The devil's in the details

Is your practice losing ground compared to its past performance? If so, it's not necessarily cause for panic. Often you can get back on track by making some simple changes. To get started, dot the i's and cross the t's in these five areas:

1. Improve the signals you send clients.

Are you emitting busy signals? We placed a number of phone calls to a practice I was consulting with to see how team members answered and how they dealt with different questions from clients. More than half the time, we got busy signals.

The practice had three full-time veterinarians, but they only had three incoming phone lines. And one of those phone lines was also used for the credit card and fax machines. It seemed like all three lines were lit up almost every time I looked at the phone.

I requested a busy-line study; your local telephone company will monitor your phone lines for a week or so and report how many times someone called and got a busy signal. In one week, this practice had more than 300 callers who received a busy signal.

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Many of these clients or prospective clients probably became frustrated and didn't call back. The lesson: Something as simple as the number of incoming phone lines can affect the growth and development of your practice.

2. Invest in more efficient technology.

Are you still using a DOS-based software program and a dot-matrix printer? It's amazing how many practices have been using the same software for the past 10 years or still aren't using a computer system. If I just described you, it's time to invest in your infrastructure. Printers, monitors, label printers, and Internet access all need to be up-to-date and working well.

An illustrative story: At a practice I recently worked with, the only printer at the reception desk kept breaking down. The paper would jam, the printer cartridge wouldn't work properly, and it sometimes just refused to print.

The receptionist incessantly fought that printer. She often had to apologize to clients and offer to send them their statements, or ask people to wait while she attempted to fix it. The time she spent on this printer was absurd and, of course, the problem was affecting customer service, her efficiency, and even her morale. She said the owner was too cheap to purchase a new printer. After discussing this problem with the practice owner that evening, I personally purchased a new printer for the practice—and I was a hero! The lesson here: Little things can have a big impact on your practice.

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Don't forget to think about software issues, too. Do you use an outdated version of QuickBooks to track your expenses? Do you still write checks by hand? Are you using the AAHA Chart of Accounts? If you're better informed about the financial aspects of your practice, you'll make more informed decisions—and the right software can help you track this critical information.

3. Update the look of your facility.

Does your practice still feature the vinyl flooring and wallpaper the previous owner installed 10 or 20 years ago? If so, clients may think you're practicing "old" medicine, too. It doesn't take a lot to update your practice: A new coat of paint, a new floor, or fresh cabinets might make all the difference. And clients really respond to these changes. One example: A veterinarian told me that after he modernized his reception area and exam rooms a client told him, "The wallpaper you had in your exam rooms was the same pattern I had in my bedroom 10 years ago. I'm so glad you took it down."

Of course, in some cases your issues may go beyond the cosmetic. For example, your physical plant can strangle you if you don't have enough exam rooms, your treatment area is too small, or you can't do surgery and dentistry at the same time because you don't have enough room or enough anesthesia machines.

I know one doctor who literally uses the bathroom for his office because he needs his office as an exam room. He uses a drop-down table that goes over the toilet. In this case, growth actually created a problem in the practice. The building simply no longer supports the business.

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Are you a victim of your own success? Correct this problem by either controlling growth or enhancing the physical plant. Most important, don't just continue on and hope for the best. If you do nothing, you'll lose the clients you're not prepared to serve well.

4. Track revenue and expenses.

Many of your costs increase every month—insurance, utilities, and wages, for example. So you need to review your fee schedule at least once or twice a year and increase your fees to keep up with these increased costs.

Look at each fee based on the cost of overhead, the materials you use in the procedure, and a fair return on the doctor's time. Anytime your income is lagging or your practice isn't developing at the same rate as it has in the past, look at your fee schedule and see whether there's an easy fix.

Of course, it's easier to increase income than reduce expenses—but don't ignore expenses. Staffing and inventory costs are the two expense areas that impact your practice the most and that you exercise the greatest control over.

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One issue to keep in mind: It's natural to add team members as your practice grows. But you still need to track this expense and keep it in line with practice income. Most practices try to keep support staff costs at 18 percent to 21 percent of total practice income. Track this number so you know what's normal for your practice and you can respond if it gets out of line.

Are you overstaffed at times and understaffed at others, or paying a lot of overtime? Cross-train team members, and look at scheduling solutions to maximize staff members' efficiency and help doctors produce more income.

Out-of-control inventory costs represent an even bigger danger than staffing costs. Keep in mind, inventory isn't an investment—no item you purchase will ever appreciate in value. But your inventory will make you money if you use or sell the product. The key here, then, is consistent turnover.

I recommend you aim for a shelf life of one to two months. Exceptions to this rule: Food should turn over more quickly, and some drugs and supplies that can't be purchased in small enough quantities or are required in case the need arises might require extended shelf lives.

5. Evaluate your management structure.

If you started your own practice or purchased one, it's likely that you did all of the practice management during those first few years. You couldn't afford a manager and you wanted control over your practice. But you need more management support as your practice grows.

If you keep trying to do all the managing yourself, you take away critical time from delivering services, which affects profitability. Or you take away from your personal time, which affects your quality of life. So evaluate your practice, and depending on your needs, consider hiring an office manager, practice manager, or hospital administrator.

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Veterinary Economics Hospital Management Editor Mark Opperman is a certified veterinary practice manager and owner of VMC Inc., a veterinary consulting firm based in Evergreen, Colo. Send your comments to ve@advanstar.com

Mark Opperman, CVPM