The 4 Common Pitfalls of Equine Practice... and 5 Steps to More Profits. Alan Robinson B.V.Sc. MRCVS D.M.S.
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1 The 4 Common Pitfalls of Equine Practice... and 5 Steps to More Profits. Alan Robinson B.V.Sc. MRCVS D.M.S. Vet Dynamics LLP Vet Dynamics LLP. 2011
2 Profitable Business for Equine Practices Equine practice, like most of the veterinary industry, is under pressure from competition, internally and externally, changing client expectations and endless bureaucracy and government regulation. This is affecting turnover and therefore profits, the quality of the veterinary work and the quality of life of those vets trying to run an equine practice. In the UK equine veterinary practices are finding themselves under increasing financial pressure due to increased competition from other equine practices and non-veterinary providers, falling client numbers, loss of drug sales to pharmacies and internet providers and inefficient and expensive working practices. Ambulatory Practice is, by its nature, very reactive and inefficient to run and organise, due mainly to the geographical coverage, inefficient call management and high costs of cars, stock and vet numbers to cover the hours required. This results, most significantly, in the gross inefficiency of vet time in being able to deliver sufficient working hours in a day (i.e. time in front of horses instead of in the car) to earn sufficient income to be profitable. This is clearly demonstrated by the relative poor productivity of the Ambulatory vets (Average turnover = 121,000 each) as compared to the Hospital / Stud vets (Average turnover = 188,000 each) or Small Animal vets (average turnover = 230,000) There are key organisational and marketing strategies to improve this situation which can realise increased income and profit, increased client and patient numbers and improved efficiency of vet time. This is probably the area of the practice with most potential for leveraging growth and profitability. A easy 15% 20% improvement in turnover in a year should be achievable. First Opinion Surgical / Hospital Practice carries the highest over head costs if buildings, staff and facility are allocated in proportion, though it is probably most efficient in terms of vet utilisation and productive high value work - IF there is enough work! Further separation and investigation of the organisation and management as a distinct department would be required. However, in many practices this is the Cinderella of the equine portfolio, possibly under-appreciated by the clients and under-utilised by the vets, considering the quality of facilities and expertise available from the hospital. Hospital facilities normally develop in line with the Ambulatory practice though there may be potential to develop these facilities as an independent and profitable part of the overall promotion of the practice offering and capitalise on the potential there. A key suggestion here would be the development of the specific diagnostic facilities to support the ambulatory / surgical work and substantially contribute to the surgical ability of the practice. Turnover can grow at least in line with the Ambulatory practice of 10% -20%. The 4 common pitfalls that equine practices need to address are: 1. Competition from other vets, practices and non-vets reducing client and patient numbers 2. Poor pricing, invoicing and debt control leading to poor cash flow. 3. High vet costs to cover rotas and afterhours and inefficiency of vet time with only 3-4 billable working hours per day. 4. Poor practice branding, marketing and 2
3 communication with clients and potential clients. Therefore the primary aims of the practice manager should be to develop their equine centre with enough work to support more full time equine vets by increasing client numbers, clinical work and utilisation of hospital facilities and improving efficiency of the ambulatory practice. Development strategies need to address the three drivers of practice income: 1. Increase the number of active clients - Being competitive through branding, marketing and zone visits, improving client relationships by delivering better information to clients about available expertise and services and promoting a stronger equine brand. 2. Generate more income (profit) from each client transaction identifying missed opportunities for professional services, improving debt collection and invoicing, enhancing the use of insurance and clinical work rather than drugs and visit fees. 3. Visit each client more frequently (more transactions) - Proactive medicine and zone visits, Equine Health maintenance schemes, increased efficiency in getting vets in front of clients. quarterly in a simple format. Develop an investment budget for new staff and equipment. Improve cash flow by reducing outstanding debts and improving accounting and invoicing procedures to collect revenues quickly. Introduce dedicated equine reception and administrative staff, management, procedures and processes in-house, particularly in client relations and marketing. Improve practice communication, case recording and clinical protocols between vets and staff Improve the practice Equine Brand, image and promotion to improve visibility and competitiveness. Zone visit Scheme: Increased efficiency of veterinary time and productivity, particularly in Ambulatory practice and use of equine facilities. Improve efficiency of vets calls to reduce time spent on in cars on visits and more fee-earning time with patients. Improve communication and marketing of services for equine business units to attract and retain target clients to promote and market a stronger equine brand of a specialist equine practice. This development falls into 5 specific areas for structured and rapid practice development: 1. Detailed financial analysis of equine business units to leverage performance and profitability. 2. Improved cost management, accurate and detailed budgeting and effective debt control to improve cash flow and profit. This presents a number of key areas for improvement. These are: Detailed analysis and separation of equine, small animal and farm animal business units to leverage performance and profitability. Increased cost efficiency, accurate and detailed budgeting to improve cash flow and profit. Improve financial monitoring and monthly management information to be reported 3. Increased efficiency of veterinary time, pricing, invoicing and productivity, particularly in Ambulatory equine practice. 4. Improved communication and marketing of services for specific equine business units to attract and retain target clients. 5. Improved Equine Brand image and promotion to improve competitiveness and visibility. 3
