Insiders' Insight KPI - July 2021

By VHMA Admin posted 07-14-2021 10:15

  

Included in the graphic below are the June, 2021 VetSuccess revenue metrics shown on the Insiders’ Insights KPI dashboard (https://www.vhma.org/resources/insider-insights) as well as placeholders for other related metrics that should also be reviewed regularly in order to get a full picture of what’s going on in a practice. 

VHMA Insiders' Insight KPI Chart July 2021


It has been difficult over the last few months to get any useful info from revenue growth comparisons between 2020 and 2021 because the comparison was between the early months of the pandemic where revenue dropped dramatically for most practices and the same, but very busy months in 2021. However, this changes in June when comparisons become more meaningful.  Revenue in practices in June 2020 was 2-3% higher than in June 2019, indicating an end to the pandemic slide seen in March-May. Growth in June 2021 was 7%, a more typical growth rate and while June 2020 revenue was probably a little lower than would normally have been expected, this comparison seems helpful in understanding what is really going on. This change may indicate a return to more normal demand for veterinary services and is certainly consistent with the return to “normal life” that is being seen in many communities--restaurants and stores are busier than they’ve been in a while, people are traveling again and practices are moving away from curbside-only. In addition to the lower revenue growth, several other changes in the VetSuccess metrics above correlate with this—a decline in new clients, a decline in patient visits and an increase in lapsed clients.

While many practices will likely be thrilled with some breathing room after the craziness of the past year, lower demand, in the long run, isn’t good for our profession. And of course, the busyness many practices have experienced lately isn’t totally about demand; some of it is due to the inability to hire doctors, technicians and other team members.

I don’t think anyone realistically thinks the ability to hire is going to become easier in the next few years so figuring out a way to work with this is critical. Of course, practices need to revamp both their compensation models and their culture if those things are holding them back in attracting and retaining team members. In addition to that, practices need to look critically at their efficiency in operations. This is an area many practices haven’t spent a lot of time on because they have done well without doing so and they don’t often know where to start. Going forward, it’s going to be a much more important issue in keeping a practice running smoothly and driving financial success.

A good starting point is to dive more deeply into some efficiency metrics. One of my favorites is the average number of staff and doctor hours per transaction.

Average staff hours per transaction is calculated as follows:

Total number of hours worked by all support staff
Total transactions

Average doctor hours per transaction is calculated similarly:

Total number of hours worked by all doctors
Total transactions

And then, of course, average total hours per transaction is calculated as:

Total number of hours worked by all doctors/staff
Total transactions

There aren’t any published benchmarks for the hours per transaction metric but most practices I see have 2-3 hours per transaction. The best practices are at 1.5 hours/transaction; very occasionally I’ll see a practice with a slightly lower number but you don’t want the number of hours per transaction to get so low that service quality suffers.  This figure should be calculated on a regular basis and compared to the prior period. The goal is to reduce the total number of hours per transaction and shift hours from doctors to non-doctors. 

When a practice is busy, often the first reaction when thinking about hiring is to look for another doctor. And while doctors are obviously critical to a practice; many hospitals could deal with a greater number of clients and improve overall efficiency by increasing the use of non-doctor staff. In order to achieve optimal staff utilization, the practice must:

  • Have a detailed, understanding of the skills staff members must have to provide outstanding patient care and client service
  • Hire effectively—find and keep the employees with the right skills and attitudes necessary to achieve the practice’s goals
  • Provide high quality, effective and ongoing training programs to both new team members as well as those who have been in the practice for awhile
  • Have high levels of employee retention—revolving door employees aren’t around long enough to be efficient and effective
  • Design and implement efficient policies, procedures and systems for getting things done
  • Schedule staff, appointments, and surgeries effectively and in synch with each other
  • Schedule staff in a way that reduces the need for overtime
  • Delegate effectively—tasks should be done by the lowest level person who can do the job properly
  • Monitor staff activities frequently—in most practices staff are always busy doing something—what they are doing, however, is the key point—is it the most important activity that should be done?
  • Provide the culture and focus on mental health that keeps team members happy and wanting to come to work; tired, stressed employees aren’t productive and make mistakes
  • Compare staff compensation and # of employees to doctor productivity. The problem may not be that staff efficiency is poor but that doctor productivity is too low.
  • Regularly review staff utilization metrics

As noted above, improved staff utilization is a more critical element of successful practices now than ever before. In addition, employees who are allowed to learn and grow and use more skills are generally happier in their jobs and more likely to stay with the practice than those who are only allowed to do less interesting tasks. Effective leveraging of employees is also critical to the productivity of the veterinarians and the practice as a whole. Veterinarians who delegate duties to appropriate staff members are able to see more clients and generate more gross revenue and profits. This increased profitability is essential to providing good quality medicine and surgery and to continual investment in team members in the form of increased salaries and benefits and increased continuing education. And, realistically, this may be the only way around the hiring conundrum for several years.

 Download Insiders' Insights - KPI, July 2021 Report

 VHMA Members can access the dashboard to drill down by region, species, and practice size filters, access the interactive KPI dashboard


Data review and commentary is provided by Karen E. Felsted, CPA, MS, DVM, CVPM, CVA of PantheraT Veterinary Management Consulting, www.PantheraT.com.


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