Shown below is the updated graphic we’ve been sharing each month; this includes the March 2022 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.
In order to put this in perspective, here is some of the same information for the last year showing the overall trends:
After strong growth in revenue in February 2022, practice growth, while still positive, was much less in 2022. Patient visit numbers saw a small increase in February 2022 but a big decline in March; this implies that the revenue growth is either due to fee increases or pet owners electing a broader spectrum of care. (Note that both March 2022 and 2021 had the same number of workdays.) New client numbers are seeing an ongoing decline; they have fallen for the last eleven months, including a very large decline in March 2022. Are we seeing an end to the pandemic surge many practices have benefited from over the last two years?
Of course, the figures above are averages, and what is going on in other practices may not be going on in yours.
In the last months, we have taken a deep dive into several of the key revenue metrics practices should regularly review (new clients, patient visits, and doctor productivity); we’ll continue looking at revenue metrics this month by discussing missed charges. While discounts and missed charges are often analyzed together, today’s focus is just on missed charges.
It is not uncommon for 5-10% or even more of total revenue to be lost via discounts or missed charges in a typical practice. While discounts are a deliberate reduction of fees charged to clients from what is stated in the fee schedule; missed charges are not deliberate—these are fees that are accidentally not charged to clients, generally because the practice doesn’t have appropriate systems in place to catch all the charges or someone just got busy and made a mistake. When practices are busy like many are now, the likelihood of incurring missed charges increases greatly.
Without specific systems in place, missed charges are hard to identify. Ongoing medical record audits and other kinds of comparative activities are essential to identifying and managing them. Once the types, amounts, and timing of missed charges have been identified, it is important to search for patterns. Is the same team member involved in all of the transactions? Do these things happen on the same day of the week? Same time of day? The same type of service? Patterns will help identify the root of the problem. Once the root cause has been identified, steps can be taken to correct the problem. The corrective action depends on the problem identified.
What can be done to reduce the amount of missed charges?
Review missed charges on a regular basis. Use this information to identify holes in the system that need to be plugged in or individuals who need to be counseled.
Simplify the fee schedule so there are fewer choices by reducing the number of service categories and the number of individual services. Use the same prices for services that are essentially the same, for example, a short in-patient hospital exam and a short medical recheck exam. If one is priced less than the other, it will inevitably be selected more frequently.
Educate employees about the importance of profitability and the impact of inappropriate discounts. The ‘business” of veterinary medicine should be talked about regularly at staff meetings; discuss whether revenue is growing or declining, what the daily breakeven cost is, what issues are impacting the profession, and the impact of discounts on the practice’s financial health and the ability of the practice to invest in equipment, raises and employee benefits.
As discussed above, missed charges are generally a function of a system breakdown rather than an intent to give away a service. They generally occur because of:
- Staff shortages—either real shortages or poor scheduling
- Lack of systems
- Bad systems
- Incompetent or non-caring employees
Many different kinds of invoicing systems will work well in capturing all fees, but each step in the system must have one person specifically accountable for accuracy. Most systems have both manual and electronic steps, and everyone, including doctors, must follow the agreed-upon rules for medical record documentation and client invoicing. There needs to be a designated person to do a final review and sign-off on each invoice before a client leaves. Some practices designate an employee to review all records within 24-48 hours of the visit and compare actual services performed to those invoiced. Generally, the salary paid to these individuals is more than made up for by the missed charges they identify. When appropriate, clients should be called and told about the mistake, and any holes in the system that allowed the missed charge to occur should be reviewed and fixed.
Missed charges can be a very large drain on the practice’s revenue. Many practices have some systems, policies, and rules in place to deter this from happening; however, few have done all they need to do. The goal is to see the right thing occur for “every client, every patient, every record, every time.”
➤ Download Insiders' Insights - KPI, April 2022 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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