Early indicator: Visits per year have a greater impact on revenue per patient than higher ACT
While there are many schools of thought on the best way to increase veterinary practice revenue, initial findings from a new statistical model suggest that Invoices Per Patient (visits) have a greater effect on increasing Revenue Per Patient than Average Client Transaction (ACT).
This new model comes from VetSuccess, and utilizes 2019 veterinary practice data from around 2,000 practices connected to VetSuccess. Focusing on annual Average Revenue Per Patient to represent revenue growth, the model specifically analyzed Invoices Per Patient and Average Client Transaction while controlling for county income per capita.
Initial findings show the following:
- Invoices Per Patient and Average Client Transaction both correlate with increased revenue, but Invoices Per Patient showed to have twice the effect on annual Revenue Per Patient than Average Client Transaction. Visits (Invoices Per Patient) account for about two thirds of Revenue Per Patient, whereas ACT accounts for about the remaining one third.
- Average Client Transactions of $300 or more negatively impact Invoices Per Patient. We see fewer and fewer visits (Invoices Per Patient) when ACT surpasses $300.
Many in the industry label ACT as the key measurement for revenue growth. While ACT is certainly not something to neglect, these initial findings suggest that it may be wise to place greater emphasis on increasing the number of invoices associated with each patient. They also suggest that clients do have a price point threshold, which when crossed can negatively impact invoices per patient, ultimately impacting revenue per patient.
This analysis has raised many interesting questions:
- How does Revenue Per Patient impact overall practice revenue?
- Do patients that visit more receive more services?
- Should practices focus on spreading out visits and decreasing ACT?
- Could separating non-service costs, such as parasiticide prevention, help decrease ACT and drive more visits?
Further analysis is in the works at VetSuccess to dig into these questions and more. Additional controls for other factors such as practice size will be included. A more comprehensive analysis will be available by the end of the year.