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Key Performance Indicator (KPI) in a Veterinary Practice.

Saturday, November 29th, 2014 11:08 am

 

A car seat belt is a little like a Key Performance Indicator (KPI) in a Veterinary Practice. 


Do you ‘buckle-up’ your practice KPIs every month? If not why not…. 

Would you like to quickly, easily and PAINLESSLY manage the KEY DRIVERS of your practice – the Key Performance Indicators (every month). 

Today’s NEW video shows you a quick and easy way to do it.
watch video
 
OR read the transcription below

Enjoy 

Diederik Gelderman 

P.S. Today’s video is a continuation from where we left off a few days ago, and in it, you’ll discover:
  • How to decide which KPIs to use
  • How often you should measure your KPIs
  • Who should measure them
  • The actions you need to take

 

There’s no charge and you can watch it here :-) 

P.P.S. If you have any questions or need any help, let me know! 
I’d love to hear from you.

 

Transcription:


Would you drive your car and not wear your seatbelt or would you drive your car at night and not have your headlights on


KPIs are a little bit like a practice seatbelt or driving at night with your car headlights on. They help you with…


  • Security – knowing that things are on track in your practice – allowing you to sleep well at night
  • Goal Setting - to set goals and directions for your practice and to plan forward – rather than trying to plan by looking back. It’s a little like driving - look through the windscreen of your car to determine where you’re going, rather than by driving by looking into the rear-view mirror
  • Comparisons - to compare yourself against ‘industry standards’. Be careful here – compare yourself against the best and be aware of the pitfalls of many ‘benchmarking studies’, which are only used by the more average practice. More on this in a little while. Ensure that you don’t compare your practice against the cream of the crap
  • Opportunities - to see what opportunities exist and where
  • Measurement - to measure one-self against your vision (e.g. best care, whatever that means for you – senior program, annual health check compliance, compliance for a whole range of other clinical stuff, customer service rating, number of cat visits, other clinically or non-clinical relevant data – data relevant to you, etc.)


Let’s summarise the issue here in one concise thought: 


Veterinarians who don't carefully read their KPIs, their financial outcomes & measurements, run risks much as they would in failing to read medical charts and outcomes carefully.


Your financial statements are the key diagnostic tools for managing your veterinary practice, tracking revenues and expenses, identifying financial problems, and ultimately increasing everyone’s compensation.


  • Determining Which KPIs To Use


Don’t let anyone tell you which ones you HAVE to use or are NOT allowed to use


KPIs are or should be - flexible


They should change over time depending on and as the practices’ focus changes


Most likely there will be a core group which will remain the same. This group will be the ones that are the primary focus and drivers of the practice over the LONGER term.


KPIs to tie in with practice vision/direction. Both in the shorter and in the longer term. Examples here include; customer care or customer service, senior care, feline programs, staff or client satisfaction ratings, the percentage of new clients coming by referral, etc.


KPIs may be clinical or non-clinical


  • Clinical

Revisit rates

% senior screens

% dentistry

% euthanasia

Vaccination / annual health check %

Etc.


  • Non-clinical (financial and non-financial)

Customer service satisfaction

Staff satisfaction or engagement levels or scores

Number of clients actively referring

Financial – profitability

Financial – various ratios – see video 1

Puppy party enrolment %

Puppy party graduation %


Once you have determined which KPIs you’re going to use, you need to benchmark them or compare then to something. Well to what are you going to compare them?


  • Benchmark with what?

External (i.e. to the Veterinary industry!). Be careful – there are different ways to measure depending on computer software, analytical models, etc. You could be comparing yourself to low end practices or skewed samples. Also different practices will have different client types, different demographics and different cultures and also have a different focus – hence there are substantial challenges using this type of benchmarking 


Internal – For example you could benchmark your own data over time – setting progressively harder target over time. Or you could benchmark Vet to Vet on various production criteria.

Etc.


  • Limit your KPIs to a manageable number. Choose some clinical and some non-clinical ones to get a representative mix of what you are focused on. If you choose more than say 12 or 15 this may (or should I say WILL) become overwhelming and unmanageable. This is especially true in the early situation where you are just starting to use them. 


  • Change your KPIs over time as your practice focus changes or as you change your parameters


  • A TWO tier approach simplifies things;


Dashboard – (upper tier with just 2 or 4 or 6 crucial (to you) parameters e.g. dental percentage and revisit percentage

Lower tier – more comprehensive and complex. This is accessed if the dashboard is out of whack.


  • How Often and Who


Who – needs to be the practice manager or practice owner who has an all over picture of the practice and the direction in which the practice is headed. They need to do the actual analysis or examination of the data and draw the conclusions and do the actioning.


However the preparation of the data can be done by any appropriate person who has access to the data.


It should all be summarised on ONE page so that it’s condensed and easy to manage and action.


