Unearth your veterinary practice's financial problems
You don't need to dig deep to see the recession's effects: going-out-of-business sale signs, empty storefronts, maybe even your practice's sinking bottom line. While our profession seems to be more or less holding steady—80 to 90 percent of practices report that they're doing as well as, if not better than, last year—there are plenty of practice owners whose numbers are down. If your profits aren't as high as they've been, or if you're looking to increase your already healthy earnings, it's time to mine through your revenue rubble. If your income is six feet under and falling, this is how to get back on top soil.
HIT PAY DIRT, NOT ROCK BOTTOMIf your bottom line is flat, the culprit may be a stagnant department within your practice. Compile and print out your year-to-date income by department (surgery, anesthesia, pharmacy, laboratory, and so on) and compare it to the same period of last year. You can expect some correlations. If your surgery income slipped, anesthesia income should have also dropped. Next, check your pricing. For example, if you find that laboratory income fell, check to see that you updated your fee schedule, especially if you send out labs. The outside laboratory may have increased its fees.
If your fees are current, try looking at the number of procedures performed. Did you do fewer fecals, heartworm tests, or blood chemistries this year? To find out, compare last year's number of professional transactions—any transaction that requires a doctor to be involved in the delivery of the service—to this year's number. (Remember, the numbers need to be from the same period of each year.) Also compare last year's total client transactions—any purchase that occurs within the practice, including over-the-counter and food sales—to this year's to get the best picture. The industry average is 3,200 professional transactions and 5,500 total client transactions per full-time-equivalent veterinarian per year. But don't get too wrapped up in these numbers. While you should be aware of national averages, remember, they're averages. What's most important is that you compare your practice to itself.
Still can't spot the reason for your practice's economic slowdown? Take a closer peek at your average client transaction (any transaction in your practice) and your average professional transaction (any transaction requiring a doctor's involvement). Compared to last year's numbers-to-date, are these figures up or down? The national average for a client transaction is $110; a professional transaction averages $140—but I know of many practices that average $160 or more per professional transaction, so don't set the bar too low.
If your average client transaction is down, maybe your team needs to offer more of a full-service approach. When clients come in for rabies vaccinations, are team members talking to them about their pets' additional needs—heartworm checks, feline leukemia tests, and so on? Are they reviewing patients' medical records and asking clients to consider food and parasite preventive refills? I know a practice that suffered an $11 decrease in its average client transaction because—as its investigation revealed—one receptionist who followed up with clients on refills had left the practice.