Following the rules
Let's examine some specific examples of opportunities that exist in the veterinary industry. Remember Rule 1? Recordkeeping
systems and accurate data compilation are essential for measuring where you have been. Quantifying opportunities monetarily
requires good historical data. My gratitude here extends to IDEXX VetConnect Systems and Mr. Daryn Kinsinger (IDEXX Practice
ProfileTM Coordinator) for generously granting permission to use 2002-data averages that exemplify the hidden potential existing
in every practice.
Here are the facts. In 2002, a variety of practices using IDEXX Cornerstone", Better Choice', and VPM' software contracted
with IDEXX to compile data reports (Practice ProfileTM). Data was then averaged nationally for practices with four or more
doctors and for a second subcategory of those practices with three or less veterinarians.
Comparison of these two practice types illuminates many aspects of faulty practice management systems. In the scope of this
article, it is impossible to reap all the information possible, but let's focus in two areas that integrate with each other:
patient reminder systems and client retention rates. First, a caveat. An interesting side statistic suggests apparent differences
in data housekeeping compliance in each of the two categories. We note that in practices with four or more doctors (an average
of $2 million of revenues, nationally), the percentage of active clients with 2002-sales as compared to all active clients
in the database was 40.66 percent as compared to practices of three veterinarians or fewer (average gross revenues of $1 million),
where the same statistic was nearly eight percentage points higher, at 48.29 percent.
The difference might be traced to the relative number of years practice software programs have been in existence. A more likely
reason resides in relaxed employee attention to record-purging tasks as a practice becomes more complex. Exploring the full
gamut of reasons for housekeeping failure related to practice size would be a long topic, suited for a thesis.
Truth in numbers
Data management issues and recordkeeping deficiencies are further highlighted in the next statistic regarding canine patients.
For smaller practice units, the percentage of dogs seen in 2002, yet shown as missing reminders, was 13.86 percent. In larger
practices, this percentage jumps to 22.91 percent. Feline patient numbers are even worse. The percentage of cats seen, yet
missing reminders in the 2002-year, was 18.75 percent for smaller practices; and a full 26.65 percent for larger practices.
Clients presented a substantial number of patients for one reason or another, yet no reminders were ever established to help
the client comply with future follow-up care (see related story p. 22).
This lack of reminders linked with patient records leads to the next statistical finding. IDEXX Cornerstone", Better Choice',
and VPM' software tracks client return rates, defined as the total number of clients invoiced by a practice in 2001, divided
into the total number of clients seen in 2001 which were subsequently invoiced in 2002.
In smaller practices, the client retention rate averaged 70.35 percent. Larger practices fell to a relatively low retention
rate of 61.45 percent on average. Although larger practice units clearly have a retention problem, we cannot believe that
smaller practices have perfected their client reminder systems either. Certainly, the previous statistics cited for dogs and
cats missing reminders indicates otherwise.
However, one cannot overlook the substantial 8.9 percentage point difference between larger practices and smaller practices.
The difference likely reflects housekeeping difficulties, staff non-compliance with maintaining systems, and a whole slew
of other issues that require debate and investigation. Let's compute the lost opportunity just based on the apparent difference
between large and small practices for this one statistic. How badly small practices compare to the perfectly run practice
is unknown; nevertheless, we can benchmark the 8.9 point differential between the larger practices and the smaller practices
that provides a means to measure (in dollars) improvement potential with the next computation.
Larger practice units averaged 4,833 active clients with 2002 sales. If the larger average practice had been able to achieve
the higher retention rate proven by smaller practice units, the average number of targeted clients with sales would have been
5,305, an increase of 472 clients.
Next, we reviewed the average 2002 annual sales per client in larger practices at $418.47. Multiplied by 472 opportunities
for additional retention, these lost clients could have resulted in an additional $197,518 of revenues.
Can you imagine what the potential impact is to the entire veterinary profession if this lost opportunity of revenue generation
on a per practice basis was extrapolated across the profession for practices of four or more doctors? Additionally, what is
the opportunity for improved reminder system notification and other aspects of client compliance with doctor recommendations
because of all the other factors we have only touched upon in this article?