Help pull your practice through tough economic times.
When times are tough, practice and office managers are positioned to make a big impact. By paying special attention to costs and profits, you'll help your practice—and impress the owner. Here are four steps to take, suggested by Dr. Karen Felsted, CPA, MS, CVPM, CEO of the National Commission on Veterinary Economic Issues.
Deter discounting. In tight financial times, giving 10 percent off here and there might seem like a smart way to get more clients in the door. Discounts aren't necessarily bad, but you must make sure they aren't hurting the bottom line and that you're giving them to the right people for the right reasons. "If it's a good client who happens to have a money issue right now, a discount may be OK," Dr. Felsted says. Or if you offer discounted services to new clients who've adopted a pet from a local shelter and this really helps bring in new clients, that may be OK too. But make sure you understand the reason you're discounting and that it accomplishes what you want rather than just giving a discount to every person who complains about fees.
Monitor staffing levels. Generally, the cost of team member salaries and benefits should equal 18 percent to 23 percent of a practice's gross revenue. "But you can't just think that because you're within that range, you're fine," Dr. Felsted says. "You need to understand profitability." If your practice pays out at 20 percent but some of your team members are standing around doing nothing, that percentage might not be appropriate. And if your staff payout percentage is too high, layoffs aren't necessarily the answer. When team members are working late every day, find out why. Then set a realistic goal for decreasing the extra hours. For example, if employees worked 100 hours of overtime last month, try to limit it to 50 hours this month. And let team members know you're avoiding layoffs by cutting back.
Watch inventory. Make sure the drugs and medical supplies are turning and you buy only what you need. It's better to keep your money on hand than give it to vendors and wait to get it back in client charges. "Next to payroll, the cost of drugs and medical supplies is your biggest expense," Felsted says. "A little effort here can save you a lot of money. And an effective inventory system isn't hard to implement."
Get educated. If some of the above items seem to fall outside your job, now's the perfect time to talk to the owner about doing more. Managers' duties can vary wildly depending on the practice. Some do it all, from reviewing income statements, to hiring and firing, to buying equipment and supplies. If you want to increase your responsibilities—and your job security—tell the owner you're eager. Some owners might worry you're not experienced enough or hesitate to let you in on sensitive information. "Have that conversation," Dr. Felsted says. "Talk about their concern and your commitment to keeping financial data private, if that's what the owner wants." And let him or her know you'll be happy to bone up on business by attending finance courses at the CVC conventions or reading financial articles on dvm360.com.