Should Your Animal Hospital Offer House Calls and In-Home Veterinary Services?

House Calls Dr Plotnick Manhattan Cat Specialists

Written By: Brad Reiss, Practice Manager, Manhattan Cat Specialists

Many veterinary hospitals do not offer house-calls or in-home veterinary services and wonder whether or not it is the right choice for their practice. Manhattan Cat Specialists, a CVP Partner Hospital, offers house calls. Owner, Arnold Plotnick, MS, DVM, ACVIM, a veterinarian & feline expert for over 30 years, believes there a number of reasons for offering house calls:

  • Some cats get so nervous on the trip to the vet that they urinate, defecate, or vomit (or all three!) in their carrier on the way to (or from) the office.
  • Some cats who are normally very well-behaved at home become very agitated and aggressive once they enter the veterinary office.
  • Some cats, with their sixth sense, know that a veterinary visit is imminent, and they hide under the bed or the couch, making their capture and transport to the office an ordeal for the client.
  • Many of clients have multiple cats, and bringing two, or three, or five (or seven…) cats to the office becomes a logistical nightmare.
  • As our feline population ages, clients are aging right along with them, and some elderly clients find it increasingly difficult to bring their cat to the office.
  • Many owners would like their terminally ill cats to be euthanized in their own home when the time comes.

For these reasons, Manhattan Cat Specialists decided to provide house calls and in-home veterinary services in order to meet the needs of their clients.

When a client makes an appointment for a house call, Dr. Plotnick and a veterinary technician visit the home with the necessary equipment and medical supplies in order to duplicate the type of visit the cat would receive at the hospital.  This includes a complete physical examination, blood and urine collection for lab analysis if necessary, vaccinations, microchipping, feline leukemia and FIV testing, blood typing, subcutaneous fluid administration, ear cleaning, claw trimming, blood pressure measurement, application of Soft Paws, and many other procedures.

And of course, when the time is appropriate, euthanasia can be performed in a gentle, compassionate manner at home. Manhattan Cats will also take care of the cremation arrangements.

It’s important to let clients know which home procedures cannot be performed in the home, for example, x-rays and surgery.  After the examination, if it is determined that a cat needs these or other advanced diagnostic procedures, or needs to be admitted to the hospital, transportation for the cat to the hospital will be arranged. Life threatening emergencies cannot wait, and should not be scheduled for house calls.  Cats who are having difficulty breathing, are having seizures, are unconscious, or are bleeding uncontrollably should be brought to the practice immediately, or to an emergency hospital if it is after hours.

To know whether offering house calls is right for your veterinary hospital, it’s a good idea to survey clients. Those with multiple or difficult pets may be the top clients to take advantage of this service. Especially if no other animal hospitals are doing house calls in the area, you may increase your client base as well as current pet visits.

To learn more about Manhattan Cat Specialists visit their website HERE.


Should You Buy That Latest and Greatest Piece of Veterinary Equipment?

Written By: Karen E. Felsted, CPA, MS, DVM, CVPM, CVA

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Many factors are essential to the practice of quality medicine and surgery; including an appropriate range of high-quality equipment for both diagnostics and treatment.  The decision to purchase some pieces of equipment may be an easy one—for example, it may be clear that the practice needs a new anesthetic machine.  Because the practice already uses this equipment on a daily basis and the cost isn’t too great, the decision is clear cut to replace the current unit.  The purchase of more expensive assets or those not previously used in the practice, however, requires more planning and forethought than does the purchase of equipment or supplies with a much shorter life, lower cost and for which there is an undisputed need.

As with any equipment purchase, it is first necessary to understand what the goal of the acquisition is in YOUR practice.  Two of the most common reasons for purchase are:

-The new equipment will improve patient care
-The new equipment will increase profits

We can assume that a practice won’t even consider the purchase of equipment if the answer to the first question above isn’t yes.  This would appear to be an easy question to answer but it’s not always.  For example, it’s generally agreed that ultrasound is a great diagnostic tool; thus purchasing an ultrasound unit should improve patient care.  But this may not always be true.  What if clients don’t want to pay for the cost of this new test and decline the recommendation?  What if the doctors in the practice don’t have the skills to properly perform the imaging or interpret the results of what they see? In either of these cases, just owning an ultrasound won’t improve patient care.

