It’s Checkup Time for Your Practice
At some point, you might want to roll back changes you made because of the pandemic. In the meantime, remember to update your fees regularly and re-engage clients with whom you lost touch.
The worst of the COVID-19 pandemic hopefully is behind us. Things were so crazy over the past year and a half that many veterinary practices did all they could to survive and keep up with the constant changes. As we start to return to some form of normal, now might be a good time to assess your practice’s health. Here are key areas that you might want to examine.
Bonding rate is the percentage of clients who return within 18 months of their last visit. Many practices were extremely busy during the pandemic while others, unfortunately, closed for a period or reduced their hours. How were your clients affected? Are they still coming back?
Most practice information management systems can calculate your bonding rate. (If you cannot find it, ask your software company.) The normal bonding rate in a veterinary practice is 60%. That percentage is extremely low, I think, and should be closer to 90%. What is your bonding rate, and how does it compare with this time last year?
Keeping your client base informed and up to date is essential. If you changed the hours or days you were open during the pandemic and are reverting to the previous schedule, make sure to update your clients by email. Some modifications might have lowered your bonding rate, so run the PIMS report and determine whether you should be concerned.
The pandemic was especially hard on clinic employees. Day-to-day policy changes, short staffing, demanding clients, COVID fears and other factors created a turbulent work environment. So, your employee retention rate is another indicator you might want to review, and especially in larger practices, where turnover issues are not as apparent as in smaller clinics.
What was your employee retention rate pre-pandemic and during the pandemic? According to an American Veterinary Medical Association article — read it at bit.ly/3vzuo7j — veterinary medicine as a profession has one of the highest turnover rates: up to 50% annually at some practices. Employee retention is a hurdle that veterinary practices are constantly working to overcome. Compassion fatigue, burnout and practice culture all contribute to turnover.
If your employee turnover rate is high, you might want to look at the compensation and benefits you offer. I know that many hospitals gave raises and bonuses during the pandemic to reward hard work and loyalty, which was only fair, especially if practice income increased significantly.
Now that we are coming out of the pandemic, reexamine employee compensation and benefits. Many practices are striving to improve both to provide team members with a livable wage and retain them. You might consider incorporating a profit-sharing or incentive program. To cover the cost, increasing your fee schedule and adjusting markups might be necessary. If you have not raised your fees in the past year, do it now. The cost of living always goes up, and if you do not increase your fees, your employees won’t get good raises and your profitability will decline.
Cost of Goods Sold
Many veterinary practices struggled during the pandemic to stay one step ahead. They had to decide whether to allow clients into the building, whether to check the temperatures of employees and clients, when to wear masks, what to do if someone was infected — the list went on and on. Not surprisingly, the attention paid to inventory might have lagged.
As the situation slows to a more normal pace, look at your inventory. As you know, the two expenses you can control that most affect your practice’s bottom line are inventory and support staff.
One way to look at your inventory is as a percentage of gross. In most practices, the expense will run from 18% to 20%. If your inventory costs are greater, dig down and find out why. The most common reason for out-of-line inventory costs is shelf life — the period from when a product enters your practice to when it is sold or used. Strive for a 30- to 60-day shelf life for most inventory items. Some products, such as food, should turn over weekly. Products that cannot be purchased in small quantities or simply must be present might not fit the shelf-life rule.
Another major reason that your inventory costs might be off is markup. Again, during the pandemic, some things might have fallen through the cracks. Maybe someone didn’t enter inventory items into the computer or markups were not adjusted. In most practices, the typical markup on inventory is 150% on non-shopped and exposed items and 100% on shopped and exposed items, such as flea, tick and heartworm medications. Whatever your policy, find out whether it has been followed and, if not, get back to it.
As the pandemic upended the lives of so many people, I also had a life-changing event. I was diagnosed with cancer (multiple myeloma, to be exact). One day my arm started to hurt as I was playing ball with my dog. The pain worsened to the point that I couldn’t throw the ball and then got so bad that I went to the emergency room. After reviewing my X-ray results, the doctor used the terrible “C” word. The diagnosis was not something I expected. It blew up my world.
Something like that puts things in perspective and makes you think about what is truly important. Have I lived the life I wanted? Did I devote enough time to my family and friends? Did I spend too much time at work and not enough with my family? And so many other questions. You suddenly reevaluate your life.
I have since gone through radiation therapy and chemotherapy, and I spent three weeks in the hospital for a bone marrow transplant. Now, nine months after being diagnosed, I can happily tell you that I am doing well and am almost back to normal. My immune system was wiped out, so I need to be careful and cannot be vaccinated yet.
The journey has been long and difficult, but with the help of my family and so many great friends, I got to the other side. Because of the experience, I made several significant changes in my life.
I would never wish what I went through on anyone, but I would ask everybody to think about what they would do if something similar happened in their life? If you are honest with yourself, I bet you would make changes. Maybe now is the time.
On the practical side, I updated my will, power of attorney and living will, and I sat down with my family to discuss sensitive issues and things they needed to know. Surprisingly, they were appreciative of the conversation and had many questions that they had been reluctant to ask. When I consulted with private practices, I asked about the status of the owners’ wills and end-of-life planning. I was surprised how few practice owners paid attention to these critical aspects of life.
My doctor said multiple myeloma can never be cured; it can only get to a state of remission. That hopefully will be the case for me for many years.
I now focus on what is important, and I make every day count. I share my story with you because I hope it helps you realize what is essential in your life. Cancer blew up my world, but it also helped me see what is truly important and hopefully makes me a better father, husband and man.
Practice Smarter columnist Mark Opperman is the president and founder of Veterinary Management Consultation Inc., director of veterinary practice management at Mission Veterinary Partners, and founder of the Veterinary Hospital Managers Association. His column won first place in the Florida Magazine Association’s 2020 Charlie Awards.
A LOOK BACK
The Veterinary Hospital Managers Association asked members about the pain points they struggled with most during the pandemic. The top answers: staff mental fatigue, client irritability, increased client visits, staff physical fatigue and staff shortages.