How do you measure performance?
It’s no secret that practices are busier than ever and amid the day-to-day chaos, most veterinarians haven’t actually defined what success looks like for them. This begs the question of how improvement is possible if the right metrics aren’t being monitored.
Today’s veterinary practices face an influx of competition and challenges that make it difficult to really focus on identifying what is driving practice performance. Complexities in technology, diagnostics and software mean that there is more to learn than ever before. Pet owners now purchase food, grooming services and even vaccines from big-box stores, because this usually is the cheapest, most convenient option. Plus, growing online retail lets pet owners order medication and pet food without ever leaving the house.
So how do you define success in such an environment? Does it mean seeing more patients on a daily basis? Generating more revenue? Running your practice more efficiently? Did you know that more than 60% of veterinarians don’t use financial tools to manage their business and many don’t review key metrics on a regular basis, according to the American Animal Hospital Association.
Clinics that do measure performance pull monthly or yearly reports from their practice management software to help evaluate overall performance, track expenses, manage inventory and much more. But are those the right metrics?
Start with the right metrics
A successful veterinary business monitors a range of key performance indicators (KPI) to increase efficiency and profitability. Improvements to practice performance occur only when data is collected and interpreted using these KPIs.
If your goal is to increase your customer base and number of transactions, focus on:
- Customer retention rate (the number of customers from last year who returned this year)
- New customer conversion rate (the percentage of new customers who returned for additional visits)
- New customer versus lost customer ratio (the number of clients gained versus lost)
If your goal is to expand on existing revenue, focus on:
- Revenue retention percentage (the amount last year’s clients spent this year),
- Average number of transactions per client/patient (the number of times clients visit each year)
- Average transaction value (the average cost of a visit)
Review your business processes
Analyzing KPIs helps identify ways to improve your practice’s average transaction value. Take, for example, identifying missed charges, which can be traced to surgical, dental, diagnostic or any treatment performed under anesthesia. Such line items as the actual anesthesia service charge, consumables, hospital charges, medications, surgical suite fees and boarding can slip through the cracks. Tracking these charges can recoup tens of thousands of dollars each year, adding directly to the net profit line.
Identifying missed opportunities is another way to improve average transaction value. For example, what percentage of your primary visits includes the sale of parasite prevention medication or prescription pet food, or diagnostic test recommendations? Should you add these services to more visits? Doing so not only increases your average transaction value but also provides better care for your patients and helps to screen for undiagnosed, untreated disease.
Once you identify key KPIs and process improvements, you can begin to review information veterinarian by veterinarian, species by species and clinic by clinic. Why is that ability important? It allows you to track inconsistent standards of care and determine areas where individuals can improve. Then you can begin to align those standards with those of your high achievers, which in turn also drives practice performance.
Use technology to make tracking and measuring easier
Tracking and measuring KPIs over time can be tedious—particularly if you must locate the data within your practice management software and perform calculations to derive ratios. Technology helps greatly in this area. For example, Sparkline Scorecard works with both AVImark and ImproMed to track over 40 KPI’s on a monthly basis. It simplifies the monitoring process, helping pinpoint strengths and weaknesses within the practice. You are then free to focus on what needs immediate attention.
Does tracking KPIs in this manner work? More than 99% of practices currently using Sparkline have identified missed charges within surgical procedures, such as fluids and anesthesia. One practice recaptured missed charges across 354 surgical cases, resulting in:
- Increased average transaction value of 34%
- Increased profit by more than $50,000 per year
Amid all the challenges you and your staff face on a daily basis, don’t let the health of your business slip through the cracks. You can’t rely on a yearly report to tell you everything that’s happening within your business; in your chaotic daily routine, you don’t have time to keep pulling new reports and weeding through the data to find what you need. Imagine what you could accomplish if you had the entire health of your practice right at your fingertips, with potential areas of improvement highlighted for you. Interested in more information? Contact us today.