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Success in cutting waste, boosting profit starts at top


Notice a lot of "I's" in the prior statements? Once you hear that, you know you are dealing with a doctor.

Ultimately, practice owners who also happen to be the board of directors must take responsibility for the success of new policies.

Leadership and accountability are key.

Start small:
  • Instill rules and policy accountability in owner-operators first.
  • Choose a few money-saving initiatives, and build from there.
  • Once owner-operators are successful in their leadership positions, start broadening the application to the next layer: non-owner veterinarians and all managers.
  • Reward and recognize compliance; "punish" noncompliance.

Requisition policy and purchase orders

To get owner-operator buy-in, you need to be a bit of a salesperson. Talk benefits and money. A requisition policy and purchase-order procedure is not about saving money through bids. It is about nailing down what the business really needs and documenting it before ordering.

Estimate wasted office personnel time per week — in hours and in total money spent trying to track down missing supporting documentation for vendor statements and invoices and other substantiation of expenditures, including:

  • Repairs
  • Maintenance
  • Service sontracts
  • Janitorial and office supplies, especially purchased from big-box stores
  • Vehicle operating expenses, such as gas fill-ups

Estimate wasted office personnel time per week trying to return stuff that should have never been ordered. Then present (to the operating committee) the potential payroll dollar savings by instigating procedures that require compliance by all employees, without exceptions.

Present (to the committee) examples of money lost due to bogus solicitations erroneously paid, overpayments for services never contracted and overcharges for work done without bid or contract.

A good bookkeeping system requires supporting documentation for a vendor invoice to be paid.

A bookkeeper who cares about his or her job will seek the supporting documentation before preparing the check or calling to pay by credit card.

Authoritative operating committee

Get the operating committee members to commit to following the rules for 60 days. Rules will not apply to any other employee until owner-operators comply.

Policy should be clear that noncompliance is akin to cheating a partner and will not be tolerated.

Start with a few targeted areas of greatest possible savings:

  • Gas receipts for every fill-up, with sign-off by the responsible driver that gasoline went into a company vehicle (under penalty of perjury or some such).
  • Formal purchase requisition for any item, ranging from needle holders to new vehicles.
  • Formal purchase requisition for any new drugs not currently stocked in pharmacy.
  • Formal requisition for major repairs and maintenance, including bid/proposals by independent contractors or companies.

First 60-day trial

Every week, the practice manager organizes all purchase requisitions into a packet for presentation to and review by the operating committee. The manager will include a total of such proposed acquisitions at best price.

If an operating budget exists, the manager will update it and provide it for comparison with the proposed acquisition total and year-to-date totals.

The operating committee will decide the cut-off point of purchase orders requiring its review.

After 60 days, the committee may decide, for example, that orders of less than $100 can be processed without prior approval, so as not to impede patient care by failure to have necessary items on hand.

The operating committee also may decide that the chief financial officer is responsible for reviewing all such acquisitions and summarizing costs at each subsequent operating committee meeting.


Source: DVM360 MAGAZINE,
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