27 Nov 2017

Tips on small animal practice management and profitability

Peter Edmondson, in the second of a six-part article series, summarises an Australian Veterinary Association Annual Conference session on how to increase practice profit.

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Peter Edmondson

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Tips on small animal practice management and profitability

IMAGE: Foxy_/Pixabay.

While attending the Australian Veterinary Association Annual Conference in Melbourne in June this year, I ended up sitting in on a small animal session on how to increase practice profit.

I am not a small animal vet, but we did have a small animal side in my old practice, so I was fascinated.

The session’s speaker, Greg Robinson, founded RxWorks – an international practice management software company. He has an extensive 30-year knowledge and experience of both the veterinary industry and practice management systems from around the world.

Greg has developed the Sparkline Scorecard – an independent and in-depth report system that analyses practice performance direct from practice management system data.

Main points

Much of this data is Australian, but many of the points will be of interest to anyone working in small animal practice, wherever they are.

So, here are some snippets:

  • Practices typically lose more clients than they gain – a really good retention rate is more than 70%, while some practices run at almost 80%.
  • A 2% to 5% loss of revenue occurs from poor billing – and the more complex your billing structures, the greater the likelihood of error.
  • All too often, practices underestimate the true amount of professional time involved in surging all procedures – some just bill from first incision to last suture. Surgeons can forget the time they spent inducing anaesthesia and preparing the animal.
  • Anaesthetic costs are often underestimated and only billed for the actual surgical time, and often do not include the time the animal is prepped when under anaesthesia.
  • Some veterinary practices do not charge a theatre fee – if you have spent £50,000 kitting out your operating theatre then you are perfectly entitled to charge for this.
  • Major billing differences exist between city and country practices for the same procedures. For example, AUS$700 (£407) in the country and AUS$1,200 (£698) in the city. This level of difference is far too high and comes from undercharging.
  • High-end practices charge for all the work and have higher net profit.
  • If you charge by time for procedures, consider this – you are a new graduate and the operation takes 45 minutes. You are highly experienced and it takes you 15 minutes. What time is billed? Is the client being charged three times the amount if a new graduate operates? Some allowance should be made for experience in billing.
  • A one key stroke for major procedures makes sense and should produce a fully itemised bill. You just add in the variables to complete the bill. If you have to enter lots of data and information for procedures, you will lose the will to live and are likely to make errors.
  • Remember, a client’s pet will probably only have one major surgical problem in its life, so undercharging is doing no one a favour.
  • Veterinary staff impacts can be a factor. For example, Mary was the most popular veterinary surgeon in a practice because she was always undercharging, but was a total financial disaster and giving away your money.
  • Many new clients do not come back the following year, but wellness programmes help greatly with loyalty.
  • Some practices have 12% of dogs getting dental work each year, while some rural practices only achieve 2%. Why? What are you missing out on?
  • What is the average lifespan of a pet and the average spend per year? This gives you the lifetime value per animal and helps work out what you can afford to spend to attract new clients.
  • Up to 20% of clients never receive a vaccination reminder as they have not fallen in line with the practice’s vaccination reminder system. This can occur because a new owner has a dog already vaccinated and does not fit in with the reminder system, or you seea sick animal that has not been vaccinated.
  • Generate a list of clients who you have not seen in the past 6 to 18 months and telephone their owners. This will not be a lot of telephone calls, but can help increase retention rate.

Conclusion

Veterinary surgeons are time poor. It can pay significant dividends to get a software company to come in and design the reports and billing systems you need if you don’t have the time or ability.

It was clear, by the end of this presentation, some very simple ways you can greatly increase practice turnover and profitability exist without increasing fees – just by charging for the services you are providing.