How Do You Stack Up Against AAHA's Best? A Cool New Tool Can Tell You
We’re all in the veterinary field to provide best medicine. But we want to be profitable, too. There's no need to choose between the two if you use key performance indicators (KPIs), called quality-of-care ratios.
What the Heck Are KPIs?
KPIs are the tools top-performing practices use to measure and improve both quality of patient care and financial health. KPIs give you a streamlined way to gauge and improve practice profitability by finding out what’s working (and not working) for other practices.
Learn From the Successes and Challenges of Others
KPIs work because the issues your practice wrestles with likely aren’t unique. In fact, 90% of the problems you face are the same problems other practices face. On the bright side, this means there are plenty of shared opportunities as well.
Where Do KPIs Come From?
AAHA’s VMG groups spent several years analyzing the data they report to determine which metrics and benchmarks most accurately portray the level of medicine they practice. They also used some standard national benchmarks, including:
- Revenue centers as a percentage of gross income, like dentistry, surgery, nutrition, and pharmacy
- Expense centers, including cost of goods sold or cost of professional services, payroll, and rent
- Average client transactions, both for the hospital as well as average doctor transactions
- Gross revenue production per veterinarian
- Pricing structure
- Other metrics such as the number of new clients gained per month per full-time-equivalent veterinarian, as well as the number of client transactions
National benchmarks are valuable because they allow you to see how your practice compares to others, but they aren’t the only way to measure the quality of medicine you practice. Because these benchmarks measure averages of many practices, there isn’t always a direct link to your own standards. To help solve this problem, AAHA’s VMG groups created a new set of KPIs that help measure your thoroughness and quality of medicine in the form of ratios. These ratios track four measures of quality care:
Why Quality-of-Care Ratios Matter
The VMG groups chose these ratios because they correlate to best medicine.
Nutrition, for example, may not be a huge moneymaker for the average practice, but most pets could benefit from a better diet.
If you’ve seen the statistics on dentistry, you know that roughly 80% of pets need some sort of oral care. When veterinarians take dental radiographs, they discover issues that need oral surgery in nearly 40% of the cases.
Too many practitioners make the mistake of failing to run lab work. Bloodwork comes back normal in most cases, but no veterinarian wants to risk losing a pet due to complications the one time they should have run labs and didn’t.
The last revenue center KPIs track is overall imaging, which includes both radiology and ultrasonography. Both are just good medicine. Without imaging, you can only guess at what’s going on inside a pet.
How Quality-of-Care Ratios Work
To determine the ratio, use the number of invoices for any given period of time as the denominator. The equation looks like this:
Take the total revenue for a chosen center (nutrition, dentistry, laboratory, or imaging) for a given timeframe (most practices run this weekly and monthly), and divide that number by the total number of invoices. That gives you the ratio.
Here's a real example from an AAHA practice: The practice did $22,987.73 in total dental revenue for the month. Dividing that by the number of invoices for the month, which was 1,132, they got a ratio of 20.
What Quality-of-Care Ratios Tell You
Dividing the total dental revenue by total number of invoices gives you an average dollar spent per client. But the secret to using these ratios is to focus on the number itself, not the dollar figure. The ratio represents the number of opportunities you and your team have to educate your clients on best medicine. Tracking these ratios will show you where there’s room for improvement. The higher the number, the better you’re doing. And while you don’t want to push unnecessary diagnostics or nutrition recommendations to boost those ratios, you do want to offer the best medicine for every patient, every time.
KPIs can help you do that.