All about benchmarking: What it is, how it works, and how AAHA can help you put it to work for your practice
Don’t trust the financial future of your practice to something as arbitrary as your gut. Make sure your business decisions are data driven with AAHA’s Vital Statistics Series.
AAHA’s bestselling statistical set—including Compensation and Benefits, Financial and Productivity Pulsepoints, and The Veterinary Fee Reference—delivers the key financial indicators you need to improve your practice’s performance.
NEWStat talked to James Heard, MBA, AAHA’s Director of Finance, about benchmarking and how AAHA’s Vital Statistics Series can help you put it to work for your practice.
Benchmarking is a hot buzzword these days. What does it mean?
A benchmark is a point of reference for comparison or assessment. Benchmarks are important for practices to review how they compare to the industry over several different categories.
How can benchmarking help veterinary practices improve performance?
By using benchmarks, a veterinary practice can improve performance by allowing the practice to reference what others in the industry, on average, are doing. This includes everything from fees to payrates to income, compared to various activities.
How will AAHA’s statistical set help?
The AAHA statistical set will help because it covers the three important categories—compensation, expenses and profitability, and fees. Additionally, the statistical set breaks down each benchmark into several categories for each practice. These include number of full-time-equivalent veterinarians and metropolitan status, just to name a couple.
Can you tell us a little about the free companion website for Financial and Productivity Pulsepoints? How will the online tools be helpful to a practice?
The companion website is a great tool for practices as it gives real-time impacts of profits to changes within a practice. Whether it is the impact of additional staff, changes in inventory, or an increase in average weekly transactions, the website can help with the impact on profits to enable the practice to achieve realistic, data-driven goals.
The companion website says it will tell us about important key performance indicators (KPIs). Let’s give our readers a little preview: What do you think is the most important KPI?
The number of each staff position per full-time-equivalent veterinarian. It is important to be properly staffed. Being overstaffed is just as harmful to a practice’s productivity as being understaffed.
If a practice was only going to buy one of the three books, which one would you recommend?
That is a tough question as they are all important and work best together. However, if only one is to be purchased, I would recommend starting with The Veterinary Fee Reference. A correct pricing model is essential for all businesses. If the pricing is not right, then the business will be hurting from the start. When prices are set too low, then a practice will not be able to cover their required staffing expenses and other operating expenses in order to be profitable. If prices are too high, then they risk reducing the number of clients who visit the practice.
What’s the one thing a practice can do today to make the biggest difference in their financial performance?
The biggest key is to be able to read and understand the financial statements, KPIs, and benchmarks. These are important tools to evaluate how successful your practice is, which areas have room for improvements, and what to strive for in terms of goals for the practice.
AAHA’s Vital Statistics Series features detailed, easy-to-read demographic tables that help you find out how your practice stacks up against the competition when it comes to employee compensation, expenses and profitability, what to charge for services, and more.
Keep your practice profitable and competitive within your unique market. Order your set at aaha.org/vss.