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What sort of KPI's are important for veterinary practices and how do they help to keep veterinary businesses profitable

Active clients

The number of clients a veterinary practice has is obviously one of the most important bits of information. But what happens if a practice is 10 years old and it has a list of 5000 customers? Some of those customers may have visited 5 years ago and then never came back. Or all their pets may be deceased by this time. So a static client list is of no use.

Unfortunately no practice management system has 'standerdised' the definition of what an active client is, so most practices do not know how thier client numbers compare to other practices. 

In ProfitDiagnostix we have a standard definition - an active client is a client who has been invoiced a positive amount of money in the last 12 months. This allows practices to know what their true client number is and allows them to compare this value with colleagues and KPI's

Full time vet equivalents - why is is so important to know what this is

If a practice has 3 vets and another practice has 10 vets, how do we compare values like their active clients or the number of vaccinations they do?
The 10 vet practice may have 10,000 active clients and the 3 vet practice may have 6,000 active clients. Which of these 2 has busier staff?

To compare practices of different sizes we need to estimate how many full time vets work there and then divide these numbers by full time vets. We often refer to full time vets as FTE (ful time equivalents) or RPU (Revenue producing units) and then supply a value per FTE.

So the 10 vet practice has 10,000/10 = 1000 clients per FTE and the 3 vet practice has 6000/3 = 2000 clients per FTE. The staff of the 3 vet practice would therefore be much busier. 

By looking at hundreds of practices in this manner we are able to see if these practices are over-staffed or under staffed. In fact, anything over 800 clients per FTE is under staffed, so both these practices would be under-staffed. Unfortunately most practice management systems cannot make these calculations.

To calculate FTE, the system needs to access the wages values  - this is only available in their accounting software which is a different software system to their practice management system.

Average client spend per year

Most veterinary practices do not know and cannot compare whether their clients spend enough money at their practice. ProfitDiagnostix can tell them this and give them an idea of what it should be.

For example,in Australia, a practice with 1000 clients has an average client spend of $700 - is this too low or too high? With a system like profitdiagnostix, we can calculate a national average and tell the vet that it should be $800. So this practice is missing out on $100 X 1000clients = $100,000 in sales.

Cash control - is all the money getting to the bank?

Most practices collect cash at the cash register and check that the amount is right at the end of the day using their practice management system. The money is then taken to the bank and deposited a few times a week. They have no way of checking whether money goes missing between these 2 processes. This is because there is no easy check for making sure that the money collected at the cash register is entered into their accounting software correctly. This makes it very easy in large practices moneytto be stolen or go missing without anyone knowing.

ProfitDiagnostix produces a report that matches the money in the accounting software to the money invoiced at the cash register.

Wages - are they too high or too low

If a practice makes $1,000,000 in sales every year and it pays $400,000 in wages every year, is the wages value too high or too low? ProfitDiagnostix can compare this to the national average and tell business owners if their wages are higher or l;ower than average.

Client facing events and opportunities - how often is a vet in a consulting room with a customer

One of the main factors that determines whether a vet can promote a health service is: how often is that vet in the consult room with a client?

This should be easy to measure because in it's simples form, this would be the sum of all consultations, repeat consultations and vaccinations.

However veterinary practices split these fees into hundreds of smaller fees. For example they may have Seniour Consults, dental checks, Sick patient consult - all of which are primary consultations. Vaccination fees can be split into kitten vaccinations, puppy vaccinations, adult dog vaccinations, kennel cough vaccinations, adult cat vaccinations.

When asked how many consultations their practice performs each year, most vets cannot answer this, because they need to generate a report for each individual fee - often it requires 20-30 reports to be run and they forget to include some of the fees.

Once ProfitDiagnostix is set up, it does this all in one report, automatically. 

Average invoice value

How does a practice know whether it is charging enough or whether staff are forgetting to charge for some items?

The easiest way is to calculate 'average invoice value' and compare it to a national average. 

For example, if a practice generates 10,000 invoices per year and their sales are $1,000,000, thein their average invoice value would be $1,000,000/10,000 = $100. Once a practice knows this then they can compare their value to the national averages in Profitdiagnostix and know whether they have pricing or invoicing problems.

Unfortunately, most practice management systems do not calculate average invoice value correctly because there is no standard definition as to what invoices should and should not be included. The greatest problem is where systems generate zero priced invoices, and a lot of systems do this. These zero priced invoices skew the average invoice value into making it look too low.

Profitdiagnostix corrects this by making sure that zero priced invoices are excluded from the calculation.

Measuring the performance of individuals within a business

In any large practice the performace of the individual vets varies significantly in many of the services that promote patient well being. It is very useful to identify these differences and try to get the practice working as a team to consistentloy promote patient health to a high and consistent level.

The important parameters measured are how many re-checks, laboratory samples, xray procedures, blood tests dentals that are performed by each vet. These are called 'patient advocacy' parameters and are known to improve the diagnostic effectiveness in vets that perform them more often.

ProfitDiagnostix automatically produces reports for each vet as often as every week and track them against a target. The target is adjusted for the amount of work they do each week so that it is fair (if for example a vet is on leave for half the week, then their targets are adjusted accordingly).

These reports would be impossible to generate manually on a regular enough basis fo give the practice team sufficient performance feedback.

Understanding what a 'conversion' is

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