Achieving Growth in Veterinary Practices
By Jason Wernli and Scott Harper, allyDVM
Growth is a worthy objective for any veterinary practice. One problem for veterinary care providers and those who support them (staff members, distributors, software providers, etc.) is that the term “growth” often means very different things to different people.
In our industry, growth might mean a bigger practice staffed by a bigger team, more wellness for more pets (regardless of practice/team size), or just bigger bank balances.
All of us in this industry want to help veterinary practices achieve growth however they may define it. And the way to achieve growth is with profit.
Sometimes participants in fields related to healthcare services feel uncomfortable around the term profit. It’s important to remember here that profits are not immoral. They’re not moral either. They’re amoral. Profits can be pursued through moral or immoral means, and they can be used for moral or immoral ends, but profits per se are just amoral.
The nice thing about profit is that it has an objective definition – i.e. unlike growth, profit means the same thing to everyone.
PROFIT = REVENUE – EXPENSE
One other nice thing about profit is that it can be broken down further into increasingly granular components.
PROFIT = (PRICE X VOLUME) –
(FIXED COSTS + VARIABLE COSTS)
Understanding those components can actually help veterinary practices increase profits. After all, one rarely sees any big, shiny levers conveniently labeled “REVENUE” in a veterinary practice for staff members to pull when they want to increase profits. However, when we recognize that revenue is really just the product of price and volume, we can begin to think of day-to-day activities that can actually increase revenue and profit. For example, working to improve client retention will increase volume (number of transactions) and, thus, increase revenue, which, in turn, will increase profit.
And, again, profit is the means to achieving veterinary practice growth.
This is the first installment in an ongoing series of articles that will discuss ways to enhance veterinary practice profit and achieve growth. Upcoming articles will focus on specific ways to increase patient volume. The primary volume growth levers are:
- Client retention
- Client compliance
- Client acquisition (marketing)
These articles will be based on a rigorous theoretical foundation informed by leading academics from the Harvard Business School. However, the articles will also include practical applications of those theories in the form of useful case studies.
We at allyDVM have spent years advising some of the most successful and sophisticated animal hospitals in the country.
We’ve also applied those experiences to the development of software applications that solve a number of problems commonly faced by veterinary practices. Importantly, our software services are designed to solve those problems in the way they should be solved, which is not necessarily the way in which it is easy for software developers to code.
We welcome your feedback and thoughts on this article and upcoming installments, and we’d love to have an open dialogue with you in the months ahead. Please contact us with your perspectives and ideas on veterinary practice growth, and please don’t hesitate to let us know if there is ever anything we can do to support your efforts.
Your allies at allyDVM
Jason Wernli – Founder and COO
Scott Harper – CEO