Today's Veterinary Business

FEB 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.

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53 February/March 2018 • TODAYSVETERINARYBUSINESS.COM inventory sales, the H.R. budget might not have room for bonuses. If we are in a heavy-hitting year for Drug Enforcement Administration renewals or have spent generous- ly on team gifts, those expenses should be factored in before determining a bonus amount. To find the revenue and expense information needed to determine bonuses, I use the profit-and- loss statement from the prior 12 months. I make sure major annual expenses like worker's compensa- tion, previous bonuses and bulk purchases of preventives are represented fairly for a 12-month period. I can then calculate bonuses payable in May and November and time them so that they are deposit- ed ahead of summer vacations and Christmas shopping. Putting It All Together The H.R. budget we have settled into is 49 percent of revenue. Again, this includes all H.R. expenses as outlined above. An additional 1 percent allowance is made for pet care benefits that are ulti- mately not included on our income state- ment but are tracked in our practice man- agement software. Our cost of goods (COG) expense bud- get includes all drugs and medical supplies, preventives, diets, in- house and reference laboratory expenses, and retail products. In theory, this percentage could be as low as 22 percent. I will spare the excuses, but we have to work to keep ours below 28 percent, which is the current budget threshold I use for bonus calculations and will strive to reduce over time. Our combined H.R. and COGS expense budgets from the income statement are not to exceed 77 percent. Here is what the bonus system looks like using simple math: Take Charge columnist Abby Suiter is practice manager at Daniel Island Animal Hospital in Charleston, South Carolina. I divide the $15,000, allowing for percentage-based payroll expenses like taxes and IRA matches, among the team members using the weight- ed point system described above. Ultimately, in this example, our annual H.R. expense would be 48.5 percent, our COGS expense would be 28.5 percent and our combined expenses would remain on budget at 77 percent. Our team members would receive a nice bonus and our profit- ability would be protected despite inventory being over budget. The win-win outcome motivates every- one to do even better over the next six months. Revenue over past 12 months $1,000,000 H.R. budget at 49 percent $490,000 Actual H.R. budget $470,000 Savings $20,000 COGS budget at 28 percent $280,000 Actual COGS budget $285,000 Overage $5,000 Bonus pool (savings minus overage) $15,000 To reward loyalty to the hospital, our bonus system is weighted based on years of employment and hours worked during the period. use daily and how many do you really need? In order to capture and clarify all possible services, we have overdone it when it comes to service codes. Pare them down and elimi- nate the unnecessary ones. Look for other areas of redundancy. Use your practice management software to group, bundle or link service codes for anything predictable, such as: • Dental plans and procedures. • Routine surgical procedures. • Wellness plans. • Serial X-rays. • Serial bloodwork. • Free doses. • Hospital treatments. • Wellness plans. If you do this, training will be easier and there will be less confu- sion. You will experience fewer mis- takes, greater fee capture, improved efficiency and happier employees. 7 Prepare for the Discharge This is just as important as prepar- ing for the initial visit. Schedule discharge appointments when the pet is dropped off or when a post-procedure update is given to the client. Eliminate end-of-day chaos and random discharges by: • Posting all charges in advance. • Preparing any medications or products. • Preparing home care and discharge instructions. • Preparing the patient. Discharges should be done in an exam room whenever possible. Instructions are delivered, medica- tion administration is demonstrated and questions are answered. When communication has happened throughout the day, a scheduled routine discharge can be done with a technician in 10 minutes. 8 Check out in the Exam Room Workstations are becoming more common in the exam rooms, especially with the evolution of electronic medical records. Start- ing and completing a patient visit in the exam room has its benefits. For example: • A decrease in the number of client and patient handoffs will personalize the visit. • You will have the opportuni- ty to discuss a pet's condition and treatment options and any financial considerations in a private setting. • Follow-up appointments can be scheduled before the client leaves the room. • Compliance rates will im- prove. • Pileups at the front desk will be reduced. 9 Leverage the Team Who does what in your prac- tice? Doctors produce the active income — roughly 50 percent — and the support staff produces the other 50 percent, the passive income. We can't have one with- out the other, but they shouldn't overlap. Inefficiency results when doctors are doing "non-doctor" tasks that the support team should be doing. Think about whether everyone is doing his or her job. You have highly skilled team members, so use them and let them do the job they were hired and trained to do. The result is a higher level of em- ployee engagement and job satis- faction. You should always have the right person doing the right thing at the right time. This is efficiency. 10 Delegate We can't do it all. Most of us have too much on our plate every day, yet we continue to pile it on. We need to get over these four common excuses for doing this to ourselves: • It's easier to do it myself. • It's faster to do it myself. • I know it will get done. • I know it will get done right. Delegate what can and should be done by someone else. If you have the right team in place, you will be able to share the load before you become overwhelmed. As con- fidence and trust develop, you will feel more comfortable delegating. Choose wisely and look to the worthy, willing, competent and trained employees. Share your expectations and keep the lines of communication open. Your em- ployees will feel valued and you will feel less overwhelmed. Follow the tips above and look for other ways to improve efficien- cy in your practice. The patients, clients, team and bottom line will all benefit from your efforts. Getting Technical columnist Sandy Walsh is a practice management con- sultant, speaker, writer and instructor for Patterson Veterinary University. (Continued from Page 50)

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