5 money-saving tips youll dig

July 20, 2019
J.A. Keith, DVM, MBA, MEcon, CVJ

Dr. Keith owners Crossroads Veterinary Clinic in Versailles, Kentucky, and advises fellow veterinarians on valuations with Veterinary Dynamics Consulting.

Veterinary practice owners: Here are five things you or a trusted practice manager can watch regularly to make sure raising prices isnt the only way your practice survives.

Photo: Denys Kurbatov/stock.adobe.comWe know the cost of veterinary care to clients has been rising, but what about the other side-our costs to run a practice? We can't just raise prices forever without looking at how to bring down our own costs. There are a few big ways to achieve this goal. Let's tackle them one at a time.

1. Staff hours: Look for unnecessary tasks and less-productive employees

First on your list is staff.

Eliminate overtime altogether, but make sure you have appropriate staff for the time of day and time of year. Many practices see a decrease in seasonal revenue (winter months in the Midwest and North, for example), so plan accordingly to avoid overstaffing.

This doesn't mean you're necessarily going cheap on salaries and benefits. Pay support staff well and expect them to perform their duties. The most successful practices have a well-trained staff. Train your veterinary technicians and assistants to do the tasks that don't require a veterinarian-things like lab work, surgical prep and cleanup, dispensing medications and in-patient monitoring.

What I find in many practices is that everyone may look busy, but there's duplicity in tasks. For example, the inventory count doesn't necessarily need to be done four times a week. Many employees learn to look busy by finding small tasks to do and letting someone else do the “big stuff.” Get rid of folks like this. They contribute little to your practice. If you create a culture of hard work, you'll find that more gets done by everyone.

2. Inventory: Watch your ‘turns'

I know, inventory management can be boring, but it's necessary. And it all starts with turns.

A “turn” is the time it takes to empty one bottle, carton, box or bag of a consumable. That can be drugs, gauze, injectables, fluids, whatever. Use your practice software to figure out the normal turns for all items you stock. It will take a little time to find this information and set up the right reorder rates, but you won't overstock as much (which is lost revenue) or see items go out-of-date.

In large practices, there's often one person who works only on inventory. Is there really a benefit to saving 3% by purchasing six months' worth of flea control preventives? Your inventory manager (or your newly tuned-up practice software) can tell you.

3. Benefits: Evaluate annually

Many practices offer retirement plans, health insurance, paid time off and many other benefits. Someone needs to review these options and premiums every year to make sure the benefits and the amounts are still sensible and rewarding benefits for the team. Like pay, this isn't something to skimp on. You need to be at least competitive to attract the best staff members and associates. If you offer poor pay and benefits, you'll likely have a revolving door of employees; and turnover is a large expense.

4. Associate pay: Check doctor production

Associate veterinarians are typically paid in one of two ways, and each has pros and cons. Are you using the one that works best for you?

Straight salary is the best option for new associates who need time to build a client base in your practice. It's also a good option for doctors who prefer a consistent paycheck for personal budgeting purposes.

ProSal, created by Mark Opperman, CVPM (read about it here), is a base salary plus X% of gross receipts above a predetermined amount and often paid once a month. This can get complicated, as there are many fine details to align, and both you and your doctors need to understand what counts as production and what doesn't. Many practitioners come up with their own compensation hybrids that include both production and salary. Regardless of the method, I argue that associates should be compensated (and this includes all benefits) 30% to 32% of gross receipts.

It's paramount that all associates generate appropriate income for the practice. If associates want to earn more, they must see more patients, work harder in the exam room or develop a special area of value to the practice. The bottom line is that you need to monitor associate production every month to make sure you're getting a return on their employment and not overpaying.

5. Equipment: Pause before purchases

It's nice to have all the latest and greatest “tools” in your treatment area. They make practice more engaging for veterinarians, allow for better care and reduce the need for costly or time-consuming outsourcing for specific procedures like ultrasound. But an equipment purchase is predicated on two things: 1) you can actually use the equipment with competency and 2) you can afford it. While it's nice to have advanced capabilities in diagnostics and therapy, you ultimately must keep typical patient load and pet owner compliance in mind to pay for it.

There are ways to estimate a sensible equipment purchase before you make the financial commitment. (Here's advice on what to consider and a basic calculation to estimate.)

We simply cannot continue the drastic rises in costs to pet owners to deliver our services. You need to spend time yearly, monthly and maybe even daily looking at efficiency, too.

Dr. Keith owners Crossroads Veterinary Clinic in Versailles, Kentucky, and advises fellow veterinarians on valuations with Veterinary Dynamics Consulting.