Http://veterinarybusiness.org John Sheridan BVetMed CVPM DMS MRCVS It’s all in the Numbers

http://veterinarybusiness.org

John Sheridan BVetMed CVPM DMS MRCVS

It’s all in the Numbers


The Numbers - The third of your ‘hidden practice treasures’

“Not everything that counts can be counted, and not everything that can be counted counts” ― Albert Einstein

"In God we trust, all others bring data.“ - Dr W. Edwards Deming

There may be some performance issues which can’t easily be measured but the likelihood is that if there are any significant problems

which impact on service to clients, professional standards, patient care, staff morale or financial performance; they will show up in the

numbers somewhere.


So we need to know what key performance indicators influence profitability and what numbers

to monitor:

• every practice owner, manager, consultant, accountant or advisor will recommend different KPI’s

• only you can decide what KPI’s are most appropriate for your practice

• but these are some suggestions


Some key numbers to review current financial performance

• From your management accounts – just three cost headings and ‘real’ net profit as % of revenue – how much profit did you really make last year and what’s your target for this/next year?

• Top line growth• Revenue per ‘vet team’ FTE• ATV (ACT)• Working capital numbers• Business value – ‘goodwill’


So how much profit did you really make last year?

• Where can I find out?• Not from your practice financial accounts – why?• International Benchmark service online or seek advice

• it’s quick, easy and it’s free• http://veterinarybusiness.org/international-online-benchmark-service/

• Now decide what margin you will make – this/next year• We will consider in some detail in the next session


Working Capital Ratios– are you using your working capital efficiently?

Liquidity cash is king!

current assets (less stock?) / current

liabilities

should be greater than 1

Stock days (current stock/purchases) * 365

aim for 3 weeks or less but categorise

rationalise your stock

short term benefit of a parsimonious

month!

Debtor days (debtors/revenue)*365 what should it be? categorise small animal / large animal / equine prevention is better than cure

Gearing total liabilities/total assets who owns your business?


Business Value– it’s never too early to plan for retirement

• value always linked to profit• is there a healthy market for buying/selling

practices in Hungary?• what is your business worth now?• multiple of net earnings (EBITDA)• do you need a professional valuation• do your own sums every year


Some key numbers to review your team performance

Consulting Room Occupancy and Veterinary Productivity• the objective is to monitor the available consulting slots, surgical and

other procedures and the availability of veterinarians in your practice in order to review consulting room occupancy and veterinary productivity

• make some assumptions about the working hours per day and the average hours taken in your practice for a house call and a minor, intermediate and major surgical operation or other procedure

• use a simple spreadsheet tool such as this one:


http://veterinarybusiness.org/occupancy-and-productivity-tool-2/


Compliance – record and review data from 100 consecutive consultations on a spreadsheet

• consulting charge• procedures recommended• procedures completed in subsequent four week• re-examinations recommended• re-examinations completed in subsequent four weeks

http://veterinarybusiness.org/100-consultations-review-tool/


Here are some results

Procedures – compliance only 17/35 = 48% - Can you see the potential for growth?

Re-examinations – compliance only 28/46 = 61% - Can you see the potential for growth?

So monitor these numbers!!


Here’s an example: General anaesthetic 8 Surgery 3 Dental 4 Lab tests12 Diagnostic imaging 3 Others 2

Consider the impact of increasing dentals from 4 to 6 or diagnostic imaging from 3 to 5 – just do the sums – we will consider specific examples in a later session

Procedures achieved per 100 consultations


Just 3 key numbers to control the costs

• the cost of drugs and supplies• the cost of all your people• the establishment and overhead costs• that’s it!!


Here they are:

‘model practice’ %

Revenue 100.0

Less costs

Drugs and supplies 20.0

The vets (inc owner) 20.0

The support staff 20.0

The rest – establishment and overheads costs

20.0

Profit % 20.0

40.0%

How do these compare with your practice?


Net Promoter Score - a question for your clients

How likely is it that you would recommend our practice to your friend or colleague?

• Clients respond on scale 0 to 10• Promoters (score 9 to 10) - loyal enthusiasts who will positively refer• Passives (score 7-8 satisfied but not enthusiastic)• Detractors (score 0 to 6) broadly unhappy –likely to be detractors

Score – ignore the passives – take the percentage of clients who are promoters score and subtract the detractor score


John Sheridan BVetMed CVPM DMS MRCVS

Thank you

Documents

Http://veterinarybusiness.org John Sheridan BVetMed CVPM DMS MRCVS It’s all in the Numbers