To keep your practice financials on track, monitor these metrics monthly.
Managing a veterinary practice involves monitoring a multitude of financial data, all of it important. But here just isn’t time to track every number. The good news, according to Monica Dixon Perry, CVPM, director of veterinary consulting services at Burzenski & Co., is that you don’t have to.
Monitor these metrics monthly and adjust as needed to increase revenue:
1. Sales. Small animal general practices with one full-time equivalent (FTE) DVM should aim for an average of $61,186 in sales per month, according to the most recent “Well-Managed Practice Benchmarks” (WMPB) study. Medical services account for the bulk of annual revenue, followed by medical products (such as parasite prevention and pet food) and other services (such as boarding and grooming).
The most recent benchmark for total invoices is 496 per month, with an average client transaction (ACT) amount of $123.44. Dixon Perry also recommends monitoring production per FTE associate. An FTE veterinarian in a well-managed practice generates on average $53,066 per month. “Keep in mind that every practice is different,” she says. “In a referral, emergency or other specialty practice, monthly sales will be higher because the invoices in those types of hospitals are typically higher.”
2. Number of invoices. In a well-managed practice, an FTE veterinarian should generate 269 professional invoices (think outpatient appointments, hospitalized cases, surgical cases) per month, with a per-client transaction (PCT) amount of $199, although Dixon Perry says these numbers are likely higher now as well.
To give associates a better sense of whether they are at, above or below those benchmarks, Dixon Perry recommends sharing production reports that include total volume and PCT. “Don’t make it a competition,” she stresses. “Make it clear that you are sharing this information to ensure that appointment and billing protocols are consistent across the practice and not confusing to the health care team or clients.”
3. New clients. According to Dixon Perry, a two-doctor practice that brings in 36 new clients each month is on target with benchmarks and well staffed, as is a two-doctor practice that generates 12,000 invoices annually (benchmark: 5,948 invoices per doctor per year). “It’s when these numbers start to creep up that you know it’s time to hire a new part-time or full-time associate,” she says.
Also consider the practice’s bonding rate, which is the return rate for clients who have been in your practice in the past 18 months. “The ideal bonding rate is 60% or higher, so if yours is lower, consider altering your post-exam marketing tactics,” she says.
4. Average invoice amount. The other reason to share production numbers is to ensure that associates are taking advantage of all revenue opportunities during appointments. “I’ve seen many instances where doctors are scheduled similarly and seeing similar types of patients, but their PCTs are drastically different,” Dixon Perry says. Consider a two-doctor practice in which each doctor generates 3,200 invoices in a year, but one doctor’s average PCT is $160 and the other’s is $190; that’s a $96,000 difference in total annual revenue.
Dixon Perry recommends taking these steps to increase PCT:
- Charge for all services rendered.
- Review pricing structures and markups.
- Review discount policies: Minimize or discontinue.
- Effectively market and promote your offerings.
- Offer one additional product or service during appointments.
When reviewing financials, always compare numbers with the same period from the previous year. “If numbers are down on an apples-to-apples comparison, then put on your investigative cap and find out why,” Dixon Perry says.