Loving Hands reaches $1.7 million

"The money was not my focus," says Dr. Joanne Roesner, Dipl. ABVP, owner and medical director. This statement seems hard to believe, coming from a woman who spearheaded the growth of her veterinary practice from $1.4 million to almost $2 million in three years. But spend only minutes talking with Dr. Roesner, and you know for certain that it's true.

Left to right: Dr. JoAnne Roesner, Dipl. ABVP, owner and medical director; associate Dr. Karen Ellis, certified veterinary acupuncturist and practitioner of traditional Chinese medicine; associate Dr. Vanessa Lee, focused on avian and exotic medicine, and associate Dr. Catherine Byars.

"The driving force in my practice is the desire to do right by my patients and to take care of the people who own them," she says. "I believe that what we're supposed to do while we're on this earth is leave it a better place. I absolutely believe that some pet owners want and will pay for excellent veterinary care delivered with an attitude of compassion. Somewhere along the line, I ended up with a $1.7 million practice."

Of course, Dr. Roesner's seemingly unending energy when it comes to caring for pets and their people sets the stage. The team at her four-doctor practice, Loving Hands Animal Clinic in Alpharetta, Ga., maintains a high standard of care and builds strong doctor-client bonds. And Dr. Roesner is dedicated to growth—for the hospital and her staff members.

When her practice started to outgrow her 3,000-square-foot facility in 2000, she started thinking about building. "To give the people I wanted to work with the tools to accomplish their goals—and for me to do the same—we needed more space," she says. "I saw our current facility getting in the way. For example, our quality of service declined because we didn't have enough exam rooms."

Dr. JoAnne Roesner

Besides the space crunch, Dr. Roesner's practice had experienced organizational and systematic issues. "I wasn't getting where I wanted to go with the practice systems in place. I felt we were overlooking tremendous untapped income because of lost charges. And I wasn't convinced that we always provided all the care that was in animals' best interest." At the time, the practice manager held the only staff-management position.

Faced with the goals to expand, grow her profits to support that expansion, catch missed opportunities, fix organizational issues, and satiate her drive to create the best practice she could, Dr. Roesner called in a consultant. She asked me to help her take the practice to the $2 million level and beyond. Here's how our efforts unfolded over a three-year period.

In 2002, the practice generated about $1.4 million in revenue. A thorough analysis revealed opportunities to strengthen the practice's foundation and opportunities for growth. Dr. Roesner and her healthcare team set these goals for 2003:

• Cultivate internal communication

• Continue to enhance patient care

• Enhance efficiency and organization within the hospital to improve productivity and profitability.

We developed a business plan to accomplish these goals. They implemented these changes in 2003:

Financial management. A fee structure analysis and review of pertinent financial information showed places that needed improvement. We:

• updated the fee structure so the practice no longer underpriced value-based services and so the fees were in line with the $38 exam fee.

• increased the average markup on dispensed medication to 125 percent.

• increased the dispensing and minimum prescription fees by $2 each. (See "Focusing on Fees," October 2005.)

• revamped how and when Dr. Roesner received pertinent financial information so she could make informed management decisions in a timely manner. The bookkeeper reorganized the profit and loss statement to mirror the Management Statement format and started preparing a monthly statement for Dr. Roesner to look at. This tool captured her revenue, expenses, and the amount available for compensation and reinvestment. (See "Sample Management Statement" under "Forms" at www.vetecon.com.)

• developed a budget for 2003, so Dr. Roesner could tell when her revenue and expenses weren't in line. (See "Feeling Squeezed by Expenses?" December 2005.)

Employee development. Dr. Roesner wasn't satisfied with the practice manager's performance. After several months of working together to resolve the issues, they came to a mutual agreement that the manager would leave. Here are some other changes we made:

• expanded the internal management structure and created a client care coordinator position for the front office, a patient care coordinator position for the nursing area, and a ward manager position for the ward and kennel areas. The additional team members assisted Dr. Roesner with implementing her management decisions and day-to-day staff supervision.