A harder question is certainly if the new equipment will increase profits.  When replacing a piece of equipment the practice uses regularly (for example, an anesthesia machine), the expectation usually isn’t that this will increase profits.  The expectation is that the practice will continue to generate the profits that equipment already provides.  It’s a different story, however, when the practice buys something it’s never had before—a digital x-ray, an ultrasound, or a laser—something that allows the practice to expand the services it already provides.

Net present value (NPV) analysis is an excellent tool to help in understanding the potential profitability of the purchase—this analysis estimates the total cash outflows involved with the purchase of an asset compared to the total inflows.  A positive outcome equals a profitable purchase.  NPV analysis also incorporates the time value of money into the calculations.  While incorporating the time value of money gives more accurate information, it is also more difficult to do and many small business owners will enlist the aid of their accountant or financial advisor in performing this analysis.

This calculation should be be performed over the full expected life of the equipment in order to estimate the total profitability.  Any amounts expected to be realized from the sale of the equipment at the end of its life should be recognized as an inflow and any costs of disposal should be recognized as an outflow.  This is a particularly useful calculation when comparing the potential profitability of two or more pieces of equipment.  It’s important to remember, however, when comparing the profitability between two choices that the timeframes must be similar for the results to be the most meaningful; $100,000 in lifetime profits from a piece of equipment with a five year life isn’t the same as $100,000 in lifetime profits from a piece of equipment with a ten year life.

As with any analysis, good data is critical to good results.  A number of variables will be used in these calculations such as the cost of the equipment, the additional annual costs associated with the asset (such as a service contract or supplies), the expected cost savings to be obtained from usage or the anticipated increase in revenues.  If these items are not accurately estimated, the results of the acquisition analysis may be erroneous.  Some examples include:

– The cost of equipment does not just include the sticker price. Other components of cost include tax, installation, training, and interest costs if the asset is financed.

– One point that is always touted as an advantage of digital radiography is the ease of taking the images and the reduced staff time required. This is true but reduced time spend on imaging doesn’t always result in reduced costs.  Unless the practice actually cuts back on the number of staff hours, there will be no reduced staff costs from purchasing this equipment.  The staff may be available to do other work which can be advantageous but that is not the same as realizing a true cost savings.

– It’s easy to overestimate the additional revenue that the practice will bring in from the new services; one way to help get an accurate figure is to go back through a month’s work of cases and determine where the new service could have been used in place of what was otherwise done. Could an ultrasound have been done in-house instead of referring the client out?  Could laser treatment have been performed?  Of course, just because something is possible, doesn’t mean clients will accept it so those factors have to be taken into account as well.  In the case of laser therapy, will the potential inconvenience of having to bring the pet into the practice multiple times reduce acceptance?

One final comment about the financial aspect of buying a new piece of equipment—just because the new item may not do much more than break-even financially, it doesn’t mean a practice has to forego purchase.  However, the owner and manager need to understand the financial ramifications and not expect something that is not possible.  In cases like this, the purchase is no different than if the practice owner chose to use his or her profits to purchase a boat.  The purchase doesn’t necessarily add profits and value to the practice but it brings pleasure to the owner.  This is only a bad thing if there was an expectation that things would be different financially.  Pre-purchase financial analysis can go a long way in helping owners and managers manage their expectations and make a good decision.


The Top 8 Things Your Veterinary Practice Must Do To Thrive In The Future

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Written By: Karen Felsted, CPA, MS, DVM, CVPM

It’s a new world out there in veterinary medicine and the things that were enough to guarantee practice success twenty years ago aren’t the same now.  While there are many things practices need to focus on, the following are some of the most important.

1: Practice Good Quality Medicine

This one goes without saying but, unfortunately, it’s often not enough to insure practice success. Unless you amputate the wrong leg, clients can’t judge the quality of the medicine you practice. They judge veterinary hospitals by things they can understand-generally communication and client service. You can be the best doctor in the state, but if clients don’t feel they got value for the dollars spent in a way they understand, they won’t come back. 

