Running a successful veterinary practice involves more than just a love for animals. It also requires providing excellent care while ensuring that the practice remains financially viable.
Examining profitability in veterinary practices is always important, but it’s especially helpful as you close out one year and start the next. That goes beyond merely looking at financial statements (although that’s important, too). In fact, you can examine your practice’s profitability right from your software. Here are some good ways software can help you elevate your profitability.
Assess Your Services and Pricing
Start by taking a close look at all the services you offer. Your software likely has a profitability analysis report where you can quickly identify any products or services that are being sold with margins that are unusually low. In doing so, consider the following questions:
- Are there high-demand services that can be priced more appropriately?
- Are there any underperforming services that may need pricing adjustments to make them more competitive?
- Are there bundles you can offer with perceived value for clients but that incorporate higher margin services to offset lower margin products?
Quick tip: Incorporating bundles is also a great way to prevent missed charges – which really kills profitability!
Optimize Operational Efficiency
Efficiency is key in any business, especially veterinary practices! Leveraging your software to streamline administrative tasks and ensure smooth workflows not only saves time but also reduces the costs associated with inefficiencies. As a general rule of thumb—you don’t want to have a staff member do something that can be automated by technology. Appointment requests, workflow and treatment checklists, client communications by text and email, and inventory calculations/management are all examples of tasks that can be automated by your practice management software.
When staff members become freed up to focus on other responsibilities, take the time to properly invest in training to enhance skills and productivity. Well-trained staff can improve efficiency, client satisfaction, and ultimately, the bottom line. As an added benefit, they also help to encourage a positive work culture that fosters teamwork and high performance.
Review Supplier Contracts Plus Inventory and Fee Schedules
Regularly monitoring inventory and fee schedules in your software is important for profitability protection. Over time, especially with inflation, inventory prices can creep up causing veterinary practices to sell products or bundles for less than their cost of inventory—oftentimes, without even realizing it.
One way to solve this is to set your software’s fee schedule at an automatic markup percentage or specific dollar amount increase over the actual inventory cost, so that if the cost of goods sold increases, your pricing increases automatically. (Also, make sure that any shipping, tax, credit card fees, or other costs are included in your cost of goods sold. It’s easy to overlook those sneaky “hidden” costs!)
Monitor Key Performance Indicators (KPIs)
When you better understand the source of your revenue, you can ensure that you and your staff are spending adequate time and resources in that area. To do so, you’ll want to track and analyze the appropriate KPIs. Start by confirming that each revenue source is labeled in your software, so that you can run reports by category. You can also set benchmarks to better compare categories internally or even with other practices externally.
To better understand profitability, you’ll want to run your inventory expenses, payroll, and all other expenses and compare them to your revenue for the same period. Use this data to identify areas for improvement, make informed decisions, and adjust, as needed.
At times, a fresh perspective can also make a difference. If this seems overwhelming, you may want to consider hiring a practice management consultant or financial advisor who specialize in veterinary practices. And if you need some help with inventory management or profitability reports within NaVetor cloud software, our team is always happy to help.
Request a Demo
Inspired by what you’ve seen? Interested in seeing how NaVetor can work in your practice? Contact us to set up a personalized demonstration of the software.