Keep your veterinary hospital prospering with these 7 analytics best practices
It’s difficult for veterinary practice managers and owners to find the time to analyze financial and operational data. It’s hard to take a step back and look at strategic planning when you’re busy with the day-to-day activities that keep your veterinary practice running. But while it may save you time now to set these big-picture analyses aside, ignoring these evaluations will cost you in the long run.
By following these seven best practices in analytics and by ignoring industry buzz metrics that only distract you, you can establish your hospital’s financial baseline. With that, you can figure out which levers to pull to ensure you are building a prosperous practice that can invest in your staff, your clients, and your pet patients.
1. Monitor operations actively. Benchmark your hospital regularly against similarly sized practices, and focus only on your core key performance indicators. These should include data like your number of transactions, average transactions charge, and number of new clients per veterinarian. If numbers in a given area seem low, task your marketing team with finding ways to improve them.
2. Analyze client retention. Aim for a 90% retention rate for your existing clients. Do this by marketing not just to potential new clients but to your existing client base as well. You can do this through regular newsletters and an engaging social media presence.
3. Adjust your fees regularly. At the very least, you should be increasing your fees roughly 3% every year. When your own costs change, make sure your markups reflect those changes so you don’t lose revenue.
4. Track and budget for cost of goods. Benchmark your practice’s cost of goods against like-sized practices and against practices with similar revenues. Budget for goods every quarter, and base every new budget on the previous period’s revenue. You can use these numbers to scale your inventory up or down, allowing for more precise (and less wasteful) spending.
5. Assess and track payroll. Again, benchmark your payroll costs against like-sized practices. In general, you should be spending 20% on support staff and 20% on your veterinarians. We encourage a 4:1 ratio of full-time employees to veterinarians.
6. Budget everything else! Do your big-picture budgeting at least annually, and look at no fewer than two previous years while doing so. Compare your budget to the budgets of similarly sized hospitals. Keep in mind parts of the year that are busier than others. This budget should include not just cost of goods and services but marketing and general maintenance costs as well.
7. Report on variations in your budget monthly. Compare your actual spending to your budgeted spending, and compare your actual spending to the same month from the previous year as well.
By following these steps, you’ll get a full picture of the health of your veterinary hospital’s financials. Getting a better grip on your finances allows you to have better control over them, which in turn leads to a healthier veterinary hospital.
MWI Animal Health is the distributor of choice of the AAHA association. MWI proudly serves the membership with broad product access, exclusive programs and educational support such as this article.
Oliver Roller is the managing director of analytics at iVET360. Oliver brings a diverse set of operational experience and private health care management knowledge to the iVET360 team. Oliver’s private practice experience started at a young age at a practice where his father was a nationally recognized dentist. After graduating from University of Oregon with a degree in finance and entrepreneurial studies, he established a successful career as an investor, producer and operations director for an independent feature film company. When he moved to Portland, he reentered the world of private practice and spent seven years working in management services for private health care clinics. Oliver was instrumental in building one of the fastest growing companies in the Portland metro area, Fuel Medical Group, which serves leading otolaryngology clinics all over the country. Oliver is the father of two pleasant little rescue cats named Dari and Naya and a Portuguese Water Dog named Nash.
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