© 2023 MJH Life Sciences™ and dvm360 | Veterinary News, Veterinarian Insights, Medicine, Pet Care. All rights reserved.
New Companion Animal Chart of Accounts Now Available
The American Animal Hospital Association/Veterinary Management Groups Chart of Accounts is now available, for free, to the profession.
The American Animal Hospital Association (AAHA)/Veterinary Management Groups (VMG) Chart of Accounts (CoA) — the new standard for classifying and aggregating revenue, expense and balance sheet accounts in small animal veterinary practices — is now available, for free, to the profession.
Creating the AAHA/VMG Chart of Accounts and Field Definitions was a huge cooperative effort between the American Veterinary Medical Association (AVMA), AAHA, Veterinary Study Groups (VSG), VetPartners, and the Veterinary Hospital Managers Association (VHMA). This effort was spearheaded by the AVMA’s Economic Advisory Research Council (EARC), using previously created materials from AAHA and VMG.
Veterinarian’s Money DigestTM spoke with the co-chairs of EARC’s Veterinary Procedural Terminology Council (VPTC), Bruce Truman and Tracy Dowdy, whose efforts were instrumental in bringing the new CoA to the profession.
A Powerful Financial Tool
Practice financial statements often lack detail, and practice management systems are not consistent in how they collect data, noted Dowdy, founder of MRG Consulting in Grapevine, Texas. “As a consultant who has looked at thousands of financial reports, I find it extremely difficult to help my clients because their data are not good.”
If all practices use the same terminology, then financial statements will be more uniform, and it will be possible to truly compare costs and revenue across the board — ultimately making for better business. This new CoA uses standardized accounting codes that can help practices better measure and organize their finances to be in line with accepted accounting principles.
According to Truman, who is the founder of BLT Technology and Innovation Group in North Plainfield, New Jersey, and president of VetPartners, the new CoA is more robust than what was previously available.
“What’s so important about this offering is that we haven’t just updated and expanded the CoA,” he said. “We’ve created field definitions that will help veterinary teams learn these new terms and codes so they can use them effectively. It’s a very powerful financial tool.”
Dowdy concurs, noting that the detailed field document will allow inventory and book managers, accountants and practice managers to easily determine revenue categories for all practice items and services. “And bookkeepers entering in invoices and revenue will know where to put each item,” Dowdy added. She also noted that human health care developed a standard CoA in the mid-1970s, not for insurance purposes but for analytics.
“Leading corporate practice groups have their own key performance indicators, their own software systems, the ability to closely monitor and manage their practices and to see key metrics in their system,” Truman said. “But private practitioners don’t have those tools and so they have no standard way of reporting this information to evaluate and monitor their practice health.”
Removing Barriers to Implementation
“We’re really trying to push the easy button for the conversion to happen in practice,” Dowdy said. That’s why the CoA is available in PDF, Excel and even QuickBook formats.
However, Dowdy does believe there may be barriers to implementing the new CoA across the board. “We’re going to have to give practitioners a resource for bookkeeping or accounting firms that can do the conversion very quickly,” Dowdy noted. “The VPTC is working to solicit partners that will perform this service for minimal cost.”
Another obstacle is that practice owners are not managing their business based on metrics, but rather on emotion. “Some practices simply look at the top-line numbers and income but don’t really know what to do with the information,” Dowdy said. “We need to build awareness that numbers tell a story, but if the numbers aren’t being entered into the practice management and financial software accurately and consistently, then practices won’t be able to analyze the story and the numbers." The VPTC’s goal is to have all companion animal practices using this standard CoA within 2 or 3 years.
A Broader Vision
The broader vision of having a uniform CoA is to monitor practice health at the regional and national level. “If all practices are using the same CoA and field definitions, then we will be comparing apples to apples from one veterinary practice to another,” Truman said, “and veterinarians can better assess the financial health of their own practice and the industry as a whole.”
According to Dowdy, the job’s not done yet. “This is really the first step,” she said. “Once everyone is on board, standardizing all data will be the next phase of our project.”