4 The first 3 areas can be achieved through a Practice Financial Analysis and Performance Review. As a comprehensive assessment of the practice you would analyse your equine practice finances from five perspectives: 1. Profit analysis and Cost Control 2. Debt and Credit Control 3. Strategic pricing of Professional fees, Drugs and Preventative care 4. Implementation and consistency of charging and invoicing 5. Reducing missed opportunities for professional services Cost and Profit Analysis Analysis of the separate Strategic Business Units - Ambulatory Equine practice, Surgical & hospital facilities, Stud or Racing Practice. Cost analysis and cash flow budgeting to produce accurate monthly management accounts. Set budget parameters for the year Set monthly budget review meetings with the practice manager. Set quarterly review meetings with directors Focus on Key cost areas for analysis and budget setting Debt Control In equine practice more time, effort, energy, and heartache is spent on debt collection and getting the money in than any other activity. Debt control is about clear systems and protocols Credit and Debt Management policies - that prevent outstanding debt occurring in the first place improving cashflow, profitability and client compliance. Pricing In equine practice some products and services such as vaccines and visit fees are more competitive and are often discounted. Drug sales are under threat from regulation and internet providers. Professional veterinary fees only make up a small percentage of equine practice income. With the investment in vets, staff and equipment professional fees need to be priced profitably to cover costs and make a profit for the business to thrive. Correct invoicing Correct invoicing is about setting and sharing Standards of Care based on the best medicine for the patient and clear information to the client. These processes will be discussed and implemented to enhance the use of insurance and clinical work rather than drugs and visit fees. Proactive Medicine Proactive medicine is based on the Standards of Care that the practice chooses to adopt. It will generate more income (profit) from each client transaction through taking up missed opportunities for professional services and encourage vets to visit each client more frequently (more transactions). If practices took up all the opportunities for professional services that were offered to them, they invoiced the work they did do properly and collected the money they invoiced they would improve their cash-flow, income and profits overnight! The last two areas can be achieved through Branding, Promotion and Zone Visits Equine Branding, practice literature, promotion and websites The Branding of many equine practices from the potential clients perspective is, at best, confusing and at worst, non-existent. With the advantages most practices have in areas of clinical and surgical excellence, facilities and equipment as well as veterinary skills this is probably not matched by the public s perception of what you have to offer. This is reflected in the lack of promotional material and client information. Practices need some serious thinking about core values (uniqueness) of their practice and some good professional graphic design work - logo, letterhead, complements, brochure, business cards etc (to start) upon which you 4
5 can deliver a consistent, co-ordinated marketing / communication programme to your current and potential clients. Client Communication and Information is developed in 6 key stages 1. Develop Equine brand logo, practice folder, letterheads, business cards etc. 2. Developing equine client Enquiry Pack and welcome letter 3. Review client booking and reception process 4. Review and establish practice equine protocols 5. Developing client information packs and website 6. Creating advertising, P.R. and marketing opportunities loss of visit revenue is more than made up by the increased routine work, client attraction and practice efficiency. Benefits of Zone Visits Increased number of active clients and patients year on year Increased efficiency of vet time - more fee earning hours per day Increased usage of surgical & diagnostic facilities Optimises vet costs to cover rotas and afterhours Improved communication with clients and potential clients Improved Equine reception processes and customer service Promotion of Equine Health Care, Vaccination & Dental schemes Zone Visits and Health Schemes Zone visits and Health Schemes offer the practice a dramatic increase in efficient use of veterinary time condensing non-routine work and reducing travel time and geographical coverage. This increased efficiency can be given back to the client as reduced fee or free visit charges. For discretionary work the client is willing to sacrifice visits at their convenience and which particular vet they see for a considerably reduced fee. This potential Equine practices like all veterinary practices are under pressure for profits and clients in this current economy but face their own unique challenges. But like all practices success can be achieved by focusing on good branding and visability, excellent standards of clinical and client care and robust financial control of all areas of the practice. Alan Robinson is a veterinary business development consultant working in the UK helping practices improve their businesses through strategic financial management and marketing through Vet Dynamics info@vetdynamics.co.uk 5
6 Alan Robinson B.V.Sc. MRCVS DMS Vet Dynamics UK Ltd. 89 Groundwell Road Swindon Wiltshire SN1 2NA Tel: Mobile: Web: Director Vet Dynamics LLP. Lecturer GP Cert. Business & Professional Studies FDI Analyst International Speaker Alan Robinson B.V.Sc. MRCVS D.M.S. qualified as a Veterinary Surgeon in Queensland, Australia in 1979 and has 21 years experience in Small Animal, Equine and Farm practice in Australia and the UK. He has owned and run his own mixed, multi-branch practice for 12 years in Purton, Wiltshire and studied for a Diploma in Management. During this time he also worked as a consultant for three years in the areas of technical service, training, product development and marketing for a veterinary pharmaceutical company. He sold his practice in 1997 to further develop a role in management consultancy and coaching. He successfully delivered coaching and management consultancy in electronics, pharmaceutical, global retail and veterinary industries. He is currently director of Vet Dynamics UK, a veterinary practice development company based in the UK and Ireland working with many major pharmaceutical suppliers such as Fort Dodge, Virbac, Novartis, Pfizer and Bimeda Projects in the veterinary market include Practice benchmarking Fort Dodge Indices and Virbac Vaccine Growth Programme, Regular speaker at seminars and conferences BEVA, VPMA, BSAVA on management topics, Course Director for the 12 months modular Certificate course in Veterinary Business Studies for Improve International (Veterinary CPD provider), Practice development and marketing for individual veterinary practices in UK, Ireland, Norway and South Africa. Platinum Practice Development Coaching programmes for select number of progressive practices working together to improve practice performance and profit. For more information on how we can help you have a more profitable equine practice please go to or call us on +44(0)
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