Posted on by tcypadmin

I know you HATE this part of veterinary practice

That’s right….. 
if you’re the ‘typical’ Vet, then you HATE the money side of your business. You hate;

  • managing the finances
  • doing the monthly cash-flow (let’s be honest – most likely you don’t even have a monthly cash-flow)
  • running a budget (honesty time again – do you run a budget – most likely not)
  • measuring and tracking the Key Performance Indicators
  • checking whether you’re ‘on track’

Let’s be honest again – most vet practices don’t do ANY of those 5 points. 
But that’s a RECIPE FOR DISASTER. Like me you could loose $220,000 and not even know it!!
Surely you don’t want that to happen. 
So what if I showed you a system that would allow you to manage ALL THE FINANCIAL and KPI DATA, in less than 30 minutes a month! 
Watch this video, take some notes and learn this simple system that you can quickly and easily implement in your practice tomorrow! Now to make it easy for you to ‘digest’ and to take action on this very important topic, I’ve divided it into TWO videos for you.
Today in Part 1 we talk about your practice KPIs and in two days time in Part 2 we’ll discuss your practice financials

Cheers – see you in a few days for Video 5. 
Diederik Gelderman 
P.S. BTW – if you want to know more about the Veterinary Practice Profit System – then just reply to this email and I’ll send you details 
DG Click Here to listen to the PodcastSee below forTranscript:
Just a quick warning….This video is a little long – and so I’ll split it into 2 sub videos to make it easier for you to ‘consume’ ?

Veterinarians typically hate and ignore finances and their financials and their practice performance data. Typically, the only see them once a year when they get their annual tax return from their accountant.
And that’s because we love pets and we want to help them and help their owners – so this is a TOTALLY understandable mindset. We’re not accountants, not financial type people and we hate those sorts of numbers, spreadsheets, etc. We’d much rather being doing a good ‘consult’ or digging around in a dog’s abdominal cavity fixing something…..
But this is a recipe for disaster. From a number of perspectives and I’ll keep this VERY brief even though I have got enough data to keep you engaged for hours….
Your current scenario: most veterinary practice owners barely eke out a living from their practice. There’s certainly no real ‘reward’ for the time, effort and expertise – especially when compared to other similar industries and professions
Your future scenario: 75% of Veterinarians will retire on less than the median wage. Is this fair – do you know that 80% of Veterinarians currently have less than $50,000 put away for their retirement. This is just terrible.
Lastly: the practice multiple bubble is about to burst. What does this mean….. It means that currently, when selling your practice, you can get a good multiple, a good sale value for it. However, in the next few years that is all going to change. So if after the next two-three years you’re going to rely on the sale price that you get from your practice for your retirement nest egg – well forget about it.
So it’s time now to start paying SOME, just a LITTLE attention to your practices finances and to your KPIs so that you can;

  • Get a FAIR return for the work that you put in today
  • Ensure that you put away enough so that you can retire to a fair and comfortable lifestyle 

Before we move on – let’s be BLUNT. The LARGEST number of ‘Help Me…..’ type phone calls that I receive are about ‘no cash, no profits, can’t pay staff, can’t pay bills, scared I’m going broke…..’
And you know what – I’ve only ever found ONE practice that I could not help and help resolve these problems quickly and easily in less than SIX months.
So most of you watching this who have these bells going off in your head need to be aware that no matter HOW BAD IT IS, it’s EASILY FIXED once you action the things we’re talking about in this 5-part training series and especially in this one.
Before we go any further, listen in and I’ll explain two things;