2: Back to Basics

Wowing clients is great but it’s more important to make sure their basic needs are met.  If the owner of an itchy dog comes to a practice, is 45 minutes late being seen, doesn’t understand what the doctor is saying is the cause of the itching, and doesn’t get the promised call back the next day, sending the dog home with a cute bandana won’t make up for it.

3: Know What Your Clients Want

There’s lots of information out there about “what clients want.”  Much of it is very valid and applies to most clients of most practices.  But it’s critical that you regularly gather information about what YOUR clients want and how happy they are with your practice.    The best way to do this is to regularly ask clients about their experience with your practice via regular client surveys.  However, you can also gather this vital information by:  welcoming client complaints and making things right, reviewing record transfers and tracking client complaints to identify any patterns and whether or not changes in the practice are reducing the complaints.

4: Offer Payment Options

 The price of veterinary care continues to be an issue for many pet owners.  They want to provide the best care but are struggling with many demands on their money.  We know that payment options make a difference—multiple studies have shown that clients who have pet insurance or a third party veterinary credit card or are enrolled in a wellness plan visit the veterinary practice more frequently and spend more money on veterinary services.  Understanding the options yourself and educating clients makes a big difference in how pet owners take care of their pets and how well your practice does.

5: Don’t Shoot Yourself in the Foot

 Look at your practice from the client’s perspective.  When you discourage a client from visiting their pet during its two night stay at your practice, how does the client feel?  The pet owner knows that when their human family members are in the hospital, it’s a different story—they can visit regularly.  They want to do the same with their furry family members—they want to be able to see that their pet is being well-taken care of and they want to reassure their pet that he/she hasn’t been abandoned.  What do you think my cousin thought when she picked up her cat following surgery and the technician said:  “We gave him some food this morning but he wouldn’t eat.  It might be because of the e-collar. Take that off when he gets home and see if that makes a difference?”  What she thought was:  “I just spent $3000 at this place and they’re starving my cat!”

6: Give Clients the Information They Want

A recent study looked at the top 5 health topics pet owners wanted to talk to their veterinarians about and the top 5 health topics veterinarians wanted to talk to pet owners about—only 1 topic was the same on both lists!  This doesn’t mean that the practice team should ignore the issues they think are important when talking with clients but it does mean they need to make sure client questions and concerns are addressed as well.  The simplest way to do this is to ASK: ·        

– Is there anything else going on with Fluffy that we haven’t covered?

– Is there anything else going on with Fluffy that we haven’t covered?

– Did you have any questions about what we have discussed?

– Do you have any other concerns?

– Are there any other questions you have?

– Can I do anything else for you?

7: Make Clear Recommendations

If you say:  “At some point you might want to get this dental done,”  the client’s not going to do it—a dental just doesn’t sound like something truly important to the health of the pet.  But if you say:  “Fluffy needs a to have her teeth cleaned and polished” or “I recommend that Fluffy have her teeth cleaned and polished” or “It is critical that Fluffy have her teeth cleaned and polished”, then the pet owner will pay attention.  The specific words are less important than the clarity of the statement you make.  According to one study, pet owners are 7 times more likely to follow their veterinarians’ recommendation when it is clear and unambiguous.

8: Get Help When You Need It

Veterinarians are great at practicing medicine; they are usually not great at preparing tax returns, writing legal documents or investing for retirement.  We advise our clients to see a specialist when it’s warranted; we should do the same.  There are many attorneys, CPAs, consultants, financial planners, lenders, architects, brokers and business appraisers who work exclusively with veterinary practices and veterinarians and can help you achieve the success you are looking for.


Is It Time To Hire Another Doctor At Your Veterinary Hospital?

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IS IT TIME TO HIRE ANOTHER DOCTOR?  QUESTIONS TO ASK YOURSELF BEFORE YOU DO.

Written By: Melissa Bingham- Community Veterinary Partners; Field Operations Manager

Is it time to hire another doctor at your hospital?  It is a weighty decision.  As a practice owner, there are many things to consider, financially, operationally and personally.  It can be helpful to ask yourself some questions to be sure of what is driving your desire to add a doctor and recognizing if it’s the right time to add another doctor.  Most importantly, don’t move forward until you feel confident that your decision is based on good judgment and a good plan, not gut feelings or a knee jerk reaction.

