It’s no secret that outstanding veterinary services require successful patient outcomes. But quality clinical care alone cannot sustain a thriving veterinary hospital – nor can it continue if a hospital is not fiscally thriving. Why? Because veterinary hospitals are also businesses that require strategic planning, tailored tools and resources, and detailed analysis.
According to VMG frequent contributors John Tait, DVM, MBA, CPF, and owner of John Tait Consulting, and Terry O’Neil, CPA, CVA, and partner-in-charge of the Veterinary Services Group at Katz, Sapper & Miller, a tax accounting firm, it is crucial to evaluate a hospital’s performance using business metrics like top-line revenue growth, influx of new clients, the use of current marketing tactics, and employee turnover rate. Doing so ensures long-term success that in turn supports even greater clinical care as well as financial stability for hospital owners and staff.
But many hospital owners lack the time, proper resources, and strategic roadmap to gain a full understanding of their practice’s performance given the day-to-day demands of providing medical care.
The root of the problem is simple: no one taught you how to do this.
“Traditionally, DVMs have little to no education on how to run a business,” said O’Neil. Since business payment cycles, cash flow management and consumer payment plans are not on the syllabus in veterinary school, many hospital owners have trouble choosing the right tools and implementing effective strategies for healthy practice management and growth.
All too often, this translates to veterinary hospitals with operational tools that are outsized, outdated, or functionally inappropriate for the business. “Inventory control, for example,” said Dr. Tait, “is often grossly over-expensed or mismanaged because hospitals rely on a model that’s more appropriate for a retail operation than a veterinary practice.” Additionally, competing priorities overshadow whole areas of growth potential, such as telemedicine, eCommerce platforms and talent management – to name just a few examples.
As a result, no matter how hard everyone works, year after year, some practices see little financial reward.
Connect the knowing and the doing
Many hospital owners recognize the importance of improving hospital management from a business perspective but struggle with where to start. The key is to make sure you have the right people and processes in place to begin with to analyze your practice’s performance. You first need to select the proper systems to collect necessary data and get a clear picture of your hospital’s current performance. A spot efficiency analysis of the five functional areas of your business (marketing, operations, finance, customer service and human resources) is a good starting point.
From there, the real challenge begins: converting the insights you’ve gleaned into strategic actions, or rather, connecting the knowing and the doing of practice management. Hiring new staff or an advisor might be out of the question, but you can always look for the low-hanging fruit for quick wins, such as:
- Expense management including labor efficiency
- Fee changes and fee building methodology
- Operational changes and capacity studies
- Role definition and service delivery models
Even small improvements pay dividends. If your hospital grosses $3M in revenue, improving profitability by just 1% yields $30,000 a year – and Over time, that yield becomes $300,000 in total practice value at the time of transitioning out of practice ownership.
Strong management teams are also paramount. Surround yourself with people who understand the industry as well as your practice’s individual goals. Tax and accounting advisors, for instance, can offer baseline operational guidance but will not be able to help you with strategic decision making.
A community of doers at VMG
You may be tackling these challenges in isolation – but you are not alone. Many hospital owners have faced, or are facing, the need to make meaningful improvements to the business of running their hospitals, often against substantial time and resource constraints. At VMG, we bring those owners together in study groups made up of similar, yet geographically distant, practices. Together, those group members share insights and experiences, hold each other accountable, and get personalized support.
In addition to an empathetic, collegial environment, our groups also have access to other exclusive learning opportunities in various formats with subject matter experts like Mr. O’Neil, Dr. Tait, and others so they can get help selecting the right systems – and move from knowing to doing even faster. Both experts regularly consult with hospital owners to conduct vulnerability audits and create highly tailored roadmaps for operational implementation.
With VMG, you have the unique opportunity to learn about the performance of your practice, how you can make strategic decisions with data, improve your practice’s performance and ultimately, increase its exit value. Contact our Member Services to learn more about joining today.