Variable expenses The two groups of expenses associated with these are "drugs and supplies" and "support staff labor." DRUGS AND SUPPLIES: These include items specifically used for animal care: bandages, needles, dispensed medications, administered medications,
catheters, fluids, anesthesia agents. SUPPORT STAFF LABOR: This includes everything associated with support staff, including gross payroll number, employer share of Social Security,
all insurances and benefits, including discount clinical services and goods. Specifically included here are "management costs."
VETERINARIAN SALARIES: Practice costs associated with all clinician animal-care duties. Included in this group are all taxes, benefits and Social
Security shares. One source of confusion is the "owner" salary. The owner's clinical floor duties are allocated and paid just like all the
veterinarians on staff. PROFIT: "Net profit" is all else that has not been accounted for previously. The academic basis for this revolves on the premise
that "a health business should be able to purchase itself." This means in short that it is net profit that retires short-and long-term debt, funds new services and equipment and education and pushes the practice into new areas. Profit is what is needed to return to the investors, be it solo proprietorship or corporation, funds that justify the investment,
also known as "capitalization." And with some controversy it is offered that advertising and promotion over 3 percent is charged to the profit group as well.
Interest, depreciation and the down-paying of long-term debt are specifically included in this profit grouping. Various corporations tend to address these profit issues in differing ways, but the recommendation from here is to get all
data on a simple table for side-by-side, month-to-month and year-to-year comparisons. Note in Table 1 that all "expense groups," including profit, add up to 100 percent. So, the homework this month is to get your numbers into the following chart and then in the next article we will discuss what
to do with this data. Dr. Riegger, dipl. ABVP, is the chief medical officer at Northwest Animal Clinic Hospital and Specialty Practice. Contact
him by telephone or fax (505) 898-0407, Riegger@aol.com
, or http://www.northwestanimalclinic.com/. Find him on AVMA's NOAH as the practice management moderator. Order his books "Management for Results" and "More Management
for Results" by calling (505) 898-1491.
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