Today's Veterinary Business

DEC 2018

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/1054694

Contents of this Issue

Navigation

Page 14 of 69

13 December 2018/January 2019 • TODAYSVETERINARYBUSINESS.COM example, a team member making $25 an hour should not be cleaning the kennels. Having detailed job descrip- tions for each employee — DVMs, nurses, groomers, kennel workers and front-desk employees — is important. Part of their training should involve setting clear expec- tations about tasks to be performed. Additionally, assigning levels for each of the different job types and then setting pay ranges according to those levels is a good practice. By ensuring that you effectively utilize non-DVM staff members to fully support the DVMs, you enable your doctors to produce more, which in turn benefits the hospital as a whole. Schedule Labor and Review It Weekly In veterinary medicine, labor is often scheduled based on the hours the employees need to work. However, this approach often leads to ineffi- ciency. For example, from noon to 2 p.m., doctors are often catching up from surgery and doing callbacks, but during that time the non-DVM staff is likely not kept busy. Instead, labor should be sched- uled based on the needs of the doctor and hospital — how many patients are being seen. Since the goal is to keep labor costs below 40 percent of gross revenue, assess- ing how your hospital is tracking toward this goal on a weekly basis is easy. For every dollar that comes in the door, about 35 to 40 cents should be spent on labor and ben- efits. Every week when the books are closed out, you can review the total revenue and compare how much was spent on labor. If the ratio is too high, you can make changes for the upcoming week. Profit-and-loss statements are usually only reviewed four times each year. Going three months without looking at this issue could be very costly. Keep Your Existing Talent The cost to hire and train new tal- ent is staggering. Instead, hospital owners and practice managers should focus on retaining current employees. There are many differ- ent ways of doing this. For example, consider an alter- native schedule. One of the biggest labor challenges is the availability and hours that people are able to work. Hospitals that are open eve- nings and weekends have a lot of financial success, but many employ- ees might be unable or unwilling to work those shifts. Non-DVM staff members who work on weekends could be given Monday and Tues- day off, or they could be offered a reduced or part-time schedule during the week, allowing them to spend more time with their family. Some hospitals offer perks such as a concierge service, which provides a set amount of money for employees to spend. A doctor could have the concierge do grocery shopping or hire house cleaners. You could consider offering a bonus program or implementing a well- ness allowance for all employees. Creating a positive culture goes a long way toward retaining existing talent. In a recent survey of 13,000 millennials — the incoming workforce — culture and values ranked as the most important considerations when evaluating an employer. By developing a pleasant, team-oriented culture that focus- es less on hierarchy and more on creativity, flexibility and balance, you will not only improve employee morale but retain staff as well. Budget for Raises When it comes to pay raises, many veterinary hospitals simply go with a gut feeling or determine wages based on historical numbers with- out any rhyme or reason. Raises can be included in a hospital's budget. To do so, owners and practice managers should first project their revenue for a given period. The next step is to deter- mine the existing cost of labor and add the percentage of the raise. This method helps ensure that your labor costs are kept in proportion to your revenue. For example, if a hospital proj- ects $1 million in revenue for the coming year and knows that total labor is 33 percent, excluding taxes and benefits, the total cost of labor would be $330,000. If the total raise percentage was 5.8 percent, then the total cost of labor with raise would be $349,140, leaving a raise pool of $19,140 to be allocated to the employees. Increase Your Revenue If you are overstaffed but are reluc- tant to cut back hours or let anyone go, one option is to grow your way out of the excess labor burden by increasing revenue. By ensuring your hospital is capturing its revenue, you are in essence gaining more money with which to pay employees. Between 5 and 10 percent of all veterinary services rendered are not charged. If a hospital was intentional about charging for those services performed, the hospital's overall revenue would increase by 5 to 10 percent. Similarly, over 40 percent of pets have at least one past-due exam reminder. This may seem like a small issue, but it can have a significant effect on revenue. Imag- ine you have 2,300 active patients and that half of these patients are overdue for their annual exam, waiting every 14 months instead of the recommended 12. If an average patient visit costs $156, one DVM's missed revenue would be $179,400 every six years. For a hospital with three full-time DVMs and the same patient profile, this equates to an average of $89,700 in missed reve- nue per year. So how do you make sure to capture the missed revenue from client non-compliance? One way is through forward-scheduling. Before clients leave the office, make sure they schedule the next appointment. Implementing forward-scheduling will promote better overall patient care and low- er the expense that comes from fol- lowing up with past-due patients. Additionally, forward-scheduling will decrease the amount of phone traffic at the front desk, allowing staff to engage with clients and im- prove the overall client experience. Implementing just one of these five tips is the first step to man - aging labor more effectively and ultimately helping improve your hospital's profitability. Terry O'Neil is the partner in charge of Katz, Sapper & Miller's Veterinary Services Group. 2 3 4 5 When it comes to pay raises, many veterinary hospitals simply go with a gut feeling or determine wages based on historical numbers without any rhyme or reason.

Articles in this issue

Links on this page

Archives of this issue

view archives of Today's Veterinary Business - DEC 2018