Bounce back using common sense management (Proceedings)

In the mid 1970's, the National economy started to slow down while the number of veterinarians continued to increase. Concerns were expressed that too many veterinarians would be produced by the year 2000. In the late 1970's and 1980's some practices experienced reduced numbers of clients and no-growth or slow growth gross incomes resulting in declining net incomes.

Since the early 1980's increased interest and attention has been paid to practice management. Private practices, veterinary schools, technical schools and continuing education meetings have since focused on improving management techniques. In the 1970's very few veterinarians graduated from veterinary school with management training. Now most schools offer at least some management information.

In the early 1980's the profession started to evaluate not only the quality of services provided, but how those services were provided. The American Veterinary Medical Association (AVMA) instituted a Department of Marketing in 1986 and this signaled the start of public education about veterinary medical services. As the AVMA developed seminars in marketing veterinary services and national and regional continuing education programs added management topics, interest by book, magazine, Internet and journal publishers also increased.

Management consultants and practice management speakers (DVM's, CPA's, MBA's) increased in number and visibility during the 1990's and into the 2000's. The entire profession was infused with new information and techniques to improve the understanding and delivery of veterinary services. Colleges and Schools of Veterinary Medicine also became engaged in teaching and using practice management information due mainly to decreasing financial resources and increasing pressure from private practitioners. In the 1990's veterinary technician schools also started to offer management courses.

In the later half of the 1980's and into the 1990's, the profession was propelled along the "fast track" of management. Numerous seminars, lectures, books, and journal articles provided a plethora of basic and advanced information. Many practices now use, on a regular basis, client demographics, computerized inventory monitoring, on line appointments, target marketing, practice web site, personnel profiling, client profiling, institutional advertising and situational leadership. The 21st Century is the period of Management Communication and application.

In fact, maybe we are becoming so technical in management and so concerned with using the "cutting edge" information that we forget about using common sense. Voltaire probably said it best: "Common sense is not so common." In the race to effectively manage our practice, do not forget or overlook the importance of common sense basics. How about the basic areas of client

communications, professional attitude, professional appearance, collections and fees, routine call backs, delegation, incentives, personnel selection, etc.? Do we have the common sense areas under control? Without the common sense approach to management, all may be lost.

Ten of the most important common sense management basics are briefly reviewed.

     1. Team Building: The practice team consists of clients, staff, veterinarians, vendors/suppliers, patients and management support. Communications must be open and positive with all team members. To maximize communications regular staff meetings must be held. Do you hold at least regular monthly meetings with staff and veterinarians? When meetings are not held monthly, communications and team building break down. Do you ask clients, "how you are doing"? Focus groups, casual listening, questionnaires and follow-up phone calls can provide valuable input into total team communications. Open, honest and informative communications must be provided to each client. Remember our clients are not veterinarians. Do you provide an incentive for staff and veterinarians to follow? Motivation through incentives work for everyone on the team. Have you developed a mission statement and provided specific goals to attain? Is the practice goal oriented?

     2. Attitude and Image: The appearance of each practice member (kennel person to veterinarian) is extremely important to the overall image and well being to the practice. When clients come to a veterinary hospital/clinic, they expect to see professionals. Do you still feel like, act like, and look like a professional? Attitude is said to be everything. A positive attitude usually gets positive but a negative attitude always gets negative. Our attitude will often determine our altitude in life.

     3. Marketing Full-Service: The three basics of professional marketing are communication, communication and communication. Do you still use a detailed, itemized fee estimate form, use client handout materials, provide your business card, call clients back to check on patient progress, send thank you's for client referrals, send appointment reminders, use a current practice brochure and offer complete care from pre-purchase to bereavement? Clients still want and ask for one-stop-shopping. A client should never leave the practice without a re-appointment or recall being put back into the computer.

     4. Human Resources: The investment in personnel make up the largest percentage of all expenditures. When the right people are employed, stress levels are greatly reduced. When hiring new employees, one should always hire enthusiasm and a positive attitude. When a person is intelligent, dependable, enthusiastic, loyal and has common sense, you can teach the person anything. Do you have a current job description for each employee? Do you have supervisory duties delegated where possible? Do you have contact with every employee at least several times per week? Do you evaluate each employee at least once per year? Do you involve your staff in the evaluation and hiring process? Do you provide regular CE for all staff? Poor producing employees should be challenged, evaluated and encouraged to improve or they should be dismissed. An effective incentive plan should be used to reward top performing employees.

