Run a “diagnostic profile” on your bottom line.
Financial management of any small business requires tracking revenue, measuring expenses and striving for a better bottom line. But it doesn’t stop there. Your accounting and bookkeeping reports can do so much more. Active practice management means interpreting data and reports, much like a diagnostic profile, so you can take action to improve.
There are four solid ways to boost your bottom line, or net profitability:
1. Drive revenue. Top-line revenue is a good place to start. To meet your revenue goals, create action plans for veterinarians and staff to improve preventive care compliance programs. Improving compliance for preventive care will drive revenue growth, so focusing on this proven strategy really pays off. Take a look at how your practice is performing in any area of preventive care.
As an example, to calculate compliance for heartworm testing in dogs, find out how many dogs have received a heartworm test in the past 18 months, then divide that number by your number of active dogs. That’s your existing compliance number. Next, set a realistic goal for growth. Draw your staff into the conversation by encouraging them to develop action steps that will help improve compliance. For help, ask your PSIvet Practice Consultant for more information on the PSIvet education module on improving compliance.
2. Control variable expenses. After boosting revenue growth, the second step to improve your bottom line is to get better control over your variable expenses. Variable expenses are expenses impacted by your business volume, such as inventory costs for pharmacy, laboratory, hospital and surgical/dental supplies. As revenue goes up, your variable expenses will naturally go up, but in most practices variable expenses are already too high. Getting this area under control requires strict management of ordering, receiving and distribution processes, as well as tight internal controls and solid checks and balances. For help in better managing inventory in your practice, ask your PSIvet Practice Consultant about the PSIvet education module on inventory management.
3. Maximize scheduling efficiency. Payroll costs also rise as practice revenue increases. With a higher level of veterinary services delivered and products sold, it’s only natural that staff is clocking more hours. This can easily get out of hand if not monitored closely. Task your area supervisors with looking for ways to improve scheduling efficiency by monitoring hospital systems and processes within their department, then suggesting ways to improve these processes without jeopardizing patient care or diminishing the client experience.
4. Monitor overtime. When you are experiencing revenue growth, monitor overtime and make sure it is approved. It’s easy to lose sight of overtime when the books are packed and everyone is running full speed ahead. Staff may stay late because they feel their coworkers need them, or because they feel guilty knowing their coworkers still have a lot to do when they are scheduled to clock out. Instruct staff to clock out when scheduled unless a supervisor requests them to stay and approves the needed overtime.