What is Profitdiagnostix - an overview
Historically, reporting accurately in any veterinary business has been very challenging, time consuming and inaccurate. It has been impossible to establish basic performance measures because all practice management systems work differently and produce different reports. The same applies for the accounting software that veterinary practices use, with different charts of accounts and different reports depending on the software used and the accountant that is used.
For example: How many full priced consultations should a single vet be doing per year? Superficially, one would expect that this should be really easy to measure as most practice management systems should be able top produce a report showing the number of consultations charged each year.
However, do you include zero priced consultations, and how do you distinguish between full priced consultations and repeat consultations?
If you were to ask 100 practices for this simple information, about 50% of them would give you the correct value, the other 50% would either include repeat consultations and zero priced consultations.
To make things more difficult, if you were to ask the same question to the same practices a year later, the 50% that gave the correct answer would be just as likely to give the wrong answer a year later - simply because a different staff member collected the information and used different criteria.
With the above example in mind, you can see that when looking at possibly hundreds of business performance parameters, it is in fact impossible to get accurate information about the health and efficiency of a veterinary practice with an acceptable level of accuracy.
To correct this issue, a team of accountants, veterinary surgeons and software developers got together to create a solution that would allow veterinary practices to measure their performance accurately. To do this, an INDEPENDENT system had to be created that could collect data from any practice management system and any accounting system and produce a consistent set of reports. The system had to give the same result regardless of whether a practice was using Rx Works, Vision VPM, Vetspace or any of the many practice management systems available.
Profitdiagnostix is a business reporting tool that collects data (information) from multiple separate software systems and puts it all together in one place. This allows users to analyse their data by looking in one place rather than having to search for information in multiple software systems. At the same time, Profitdiagnostix may 'clean up' some information to make reports more accurate and easy to understand. Regardless of the practice management system being used by the practice, the reports will look the same. This also allows the reports that are created to be consistent.
For example, 2 vets may wish to compare their businesses at a conference. One of them may be good at getting vaccinations through the door, the other may be good at performing a lot of cytology procedures. In this way, they could help each other with their strengths. However, the sad truth is that most vets do not even know if they are good or bad at something because the information does not exist in any consistent format. With Profitdiagnostix however, the 2 vets could easily see where they are good and where they perform poorly even though they have different practice management systems, different accounting software and a different accountant.
Where is the original data? Generally data that is collected is from 2 types of systems 1) accounting systems 2) practice management systems.
Why do veterinary practices need Profitdiagnostix
Saves on time
Staff performance
Know whether they are above or below average in a particular process
Know whether they are making any money or losing money
Know if there is a serious problem with their customer base
Know if there is a serious problem with their reminder systems
Know if they are billing accurately
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
What is a profit and loss statement?
Why it is important to adjust a profit and loss statement to get accurate reporting
How does it work with accounting software and what are accounting software systems
Is the data safe and confidential
Can it damage my computers and server?
Where is the data stored?
When Profitdiagnostix collects data, it puts it into a web or cloud area, so that the information can be accessed easily using a web browser from anywhere. This is also much better than users being restricted to only viewing information when they are at a specific computer or address. Generally the servers that hold your data are in the same geographical region (country) as the users business.