Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.
Issue link: https://todaysveterinarybusiness.epubxp.com/i/856474
24 Today's Veterinary Business Business • Monitor monthly cash flow. Where is it going? Where is it coming from? • Maintain a budget. The reason to have these numbers is the same reason you collect patient vital signs. You need numbers to determine both the health status of your patients and the health status of your practice. When it comes to profitabil- ity, three major numbers on the expense side must be kept track of: cost of goods sold, staff salaries and DVM salaries. These numbers can easily eat away at more than 60 percent of your gross revenue every month. What are some things an inde- pendent practice can do to control these numbers? Inventory management is a huge challenge. Determining how much to have in stock at any one time is difficult. Can using an online pharmacy limit your overhead costs while maintaining your profits? I think so, if done correctly. Standards of care and medical proto- cols — as set by the doctors — can help minimize having six antibiotics for the same symptoms. Do buying groups help? Savings may be realized by increasing the number of practices negotiating product contracts. This is what the big boys do. What about the inde- pendents? It depends on your prod- uct mix and dispensing habits. You'll need to analyze that as there is no one-size-fits-all for buying groups. When it comes to staff salaries — an appreciation here to "Good to Great" author Jim Collins — getting the right people on the bus, the wrong people off the bus and the right people in the right seats on the bus will go a long way. The best way to manage staff salaries is to staff correctly for your busyness, schedule appropriate- ly for your busyness, and most significantly, delegate as much as possible. Delegation allows people to perform the highest-value tasks, increasing production. With doctor salaries, the question of production-based pay versus salary versus a combination of the two is debated online and at major meetings. There is no one right way as this is people- and practice-dependent. In my experi- ence, highly productive veterinar- ians have great communication and doctoring skills, and they have learned to leverage their team so they can focus on doing what doc- tors have to do and not what they want to do. There are so many vari- ables in the how-to-pay-doctors discussion and in the "When should I add another doctor?" discussion. Suffice it to say, the rule of five is a great place to start. To be prof- itable for a practice, doctors must generate five times their salary. The Enemy Is Us I would love to look into a crystal ball or pull out my tarot cards to predict where this is all headed. Unfortunate- ly, like everything these days, surveys and predictions are rarely correct. I think the independent practice is strong, vibrant and very competitive. The changing environ- ment should generate new ways to think about strengthening your team. Hiring correctly, training sufficiently and creating careers — more so than jobs — is a compet- itive advantage. Consider adding nonveterinarians to your owner- ship model if your state allows. The environment may force practices to look for new ways to bond clients. Pet owners, like Starbucks coffee mavens, seek a consistent experience. This comes from seeing the same people at the front desk, in the exam rooms and in the white coat. Client retention comes from value, care and staff retention. Build a team that stays together and plays together. Today we have real challenges that demand attention and con- cern. But this also is a time of great excitement for the veterinary pro- fession as we see more and more money being invested. Whether it is manufacturers selling new drugs or new equipment. Or pet owners investing in new treatment mo- dalities or seeking more advanced care. Or venture capital groups seeking new ways to consolidate practices or deliver veterinary care. Veterinary medicine, for years the poor cousin to human health care, is getting some attention. Sure, change is scary. Sure, the thought of big business is scary. Sure, losing control is scary. To quote U.S. Army Gen. Eric Shinseki: If you don't like change, you're going to like irrelevance even less. Dr. Peter Weinstein owns PAW Consulting and is executive director of the Southern California Veterinary Medical Association. Business A DYING BREED? When it comes to profitability, three major numbers on the expense side must be kept track of: cost of goods sold, staff salaries and DVM salaries. MyLegacy@svp.vet | 205-453-4760 | www.SVP.vet Planning for your future can be overwhelming given our rapidly changing industry. At Southern Veterinary Partners , we can help you navigate the maze of resources to sell your practice AND leave your intended legacy. SVP is a veterinarian owned and managed regional network of hospitals in the South with the goal of providing high-quality care to companion animals. CONTACT US AT MYLEGACY@SVP.VET TO DISCUSS YOUR UNIQUE NEEDS! (1) We buy hospitals with at least $1MM of revenue, but this seminar is specifically tailored for hospitals with $2MM+ of revenue.