     5. Time Management: Some people seem to be able to be productive nearly all the time. Productive and efficient people usually have specific daily goals which allow them to focus their energy in the priority areas. Do you use a priority list each day? Do you accomplish the "A" items and forget the "C" items each day? Do you delegate duties? Have you learned to control your work load by saying "NO"? Do you use the Internet and Email? Do you make time for both personal time and family time? Everyone must learn to balance their professional and private life to become successful.

     6. Facility Management: The building and grounds of the practice are almost as important to maintain as ones personal appearance. The building should project a well-cared-for appearance both inside and outside. The landscape, parking lot and signage should be meticulously maintained. Have you driven into your practice's client parking lot within the last week and looked around as a client would? Have you walked through the front door of your practice within the last week and entered your reception area to look, smell, and listen? Do you like what you find? You should be proud of what you find and if not CHANGE IT!

     7. Quality Life-Span Services: Professional services should include full-service (i.e. medical, surgical, dental, nutritional, preventive medicine, diagnostic, boarding, grooming, retail, etc.) for the entire life span of the pet. Specific programs should be available for pediatric, maintenance and geriatric patients in addition to pet selection and bereavement counseling. The level of service should always be high quality and include a complete physical examination. Are you providing a complete physical examination on each patient? Do you record all findings in a problem oriented Veterinary Medical Record format? Are you communicating your findings to the client and offering several options (best option first)? Are you monitoring the level of client compliance and sending reminders?

     8. Inventory Control: Inventory expenditures are the second largest investment (2nd to personnel) in most practices. The computer allows close monitoring of various control measures of the inventory. However, some basic issues need to be controlled. Have re-order points been established? Have re-order quantities been determined? Does the practice take advantage of all payment discounts? Do prices continue to be updated with each order? Is each item turn-over being monitored? As an example, all items that turn-over 10 to 12 times per year have little investment because they are sold before the bill is received. Most pet foods fall into this category. Do you run out of some items while others sit on the shelf until outdated? Are controlled substances being accounted for in a manner that meets Federal law? Are most pharmacy items receiving 150 percent mark-up? Do you charge a prescription fee on each dispensed item that is not an over-the-counter product?

     9. Management Reports: Approximately 99 percent of all companion animal practices are now computerized. The computer has allowed close monitoring of many parameters. You can easily print more reports than you can read. Some specific areas to monitor monthly with comparisons to the previous year-to-date and month-to-date are: Average transaction fees, monthly gross income, monthly patient numbers by species, average gross income per veterinarian, revisit rate, income by service categories, expenses by account categories and monthly net income. Are patient numbers going up or down? Is net profit going up or down? Is the average transaction fee going up or down? You should be reviewing management reports AT LEAST once every 2 weeks.

     10. Professional Fees: Fees are difficult for most veterinarians to review and adjust. The level of fees are usually reviewed every year on a formal basis. Most veterinarians feel their fees are too low when they talk with themselves and their fees are too high when they talk with clients. Veterinarians are generally under paid the world over. Net income will increase when fees are assessed for all services provided. With the advent of the computer, fee estimates ( treatment plans ) can be given more easily and more accurately. An initial payment of 50 percent of the estimate should be collected on all hospitalized cases. Fees can now be compared on a regional and state level by using NCVEI.org website. This is a free service to all AVMA and AAHA members.

The computer can also make consumer-price-index increases automatically. If, as example, the consumer-price-index is increasing at 6 percent per year, a monthly adjustment of .05 percent per month will account for the increase. When prices are adjusted monthly, the client will not feel the "sticker shock" of one large yearly increase. The shopped items (office call, vaccines, elective surgeries, etc.) can be held at a constant fee while non-shopped items (i.e. CBC, enterotomy, chest x-ray, gas anesthesia, etc.) can be increased regularly each month to keep pace with inflation.

A new concept would be to consider consumer-price-index fee increases for non-shopped items on a daily basis. This may sound wild but it is now working in a few practices!

The total accounts receivable should be monitored at a level of 25 to 30 percent of one month gross income or 2% of the annual gross. Credit is OK in most practices if controlled. Control means a credit application should be completed by each client prior to credit approval, a monthly billing fee ($5.00 per month per account) and a monthly interest charge of 1.5 percent on the unpaid balance. Controlled credit will allow increased gross income.

The major fear from extending credit is that clients will not pay. In most practices the actual loss per year is less than one percent. If controlled, credit allows the practice to grow by at least 20 percent, so why worry about a less than 1 percent loss?

The above list of 10 Common Sense Management items should be reviewed regularly to prevent the business side of the practice from crumbling. Often times the diagnosis is so obvious we over look it. Do not overlook the common sense building blocks.