Unlock the four secrets to boosting practice profits
Written by Gerard Gervase, CM
Unlocking the secrets to increasing your practice's profits is a crucial endeavor. In today's veterinary industry, the age-old wisdom of "working smarter, not harder" carries significant weight. Our field grapples with a range of challenges, from workforce shortages to rising inventory costs and escalating labor expenses. In the face of these formidable obstacles, a critical question arises: Can we navigate a path toward greater profitability?
The resounding answer is yes, and the perfect time to do so is now – especially as we transition into the typically slower months of the year. Now, a golden opportunity presents itself to explore strategies that can streamline your practice's operations and elevate its profitability before the new year.
Prioritizing Client Retention
One of the most fundamental steps in this journey is focusing on client retention. This involves routine database audits, which should be at the top of your business agenda. A meticulously maintained database yields a positive impact on revenue growth. By nurturing and actively engaging with loyal clients, you can significantly increase annual physical exams and follow-up appointments. It's important to recognize that both existing and new clients are the lifeblood and future of your practice.
Reducing the Cost of Goods Sold (COGS)
Another crucial aspect to consider is the Cost of Goods Sold (COGS). Ideally, your practice should aim for a range between 20-25% of gross revenue. A higher percentage suggests that a greater number of products are being sold to achieve your revenue targets. To manage your COGS effectively, contemplate strategies such as switching from national brands to high quality alternatives, optimizing your inventory orders, and adjusting your pharmacy item levels. Implementing smart ordering techniques can also contribute to curbing staff labor expenses and alleviating workplace stress.
Prudent cost management remains a perpetual priority for veterinary practices, as a substantial portion of expenses is dedicated to procuring essential goods and supplies. One standout strategy is the transition from national brands to Covetrus® Branded Products. This shift can potentially yield substantial cost savings of up to $14,000 annually on indispensable supplies. These savings aren't just numbers; they represent tangible resources that can be strategically reinvested in your clinic's growth and development.
Covetrus, a renowned name in the veterinary industry, offers an extensive range of high-quality veterinary products, spanning essential medications to critical surgical supplies. What sets Covetrus apart is its commitment to competitive pricing, enabling you to save without compromising on quality.
Reviewing Practice Fees and Invoicing Accurately
Careful scrutiny of your practice fees is also a very good way to increase profits. In today's challenging economic landscape, where costs continue to rise, your treatment fees should align with local demographics and reflect the high-level care you provide to your patients. Adjusting these fees can have an immediate impact on net profit.
Vigilant monitoring of Practice Information Management System (PIMS) reports is equally vital to ensure that fees aren't inadvertently discounted and that all services rendered to pets are accurately invoiced. A precise fee schedule that's correctly invoiced is pivotal for maintaining a healthy net profit.
Leveraging Purchasing Power for Laboratory Services
Finally, harness your purchasing power and conduct a comprehensive review of your laboratory service expenses. This aspect often represents a substantial line item on your Profit and Loss (P&L) statement. While this may mean some time negotiating to your vendor, dedicating effort to find the most advantageous deals can yield substantial benefits.
In conclusion, by diligently monitoring a select set of financial benchmarks and making necessary adaptations, you can enhance your practice's profitability and fortify its long- term viability. I hope these tips help guide you along the path to a greater practice profitability.
1. Potential savings are based on the average annual usage of a 3-doctor practice. Savings comparison is based on the average pricing charged across all contractual price lists and does not include promotional discounting or any other pricing considerations. Individual customer potential savings will vary. Covetrus Internal Data, October 2023.
Disclaimer: Through Vet Candy, Gerard Gervase received compensation from Covetrus.