Some questions that are important to ask yourself are: What is driving your desire to hire another associate doctor?  Have you been working long hours for a long time and want to cut back?  Do you want more time to devote to mentoring your medical team or giving back through community outreach?  Do you want to spend more time on a particular area of veterinary medicine of interest to you?  Do you need time to reflect, review and implement the next stage of hospital growth?

Yes it could be the right time to hire another associate vet for you but make certain is it also the right time for your hospital and your existing doctor team. Some alternate questions to consider are:

For your hospital:

– Do you want to expand your days of operation to be more available when your clients want to come in? -Do you want to add a doctor during your busiest times of day to increase appointment availability for clients?

– Do you want to add a doctor with an interest or specialty your clients want or need?

– Is your hospital in healthy financial shape to support the salary and benefits for an additional associate vet?

– Have you identified the personal production needed for an additional associate doctor to “cover” their costs and your profit margin?  Production is determined by the number of clients seen per day times the average transaction.  The new doctor will need to meet or exceed the personal production goal.

– Do you have the time, energy and interest to mentor a new graduate or onboard an experienced doctor?  If not, is there a doctor on your team who would enjoy the assignment?

For your existing doctor team:

– Is your existing doctor team feeling overloaded or working more hours or days than they want to work?

– Can your clients come in the same day for routine appointments with their preferred doctor?  Or is the next available appointment a few days or even weeks out?

– Are your busiest days and times always booked in advance?

– Are surgery days consistently full?

– Do you feel confident that an additional associate will add business rather than share existing business with the current doctor team?

– Do you need to hire a full time doctor?  Or could you fill the gap with a part time doctor and add experienced veterinary technician to your support staff?

Making the choice to hire an additional associate vet can be overwhelming.  Don’t let it be.  A careful review of the needs of your clients and the future needs of your hospital will provide reassurance as you make this important decision.


Key Data Points in Your Vet Hospital’s P&L Statement

Written By: Karen Felsted, CPA, MS, DVM, CVPM

The first question that people ask is:  “Why do I need to look at my profit and loss statement?”  The answer lies in an old cliché that says “If you can’t measure it, you can’t manage it.”  While it is easy to ignore clichés because you’ve heard them so many times, these phrases are generally clichés for a reason—they are widely applicable truths that should not be ignored.  Obviously these specific words have to be taken with a grain of salt—it’s not necessary to count the paperclips on a daily basis in order to manage the purchase of office supplies but managing most areas of a veterinary hospital well means you need to measure the activities involved.  Your veterinary hospital profit and loss statement (aka “income statement” or “P&L”) is a good starting point for revenue and expense analysis.

P and L Statement Example

Revenue

In most hospitals’ P&L statements, revenue is only displayed as a single number called something like “Fees-professional services.”  While comparing this figure for a month or year to the prior month or year and calculating the percentage change gives you some idea about the magnitude of revenue growth or decline, the profit and loss statement doesn’t have a whole lot of other information about revenue.  In order to analyze revenue more deeply, it’s necessary to look at some of the metrics related to the drivers of revenue—transactions, average transaction charge, revenue by doctor, new client numbers and revenue by category.

Expenses

In comparison, the profit and loss statement is an excellent source of information for expense analysis.  You’ll get better insights, however, if the information from the income statement is put into a spreadsheet that allows for comparison of changes over periods of time and allows the expenses to be reviewed as a percentage of gross revenue, not just in absolute dollars.

The key data points on which most of your time should be spent are the high-dollar items–labor costs (both doctors and staff), and drugs and medical supplies expense.  However, don’t forget the smaller items–all expenses should be examined in detail at least once a year.

The first comparison to be made for any given expense is between the current period (month, quarter, or year) and the prior period; for example, support staff costs are compared from 2013 to 2014.  Expenses that generally fluctuate with revenue changes are better examined by looking at them as a percentage of revenue rather than as a direct dollar comparison.  Support staff costs may have declined dollar-wise from one year to the next but if revenue is declining as well, the support staff costs may actually have gone up in proportion to revenue.  If you only look at dollar amounts, you won’t see this.

