Shown below is the updated graphic we’ve been sharing each month; this includes the February 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 three months of steady declines, revenue and patient visit growth saw a strong increase in February 2022. (Note that both February 2022 and 2021 had the same number of workdays.) New client growth, on the other hand, has fallen for the last ten months, including in February 2022. Predicting what is going to happen next has gotten much harder than it was pre-pandemic!
Of course, these 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 metrics practices should be reviewing regularly (new clients and patient visits); we’ll continue this month by discussing another one: doctor productivity.
Doctor productivity is a measure of efficiency. It’s important to remember that while many practices have been very busy during the pandemic, busyness hasn’t always meant a practice has seen increased revenue, improved efficiency and/or a strong level of profitability. It’s critical, therefore, to keep tracking key metrics even during busy times because the practice may not be doing as well financially and operationally as the busyness would imply.
Doctor productivity can be calculated in various ways, and they are all helpful. The first way is to calculate the overall productivity of the practice as a whole:
Total practice revenue
Number of full-time-equivalent DVMs
The second way is to analyze the productivity of the doctor-only work in the practice:
Total medical revenue
Number of full-time-equivalent DVMs
The difference between the two calculations above is that non-doctor revenue from boarding, grooming, and other similar services and non-medical product sales is not included in the second calculation.
The above calculation provides information about average productivity per doctor. The last component of doctor productivity analysis is to review actual revenue per each individual doctor in the practice from their production reports.
Because the first two components of the above analysis involve full-time-equivalent (FTE) doctor numbers, it is necessary to first calculate these.
The most typically used definition of a FTE doctor is one that works 40 hours/week for the entire year. Time off for vacation, sick days, CE, and holidays is considered work time, but extended leave is not. This figure is calculated for each practice by taking the total annual hours worked by veterinarians in the practice (including CE, vacation, sick, and holiday time) divided by 40 hours per week and then dividing that result by 52 weeks. For example, the number of FTE doctors in a three-veterinarian practice with an annual total of 6,000 hours worked by veterinarians is:
6,000 total hours worked by doctors = 2.88 FTE doctors
(40 hours per week X 52 weeks per year)
The FTE number is very rarely the same as the number of actual doctors working in the practice, and the 40 hours a week assumption is often not the same definition of full-time as the practice benefit plans use or what the practice considers to be a full-time employee. This is ok; the point here is to use a calculation that can be compared to published benchmarks and in your own practice across time.
The above calculations should be done for at least the past three years; it’s important to look at pre-COVID numbers in order to understand the impact of the pandemic on efficiency. Published benchmark studies such as AAHA’s Financial and Productivity Pulsepoints and the Well-Managed Practice Benchmarks Study are excellent resources for comparison.
Once these top-level calculations have been done, the practice should drill down further into areas that may need improvement. For example, let’s say that the management team analyzes the revenue of the practice at the doctor level and finds that the average revenue per doctor is lower than that seen in most practices and that there is a great deal of variation in productivity amongst doctors. Improved doctor productivity becomes a goal of the practice. What additional data should be gathered?
- Number of hours worked each week by the doctors—revenue variability may be a function simply of the time spent in the practice
- Number of appointments, surgeries, dentals done by each doctor during this time frame
- Support staff help utilized by each doctor—some doctors may be able to produce more because they have access to and use more support staff
- Number of key procedures (CBCs, chemistry panels, x-rays) performed by each doctor in relation to the number of transactions they generate—revenue may vary because of different approaches to cases which should be more consistent
- Measurement of client compliance with key recommendations by doctors and staff
- Dollar amount of discounts and missed charges per doctor
As the data gets more detailed, a wider variety of sources may be necessary to obtain it. Occasionally practices will have doctors clock in and out the same way non-doctor team members do. If this is true, the practice may have good quality “hours worked” information for doctors, although the in-clinic hours may need to be adjusted for any substantial amounts of work done at home (record writing, client callbacks, case research) or for trips back to the clinic outside of normal hours. If the practice doesn’t have this information, it will have to be created. Support staff utilization is a more subjective measure that is generally gained by observation. Key procedure information can be obtained from the PIMS. Measure of client compliance with key recommendations isn’t available in all practices but is an important piece of data. When available, it can usually be found via medical record audit or in the PIMS if service codes are used to track when recommendations are made, accepted, or declined. Discount and missed charge information comes from a medical record audit.
The findings from the above analysis will drive what the practice does. For example, after controlling for hours worked, if one doctor is doing fewer dentals than another, it may be because the doctor doesn’t do a good job of discussing dental needs with the client either because they are rushed in the exam room or because their communication skills aren’t as strong as they should be. If it’s the first reason, checklists or a consistent exam room technician may help. If it’s the second reason, communication training is the answer. Remember that doctor productivity isn’t all about how the doctor performs; it is also very dependent on the overall management of the practice. For example, productivity may suffer because the practice simply doesn’t have enough patients coming in the door; in this case, improved marketing may need to be the focus.
➤ Download Insiders' Insights - KPI, March 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.
#InsidersInsights-KPI