How Often – the analysis and actioning should be performed monthly and within 7-10 days of the end of the month. The steps include;

  • Compare actual to budget for financial data or actual to the target you set for non-financial parameters.
  • Investigate discrepancies or deviations by the actual from the budget or from the targeted figures and ACTION these discrepancies 
  • Set new targets and monitor the practices’ progress towards them
  • Analyse and follow trends i.e. if mild deviation / discrepancy, then this may be due to timing issues or other smaller factors. But if these discrepancies worsen or are still present after two or three months then they should be regarded as being significant and they need to be actioned. You need to ensure that you allow for fluctuations in things like; stock levels, four and five week months, Easter, elections, local events, stockpiling of stock like flea control, mastitis treatment, etc.


Make this process EASY for yourself by the use of a two tier system (dashboard and deeper layer). This concept is a sound one and therefore you only have to look more deeply at the lower layer if there is a significant discrepancy in the upper dashboard. 


Initially however in the formative stages of understanding and developing your KPIs, in order to get a good understanding and to get good habits, I’d look at ALL the data, not just the dashboard data. But over time you will no longer need to do that.


What’s a DASHBOARD – a dashboard is or are the ‘critical’ or highly tracked, important or current focus items in the practice. These are on the dashboard. These are the things that are KEY to your whole business, For example – for me it’s these two keys – r/v % and dental income %


Remember: Action early rather than late


There can even be a ‘reward’ system in place for staff (individual, Team, or department based) if all KPIs are on track – globally for the practice or just in their ‘department’



  • What Action To Take


So to lock-in this information about KPIs and to make it happen for you, let’s summarise the actions that you need to take right here and right now;.


  • Determine a handful to 10 KPIs that are meaningful to you and relevant to where you want the business to focus and to be headed.
  • Get a monthly report of them – within 7-10 days of the end of the month on your desk
  • These KPIs need to be looked at by the Practice manager or owner, but the report can be put together by anyone with access to the appropriate data
  • Use a dashboard with a small number of parameters and a second tier of more comprehensive data. Dig deeper into his second tier if the top layer dashboard is out of kilter
  • Determine WHAT discrepancy has occurred and WHY the discrepancy has occurred and then take EARLY remedial action
  • If a KPI is unrealistic, adjust it
  • If a KPI is old and/or no longer valid (for example, the practice focus has changed), or if it no longer fits in with the practice vision, then discard it
  • Over time, discard and delete redundant/old/out-dated KPIs and replace with fresh ones, ones that are relevant and pertinent to your practice’s evolution and current focus


Realistically, the KPI process is simple, easy and straightforward and you’ll be able to implement it into your practice forthwith.


Imagine how happy and contented you’ll feel, how well you’ll be able to sleep at night when you know that everything (wrt your practice KPIs) is ship shape in your practice – what a weight off your shoulders!.


If you think that the material in THIS and in the previous video is powerful – yes you’re right, it really is VERY powerful and when you combine this with a really depth understanding of;


  • the psychology of your client around money, spending money on their pet and on pet care
  • the psychology of mark-ups, pricing and price pointing so that you can price the products and services in your practice so that clients will buy them – even though they may be more expensive from you than from your competitor
  • and a really deep, in depth understanding of the cost of running your Veterinary business
  • and much more


When you get all that material ‘down’ and locked in your brain – that’s when life around your practice finances will change and change dramatically for you.



 

So, as I’ve already said, if you like this material then you’ll love Your Practice Finances Made Easy On-Line Training Program – it’s so much more in-depth and comprehensive than what we’ve gone through today – we’re only looking at the tip of the iceberg in this 5 part training. If you want to get this whole system happening in your own practice, then there is a really easy way to do it. All you have to do is join me in the Your Practice Finances Made Easy On-Line Training


Your Practice Finances Made Easy On-Line Training shows you exactly and in detail how to set your practice up financially for success and it goes through everything that you need to know in order to do so. With even more detail and information on KPIs than we’ve shared today.


My one-on-one coaching clients as well as my clients in the VPCF 2014 training LOVE this ‘Business Finances’ module. They love the fact that it’s; 

  • revolutionised their practices finances, 
  • made them easy to understand, 
  • made it so they can be managed in one hour a month, 
  • made it so that most of the financial stuff is automated (watch the last video in the series for this topic)
  • ensured that if they wanted to they personally could be totally redundant in managing their practice finances – it can all in fact be systematised
  • and that they can PROACTIVELY target all the important drivers in their practice – the main ones of course being their personal wage and their take home practice profit through this system


Imagine how delighted you’ll feel when you have all those things under control in YOUR practice as well.



Enough said; so let’s move on - keep your eyes open for the next training video. It’ll be along in a few days.


In that video specifically we’ll look at

  • The current state of the industry
  • The key ‘players’ in the profit game
  • Understanding your costs
  • The fine distinctions that make ALL the difference in being profitable or not


 


 

 





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