• developed job descriptions, so everyone was clear about the expectations and responsibilities of each position.

• promoted a long-term technician to be the new practice manager, hired a licensed technician to be patient care coordinator, and promoted from within to fill the client care coordinator and ward manager positions.

• designed a training and continuing education program to enhance understanding of co-workers' strengths and contributions and to improve team effectiveness. The program consisted of external and internal meetings and Myers-Briggs Type Indicator personality testing.

• established an internal meeting structure to cultivate teamwork and communication. The schedule:

• management meetings: Mondays from noon to 1 p.m.

• client care department meetings: Tuesdays from 1 p.m. to 2 p.m.

• doctor and patient care department: Wednesdays from noon to 1 p.m., with another meeting later for the second-shift technicians and assistants.

• ward department meetings: Wednesdays from 3 p.m. to 4 p.m.

Medical development. To enhance consistency and assist with new staff members' training, the medical team created written standards of care. As part of that effort, the team:

• modified the travel sheet for easier use and to reduce the potential for missed charges.

• devised a process to track medical records as they move through the hospital to reduce the amount of time spent searching for them. The team's ultimate goal was to move toward a paperless practice.

Client development. To improve client compliance, we focused on proactive scheduling and on improving the clients' response rate to reminders. Specifically, staff members:

• committed to scheduling the pet's next appointment for recommended care at the end of the current visit

• targeted an 80 percent scheduling rate.

• modified their reminder process and called clients for the third reminder to schedule the appointment. (See "Rev Up Your Revenue," November 2005.)

Facilities and equipment. The management team formed a committee to develop an organized, step-by-step plan for becoming a paperless practice. And Dr. Roesner started planning for her new facility. The building project represented a significant financial investment, of course, and she wanted a strong plan in place to ensure success.

Results. By the end of 2003, revenue grew to $1.5 million. Dr. Roesner invested the increased revenue in raises for staff members and doctors, and computers for all exam rooms. Plus, she accelerated the repayment of debt.

GOALS FOR 2004

Dr. Roesner and her team established these goals for 2004:

• Enhance profitability

• Continue to strengthen the team's contributions to the practice

• Plan for the new facility.

Using the Management Statement, we again identified opportunities for growth and developed a business plan for 2004. They implemented these changes:

Financial management. We again reviewed fees and financial processes and made the following changes:

• implemented cost-of-living increases for value-based services

• increased the average markup on dispensed medication to 150 percent.

• developed a budget for 2004 and planned quarterly discussions of the Management Statement.

• identified why there was a significant difference between the doctors' average charges. The team pulled a random sample of cases and compared the medical record for services provided to the client invoice for services billed to determine whether they captured all fees. Then the doctors traded cases to see whether the reviewing doctor would have followed the same treatment plan or modified it; they discussed the results to develop a consistent, shared medical philosophy. They decided to mentor less-experienced doctors to enhance patient care and to make sure they were attaching a fee to all components of care provided.

Employee development. The management team experienced some upheaval in 2004. The client care coordinator resigned. Dr. Roesner and the practice manager decided she was better suited to the client care role, so she made the move. The ward manager wanted to pursue certification as a practice manager in the hopes of filling the role. Dr. Roesner agreed to support her efforts and give her added management responsibility to evaluate her capability of assuming the role.

The healthcare team developed the continuing education plan for the year with an emphasis on learning more about the importance of perception of value. I suggested conducting phone-based surveys of area practices to educate team members about the importance of a caller's impressions; inviting one or two clients to discuss why they chose the clinic and what factors affect their perception of value; and visiting another practice as a client and evaluating the experience, including the quality of care they receive and what they pay for it.

Get your team onboard

Client development. The team didn't hit its 2003 goals for proactive scheduling and third reminder calls. So they refocused on these two areas again for 2004. They completed a compliance audit of their reminder system, found a significant number of errors, and worked to correct them. The client care staff decided to divide reminders into smaller batches and send fewer reminders weekly instead of a large batch monthly.