This internal benchmarking is often the easiest kind of analysis to perform because the data is readily available—it’s all internal.  However, there is no guarantee that improvement means a practice is doing well; it may simply mean they are doing less badly than before.  Some comparison to outside benchmarks is important to make that assessment.

AVMA, AAHA and Advanstar all collect and publish a fair amount of financial and operational metric information that can be used for this kind of comparison purposes.  No practice is going to be exactly like the practices included in the study population but this analysis is very beneficial for most practices.  For example, if your drugs and medical supplies expense is 17.1% of gross revenue and one of the published studies says this expense is 17% in a typical practice, you aren’t going to get too worried—it’s a minor difference.  However, if your expense is 25%, then you should do some investigating.  If the majority of practices can keep their drugs and medical supplies expense at 17%, why can’t you?  Improving your inventory control could drop a lot of money to the bottom line.

Once you have a handle on which expenses seem high, you need to look at the drivers of those expenses.  For example, if your staff compensation looks high, are staff working too many hours?  Is there too much overtime?  Are they overpaid?  Some additional metrics to look at in sorting out the issues are staff hours per transaction and staff hours per day (particularly in comparison to doctor hours/day.)  Does this fluctuate per week or month?  What can be done to increase efficiency?

Net Income

The last item to discuss is the “net income” figure on the P&L.  This is what’s left over after expenses are subtracted from revenue.  Perhaps the most important indicator of financial success in a veterinary practice is the true operating profitability.  Unfortunately this is the most difficult number to get because it doesn’t show up on any report a practice regularly receives, even when those reports are properly prepared.  The net income figure on the P&L is generally a meaningless number and doesn’t represent the operating profit.

Why is net income usually a meaningless number?  Net income (i.e. the operating profit) should represent what’s left over after all of the normal and necessary expenses of the veterinary practice are paid at fair market value rates.  Often times, not all of the expenses in a veterinary practice P&L statement are “normal and necessary” or they are not “paid at fair market value rates.  Some common examples are:

  • Practice owner compensation that is not calculated based on the medical/surgical/management work the owner does but instead is just a random amount determined by how much money is in the bank
  • Perks (trips to Tahiti, dry cleaning bills, liquor store bills, airplanes, personal lawn service, etc.)—i.e. expenses that are not necessary for the operation of the practice but are paid by the practice in order to gain a tax advantage
  • Salaries for family members that are not paid at fair market value rates
  • Facility rent that is not representative of fair market value

There are usually 8-12 adjustments that need to be made to an income statement to determine what true operating profit is.  You will generally need to get help from someone with veterinary practice financial expertise to know how profitable you are.

The P&L statement is a great source of information for making better management decisions.  A monthly review will help you identify problems early on when it’s easier to correct them.


Dr. Karen Felsted: Strong Client/Doctor Relationships Drive Veterinary Visits

The Bayer study identified a number of attributes that practices who continue to grow during this challenging economy have in common.  One of these is that clients in the growing practices generally see the same veterinarian every time they visit.  But this isn’t what happens in all practices but any means.  As you can see from the graph below only about one-third of the practice owners in the study completely agreed that this goes on in their practice with another 19 percent somewhat agreeing with the statement.

Think about when you take your kids to the pediatrician or when you visit your own doctor.  Do you want to see just whoever happens to be there when your appointment time is?  Or would you rather see a doctor you have a relationship with and who has a personal understanding of your health and your history?  I have asked this question in numerous seminars and about 95 percent of the attendees want to see the same doctor.  Why is it any different with people and their pets?  A pet owner is much more likely to agree to a recommendation even when it is expensive, complicated and scary if they know and trust the doctor who makes it.

There are a couple of reasons why practices don’t encourage seeing the same doctor every time—one is that it sometimes doesn’t fit the appointment scheduling method used in the practice and another is because practice owners are afraid that if associates have too much of a bond with clients, they will steal them away if they go to work at another practice.  While these can be legitimate issues within a practice, there are better ways to deal with them than by discouraging the building of these bonds.

See all of Dr. Felsted’s blogs.