companies have become very tricky, and sometimes fees can creep up without our even noticing them. It used to be that interest rates and fees were clearly stated and that was that—well, no more. Now, there are different names for different fees, making it a little harder to calculate what it actually costs to process credit cards.
The easiest way to figure out what you are really paying is to add all the fees together (percentage on amount charged, service fee, transaction fee, monthly service fee and so on), and divide that by the amount of your credit card sales. Normally, the resulting figure should be below 2 percent. This is a highly competitive market, so if you’re paying too much, it might be time to renegotiate your rates or switch to a new credit card processing company.
5. Assess your chart of accounts
If you want to make changes to your chart of accounts, now is the time to do it. I normally recommend that my clients follow the American Animal Hospital Association (AAHA) Chart of Accounts when making changes. The AAHA Chart of Accounts is a standard for classifying income, expense and balance sheet accounts in your veterinary practice. Every industry and profession has a standard chart of accounts to compare to others in an apples-to-apples manner.
Here’s an example: Suppose you’re paying an invoice from one of your suppliers. Do you post the entire amount under drugs and supplies or do you break that invoice down into medical supplies, surgical supplies, anesthesia supplies and so on? The AAHA Chart of Accounts will provide the suggested breakdown of both income and expenses. This is helpful if you’re going to compare your practice to others to see how you’re doing from an economic point of view. Plus, you don’t have to be an AAHA hospital to get the chart of accounts, and the chart applies to large animal, small animal and mixed animal practices. Visit aahanet.org for more information.
6. Review your personnel records
The beginning of the year is a great time to go through your employee files and make sure everything is current and up-to-date. Have your employees signed for the receipt of their employee manual? Will they be making any changes to their payroll deductions? Have there been any changes to your employees’ personal information? Have your employees completed OSHA training?
I always recommend that employees receive a performance evaluation after three months of employment and then yearly thereafter. To make sure that performance evaluations are given on time, I’d review my employee files in January and make sure a reminder is set up in my calendar for each employee’s evaluation. In fact, I would inform employees about their upcoming performance evaluations a month before and schedule a specific day and time for the review at that time. One of the most demoralizing things you can do to your employees is forget their performance evaluations.
7. Peek at your insurance policies
Another expense that tends to creep up and get away from you is business insurance. You should have reviewed your insurance policy when it came up for renewal, but sometimes that happens when we’re at our busiest and it doesn’t get done. So take a look at your business owner’s policy now. Is your coverage appropriate? Do you need to increase or add any additional coverage?
I’d also suggest getting some competitive price quotes for your business policy. The best way to do this is to create a schedule of coverage that lists your current insurance coverage and the limits of liability. Using this information, you can shop out your policy with several insurance companies. You might be surprised how much money you can save or how inadequate your policy is. It’s always good to review your insurance coverage once a year.
So there are your seven tasks to make January your business housekeeping month. Create a list of things you need to do and get to work. By starting off 2014 on a positive note, you’ll be taking steps to ensure it’s a great year for you and your practice.
Mark Opperman, CVPM, is a certified veterinary practice manager and owner of VMC Inc., a veterinary consulting firm based in Evergreen, Colo.