  1. Why I’m so passionate about this subject
  2. Why I’m qualified to talk on this and WHY you should listen to me

I’ll briefly share part of my story – I’ll make it VERY quick. I practiced from the side of my in a 2-Vet practice from 1976 till 1996. Did very well thank you financially speaking. Saw the accountant once a year to sign the tax return and collect the financial ‘stuff’.
Then we built this $1.2M facility. Staffing went from 2 vets, a nurse and a receptionist to 4 vets, practice manager, 3 nurses, kennel person and 2 receptionists and the bills – especially the rent went through the roof.
The first year in the new facility was ok – profit wasn’t as good as previously but nothing scary (I didn’t know it, but the expenses hadn’t really kicked in yet).
In the second year I went to the accountants to sign the tax returns – and we’d all done this JUST BEFORE the tax deadline – so this was 9 months after the end of the tax year – only to find I’d lost $150,000. I shat myself, but soldiered on….
The next year – I was really proactive and wanted to see my tax data and financial a lot earlier – so I saw them six months after EOFY. Hey – I’d only lost $75,000 that year.
I say that with a wry smile on my face. I can smile now – but I didn’t smile then.
Actually I shat myself again. Losing a quarter of a million dollars in two year….. If I kept that up, I’d lose everything including my family home.
Something had to change…..
I elected to get coached by Michael Gerber and the Gerber system.
This system spent 24 months on high-end finance as well as on many other things. Long story short – it WORKED.
Everything was fixed – but the system was far too complicated.
So I simplified and simplified and simplified it so that I could manage the practice finances and key performance data in just 60 minutes a month.
That’s what we’ll share today. I’ll give you a very brief overview – enough to get you started on the right track so that you DO NOT MAKE the same MISTAKES that I did and so you do not go close to losing your family house like me.
First let’s start on the practice KPIs or KPDThis data needs to be on your desk one week after the end of the previous month. You can easily get someone to ‘strip’ it out your practice management software for you and print it out and put it on your desk.
Let me here my list of MUST TRACK KPIs and also my list of ‘EXTRA’ KPI’s. This second list of ‘extra’ KPI’s are 
Must TrackYou need to track the KEY drivers to YOUR Veterinary business. Since every practice is slightly different and has a slightly different focus, these KPIs are not absolute to every practice. But they will be a good starting point for you.
I’ll give you the KPI and then the target that you can easily achieve.

  • Vaccination recall / Annual health check 75% easily 85% possible
  • Revisit rate of primary ‘disease’ cases
  • within three months 32% 33%
  • Dental income as a percentage of gross fees 8% 10%
  • New clients coming by referral 50% 85%
  • New clients per Veterinarian per month 15 >20
  • Average Transaction Fee (as a multiple of
  • your examination fee 4x 5x
  • Pathology income as a percentage of gross fees 18% 22%
  • Discounts zero zero

If you want to just track the best of the best of the best – the key DRIVERS if you will…..
The ones that my 18% Club clients track are;

  • Dental income
  • Revisit rate
  • Vaccination recall rate
  • Pathology income

That’s it……
They know EXACTLY where they are at from a good management of their practice perspective by just looking at these 4 Key Drivers.
Extra (Nice To) TrackNow there are MANY things that you can track depending on what YOU are focused on. And remember you may focus on different things over time. 
For example, you may implement a Senior Pet Program this year and so to get it going you will rigorously track the numbers for say 12-18 months. Once it’s up and running then you may want to implement a Feline Friendly Program and so you will start to measure and track a different KPI 
Number of new client referrals (on average by each client) per year 5 10Senior pets coming in for biannual ‘senior’ Checks (including blood) 50% 85%Veterinary productivity (per hour) $300 >$400Number of non-veterinary staff (includes; nurses, technicians, receptionists, practice manager, groomer, kennel staff, etc.) ‘on shift’ at any one time compared to the number of veterinarians ‘on shift’ 3.5 5Imaging income as percent of gross feesper Veterinarian 4%
You can also track the percentage of;

  • urinalysis per exam
  • ear swabs (diff quick examination) per exam
  • faecal examinations per exam
  • heartworm preventative sales as a percentage of active dog numbers

Look – I could go on…………..
And it’s not necessary as you know have much more data to track than you really need.
My Advice

  • Choose 6 things to track from the ‘must track’ list and
  • Choose 2 things to track from the ‘nice to track’ list

That’s ALL YOU NEED.Don’t make it complex or hardDon’t add extra stuff that’s not needed.
Let’s be HONEST. Vets are GREAT at making this complex and complicated. IT’S NOT NECESSARY here – just keep yourself down measuring these 8 things.
Many of my 18% Club clients have pared these 8 back to just FOUR and they LOVE THE SIMPLICITY.
Enough of KPIs, let’s move on
Let’s Now Look At Financial Data
You need to on a monthly basis get the following data out of your practice management data and put it in a quickly and easily looked at spreadsheet.

(BTW: – these figures are all WITHOUT GST, VAT, Tax, Sales-Tax, etc. – whatever your country might use.)
This spreadsheet may look complex but it’s not. Once you’ve used it a few times, you’ll be able to ‘get it’ in less than 15 minutes.
The 18% club have this on a self-calculating 12-Month spreadsheet and spend less than 30 minutes a month analysing this data.
HEY – if you want your own copy of the 12-Month spreadsheet that they use, email me asking for it and I’ll be only too happy to send you your copy. 
There are only a few key lines and key numbers that you need to look at. These are;

  • Practice Revenue
  • Variable Expenses
  • Fixed Expenses
  • Staff Compensation (Non-Vets)
  • Facility Expenses
  • Veterinary Compensation
  • Owner Compensation
  • Reinvestment Into The Practice
  • Other Income
  • Other Expenses
  • Remaining Cash Available To Owner – PROFIT

So that’s just 11 simple pieces of information that you need to look at. Of those 11, you can really ignore the following – let me explain…..

