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Note to All Practice Managers - You've Got to Know the Numbersby Monica Dixon Perry, CVPMVMC, Inc. Evergreen, CO 80439 One of the most effective methods to successfully manage a practice is by utilizing industry benchmarks. What are industry benchmarks, you may ask? A benchmark by definition is a point of reference from which measurements may be made or something that serves as a standard by which others may be measured or judged. Luckily for us and especially for small animal practices, we have easily obtainable benchmarks and reference points to help us manage our practices. These benchmarks are an excellent way to keep a pulse on the pitfalls and valleys that your practice will experience. As a former hospital administrator, I relied on benchmarks to assist the doctors and motivate the team in areas that the practice could improve upon. Using your financial data and information from your practice's computer system can provide an elaborate picture of areas in which your practice is excelling as well as allow you to hone in on areas in which your practice may need assistance. Don't get me wrong, each practice is unique and different and utilizing benchmarks does not mean you are attempting to be something you are not, but if you don't know where you are, how can you truly know where you are going? Therefore, my challenge to each manager is to know the industry benchmarks that are available and monitor them closely on a quarterly basis at a minimum. Thankfully to a number of excellent veterinary software management systems, you can monitor information as frequently as daily, weekly and monthly. Your computer software provides a plethora of information that you should be monitoring. Now that you know that you should be monitoring something, you may ask, what exactly is it that I need to monitor? You should closely watch your payroll and inventory expenses. These two areas are the most significant areas which a manager can control and can comprise nearly 37% of your practice's expenses. As many of you know, in a well managed practice, your staff payroll expenses should be 18%-21% of the practice's gross revenue and your inventory costs should be 15%-18% of gross revenue. In addition to these expenses, you will want to monitor the average invoice for the hospital as well as the individual average per patient invoice for the associates. The averages we are seeing for these respective areas are $96 for the hospital and $120-$128 for the individual associate. Remember, these are averages. If you know these numbers, you can provide valuable guidance and feedback to the owner(s), associates and healthcare team to help your practice provide more comprehensive care and medicine and ultimately increase the practice's profitability. Another big area of focus is the average number of new clients your practice sees each month. For a full-time equivalent DVM, the average is 25 to 30 new clients per month. Where does your practice fall? If your numbers are below the industry average, then you will need to map out an action plan to increase those numbers. As you can see, managing a practice with industry benchmarks can assist you and the entire healthcare team tremendously. However, until you know the benchmarks, it becomes rather challenging to manage your practice. I have provided some points of reference when it comes to industry benchmarks, but for a detailed list to use in your practice, you can contact Veterinary Economics and AAHA for a current list of industry benchmarks and guidelines. |
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