Monitoring your practice in today's economy

When our grandfathers sat us down and told us about the good old days, their memories were very selective.

They probably walked five or 10 miles a day because there was little in the way of convenient transportation. Few people had a telephone in their own home and radio was the most common form of entertainment.

But the grittier details of two world wars and other conflicts, the flu pandemic, the Great Depression and other troubling events somehow got left behind in their recollection of the good old days.

In veterinary medicine, those who practiced in the last two decades may be in the same position. I cannot tell you what wonders our grandchildren will take for granted that we can't even imagine today, but I can tell you that veterinary practice will change considerably — and not necessarily for the better.

The counterproductive instinct innate in most practitioners — to provide more services for fewer dollars — will lead to the extinction of about one in six practices in the next decade. You cannot continue to give away profits in the continuing down economy of the next decade.

We must give value for the client's dollar, but not at the expense of our livelihood.

What is this insane urge to design and build award-winning cathedrals of veterinary hospitals? Overhead soars as our clients, increasingly desperate to retain their discretionary income, increasingly procrastinate over services that were commonplace just yesterday. Dentistry, now getting performed on just 3 percent of dogs and 1 percent of cats, is the first casualty that will fall to the cash-strapped clientele.

Veterinary services are a matter of educating our client on value vs. costs. If cost appears greater than the value, the service is declined. If perceived equally, indecision reigns. Only when value exceeds cost does the pet get the needed service.

Now the problem becomes the question: Who on our staff is capable of communicating value over cost? Certainly some are better than others, but improvement never starts without recognition of the relative communication failures.

I use a monthly associate productivity report (Table 1) to help determine the strengths and weaknesses of associates in a multi-doctor practice. We monitor 10 critical areas. The numbers are not difficult to determine and break down each associate's production by percentage and by comparison to both an academic standard and to their peers in the same facility.

Table 1 Monthly productivity report (owners and associates)

In this example, the office exam fee is $41.40, and each doctor's average transaction should be four times that or, in this case, $165.60. Drs. B and D meet or exceed this benchmark. Dr. C is 14 percent too low and Dr. A, who happens to be the practice owner, is 34 percent below this mark.

Assuming about 5,000 transactions each per year, Dr. A is costing the practice about $170,000 per year. This is largely because he wants to be a nice guy and discounts a lot to the gazillion friends he has built up over the 30-plus years of his practice. Unfortunately, many clients know this and request Dr. A to save money. This means that, at a time of life when he would like to relax a little, he is almost double-booked most of the time.

Trying to see all of his "friends" is wearing out Dr. A, and he is missing some lessons in his haste to be the nice guy. This is noticeably obvious, in that he has the lowest dentistry and laboratory percentages. However, in the discounts column, he looks good. This is what the Russians call maskirovka, or political deception. If he gives two injections and only charges for one, the discount is not tracked by the computer. Oh well, no system is perfect.

Dr. D is a relief veterinarian, and clearly is unaffected by the politics of the practice. She just practices the medicine she was trained to do, and her numbers reflect that. She has the highest performance in radiology, laboratory and the use of injections for treatment. She is a relatively new graduate, not yet ground down by the bad habits almost all practitioners form with experience.

"Eyeball diagnosis" has not entered her psyche as yet. "Could be hip dysplasia, so let's throw medicine at it" is not a replacement for radiology and pre-treatment organ-function evaluation. She is well-respected for her doing things the right way, just as her education demands. Her dentistry cases are done by another associate because she works only two days a week.

You may note that this analysis shows that a serious medical error is made by all of the professionals, in that wellness testing is not part of their routine. But 18 percent to 23 percent of all patients are at least seven years of age, and more than half of their owners are quite amenable to wellness testing. Almost 60 percent of the older patients tested are found to have subclinical and treatable kidney or liver problems. In addition to the obvious earlier detection of treatable disease, wellness testing adds about $50,000 a year in profit to any practice with 15 patients a day.

Then there is the serious matter of re-examinations, which I prefer to call "Treatment Progress Evaluation."

We have no guarantee that our initial treatment of most clinical problems will be successful. In fact, the most common cause of chronic otitis externa is failure of the veterinarian to completely eliminate acute otitis externa. We have a moral obligation to have the client make a follow-up appointment for most diseases we treat. In this practice, three of the four just are not scheduling these vital re-examinations, all to the patient's detriment.

There obviously are many more areas of practice that could be benchmarked, but these are the biggies.

The report is posted monthly in the doctor's office area, and each associate can ask himself or herself the necessary questions as to what each must do to comply with normal standards.

In some cases, management can direct continuing-education emphasis toward dentistry or other areas where more awareness is needed.

But we cannot improve unless we know where improvement is required.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 112 Harmon Cove Towers, Secaucus, NJ 07094; (800) 292-7995; Vethelp@comcast.net; fax: (866) 908-6986.