  1. Practice Revenue – all other lines simply use this to calculate the % from. You’d compare PR in July this month say with July next month – and if you’ve planned for a 10% growth rate, then you’d just quickly compare this year and last. Ok – takes you 10 seconds!!
  2. Reinvestment Into Practice – in most practices this is somewhere between 1% and 5% – typically 3%-4%. So not a big ‘player’ in the game. So most often you can ignore it, discard it quickly – also in 10 seconds
  3. Number 10 and 11 – Other Income and Other Expenses. These are usually very SMALL number; like your drug rebate or similar or the income you earn from being the Vet at the local show. Other expenses are typically also rare and minor – they just don’t fit other categories. Rarely are these numbers more than ¼% or ½%. Again – quick look and disregard – takes 10 seconds

So now you’re left with 14 minutes and 30 seconds to examine 8 numbers and compare them to the IDEAL Financial Data.

It’s only IF these MAJOR data lines vary significantly from the ‘NORM’ that you need to look ‘deeper’ at the subset.Let me explain;Your Fixed Expenses should be 7%-9% (as a percent of gross fee turnover). If they are less WOOWEE!!! Celebrate!!If they are more then you need to find out WHY. So then you’d look at these data lines to (below) to see where you had spent more than you should. And then you’d ACT to take CORRECTIVE ACTION.So for example – a Well Managed Practice spends less than 1% (of gross fee income) annually on Advertising. So that’s less than 0.5% per month.So if your ‘Advertising cost’ in the data below is OVER 0.5% – then you need to determine WHY and CORRECT it is appropriate.DO THIS monthly and you’ll find that all of your practices financial problems will be solved! Now let me give you the Financial Data Numbers that you need to ADHERE to.

  • Practice Revenue (My 18% Club members typically target an 18% growth rate per year – YEP and an 18% net profit after all expenses and including a ‘fair’ wage to owner) 
  • Variable Expenses (<21%; if you want a, CHALLENGING but achievable, target then set yourself a target of 18%
  • Fixed Expenses (7%-9%)
  • Staff Compensation (Non-Vets) (21%)
  • Facility Expenses (5%-7%)
  • Veterinary Compensation (TOTAL Veterinary compensation including owner compensation 17%-18%)
  • Owner Compensation (approx. $100,000 for a 3.5-4-day workweek with 4-8 weeks holiday per year – include this in ‘Veterinary Compensation’ above)
  • Reinvestment Into The Practice (2%-3%)
  • Other Income (negligible)
  • Other Expenses (negligible)
  • Remaining Cash Available To Owner – PROFIT (>18%. If you want a challenging but achievable target, then make it 23%)

NOTE: Total Staff Compensation – it doesn’t really matter HOW you split it as long as the TOTAL wages bill (plus ALL on costs) is less than 38%
With all the 18’s you see above – maybe you can now see why it’s called the 18% Club. BTW; – ALL these numbers are ACHIEVABLE!

NO MORE – You’ve got enough to go on with!!
I’m afraid that if I give you MORE, that it’ll be overwhelming!!. So just implement the strategies from this training today and you’ll be BLOWN AWAY at how easily your practice finances and KPI data will fall into line.

These are the steps to quickly, easily and accurately ensuring that your practice is on track from a financial and KPI perspective AND ENSURING that unlike me, you don’t bleed big money without even knowing it.
Tracking this data will ensure that you earn enough ‘today’ to ensure that they stress, responsibility and hassle of owning, managing and running a veterinary practice is WORTH IT’ and that you are FAIRLY recompenses for you time and efforts.
And secondly, this simple tracking and monitoring system will ensure that you DO have enough put away for your comfortable retirement. A retirement style that you deserve after those 30 or 40 or even LONGER years of very HARD work.
Follow this through, implement the strategies and you’ll be earning what you are worth and the retiring as you deserve to. You won’t be in that 75% group of Veterinarians who retire to live on less than the median wage.
That’s ALL YOU NEED.Don’t make it complex or hardDon’t add extra stuff that’s not needed.
Let’s be HONEST. Vets are GREAT at making this complex and complicated. IT’S NOT NECESSARY here – just keep yourself down measuring these 8 things.

It’s a simple formula and it works. I’ll just say to you….. Don’t screw with it, don’t make it any more complicated (because it doesn’t need to be), don’t much it up or screw with it up because you might think it’s so simple, too simple and you want to make it more complex.
Just don’t……….
Hey – see you next week when we talk about the last of the 5 keys that you need to have in place to have a highly successful Veterinary practice – your client and patient care Programs.