The difference between efficiency and effectiveness

There are two different approaches to maximizing your veterinary practice's productivity and profitability during tough times. One is to focus on efficiency; the other is to focus on effectiveness. Both are important, but which should you focus on?

An efficient practice focuses on maximizing productivity and profitability. An effective practice, on the other hand, focuses on maximizing client satisfaction and referrals. The former is an "inward" view of veterinary medicine; the latter is an "outward" view. Here are four permutations of these philosophies:

1. Inefficient and ineffective. In this veterinary practice, nothing's going right, and the result is often high turnover numbers for both clients and team members.

2. Effective but inefficient. Team members at this practice are doing the right things, they're just not doing them very well. For example, they're sending client reminders—but using costly and time-consuming snail mail instead of e-mail.

3. Efficient but ineffective. Things at this practice are running smoothly, but the appointment books aren't exactly filled to the margins. That's because team members aren't using smart strategies to educate and retain clients—or find new ones.

4. Efficient and effective. In this practice, team members are doing the right things in a timely way, and clients love the service.

Veterinarians focused on efficiency often look for ways to maximize profitability by working faster, delegating as many tasks as possible, skimping on payroll expenses, and cutting corners to save time or money. And to a certain degree, these are sound management strategies.

But the point of diminishing returns occurs when such cost-containment measures impinge on a veterinarian's effectiveness and ability to satisfy clients. For example, does the emphasis on delegating tasks and working faster require you to spend less time with clients explaining findings and recommendations and answering important questions? Does skimping on payroll expenses mean that you're understaffed during busy times or, worse, employing team members who aren't as knowledgeable or experienced as the job requires? Does belt-tightening require a cutback on continuing education for your team or necessary equipment updates?

Effectiveness, says management expert Peter Drucker, is the foundation of success. Efficiency is a minimum for survival after you've achieved success. But you've never settled for just the minimum at your veterinary practice, right?

Veterinary Economics Editorial Advisory Board member Bob Levoy is the author of 222 Secrets of Hiring, Managing, and Retaining Great Employees in Healthcare Practices (Jones and Bartlett, 2007).