Facilities and equipment. Dr. Roesner continued planning for the new hospital, with the goal of breaking ground in 2005.

Results. By the end of 2004, revenue grew to $1.6 million. With the revenue growth and improved expense management, the amount available to compensate the doctors and reinvest in the practice improved by 31 percent, or $145,000. Dr. Roesner again accelerated the repayment of debt so she'd be in a good position for the construction project in 2005.

Dr. Roesner and her management team established the following goals for 2005:

• Continue to grow and enhance profitability to support the new hospital

• Continue to strengthen the client care team

• Complete construction of the new hospital.

Using the Management Statement we again identified opportunities for growth and developed a business plan for 2005. They implemented these changes:

Financial management.

• reviewed fees and implemented cost-of-living increases for value-based services.

• developed a budget for 2005 and planned quarterly discussions of the Management Statement.

Employee development. The management team experienced some additional change in 2005. The client care coordinator resigned and Dr. Roesner hired a new coordinator. "I'm optimistic about the skills my new coordinator brings to the practice," she said. "I think she'll be able to lead the client care team in the direction I envision." The ward manager resigned and relocated to another state. For now, the patient care coordinator will assume responsibility for managing ward attendants. Dr. Roesner also hired a new practice manager and is pleased with the employee development and organizational skills she brings to the table. "Now I've got the practice manager I've always wanted," says Dr. Roesner.

The healthcare team developed the continuing education plan for the year with a continued emphasis on the importance of perception of value and on strengthening the client care team.

Client development. The practice continues to focus on proactive scheduling and improving reminder compliance.

Facilities and equipment. Once we received the initial cost estimates, I completed an expansion analysis to help Dr. Roesner determine the financial viability of the new hospital. We projected changes in her expenses in the new, larger space and then developed a plan for revenue growth to support the new expenses. (See "Don't Get Lost in Increased Costs" at www.HospitalDesign.net.) They broke ground for the new facility in March.

Results. By the end of 2005, revenue grew to $1.7 million, and the amount available to compensate the doctors and reinvest in the practice improved by another 4 percent, or $26,000. Dr. Roesner hopes they'll move in to the new facility soon. And while she and her team have made great strides toward achieving their goals, they haven't stopped there.

They continue to do strategic planning and to work on improving the practice. "We've accomplished so much," says Dr. Roesner, "and I can't wait to see what happens in our new building!"

Reflecting on the journey

Thinking back over her practice experience, Dr. Roesner says resolutely, "The greatest reason for small business failure is lack of adaptation. If I'd been satisfied with keeping things as they were, I could have downsized, abbreviated growth, and stayed where I was. But I needed to address my lifelong desire to practice the best veterinary medicine I could. I found I was grossly limited in my current facility and my current systems. I wanted to be in a position to support the people I had and to attract the support staff that I wanted. I had to take a deep breath and move forward."

From her first 1,200-square-foot facility in 1993 to today, preparing to move into a 9,970-square-foot hospital, Dr. Roesner has stayed rooted in her ability to adapt—and in her mission for Loving Hands Animal Clinic. "Our clinic's our way to do good in the world," she says.

The bottom line

Not every practice is or should be a $2 million one. But the strategies used to improve this hospital apply to everyone. For example, you could:

• develop a budget

• review financial statements monthly

• set scheduling and compliance goals

• evaluate your team and make sure you have the right people in the right places, and

• establish standards of care.

Denise L. Tumblin, CPA, is co-owner and vice president of Wutchiett Tumblin and Associates in Columbus, Ohio. She'll lead a two-day seminar on transitioning into management and ownership, Aug. 24 and 25, at Progress in Practice in Kansas City, Mo. And she'll speak on setting fees, staff compensation, and more at CVC Central, Aug. 26 to 29 in Kansas City. For more information, visit www.thecvc.com

Denise L. Tumblin, CPA