If you have your own veterinary practice, you may have realised that the challenges involved in running your business are totally different from those of being a practising veterinarian. Despite the fact that many veterinarians want to open their own practice, the basic knowledge to manage and promote the business is often lacking. Have you ever wondered how you can improve your profitability? In this article we will go over the basics of veterinary practice management so that you can improve the profitability of your own practice.
What Is Profitability?
Before we begin, it’s necessary to define the most important concept for the survival of the practice: profitability. Simply put, a profitable business is one that generates more income than expenses. In other words, it’s when a business manages to generate profits.
The more money a business makes, the more profitable it is. However, a clinic is made up of several services, and the smart thing to do is to analyse which of them are the most profitable in order to promote them.
In many cases, profitability is associated with the concept of “return on investment” or ROI, which consists of knowing how much money you have recovered from a particular investment. For example, if you are upgrading an instrument in your clinic, you should calculate how much time and money you have saved or gained from the upgrade. Have you recouped the money you spent on buying the instrument?
Key Actions to Improve Your Profitability
Now that we’ve gone over the main concepts, it’s time to answer the big question: how can you improve your profitability? Let’s look at three basic tips that will help you in this task.
Reduce Your Costs
In many businesses, it’s common to find yourself in a vicious circle of earning more to spend more. There are certain moments in business when this is logical, such as in times of growth, but it’s not always the best thing to do. One of the first steps you will have to take is to analyse each of your costs to find out if it’s possible to reduce them.
The best tool for this is a cost sheet, a document in which you write down all the detailed costs related to each service. This way, you can find out if it’s cost-effective or if you need to review the processes and associated instruments.
For example, you may still be using an old X-ray machine, which takes significant time out of your employees’ day. By modernising it, you could save this time and allocate it to another task.
Once you have identified the costs you want to reduce, you can:
- Negotiate with your supplier to get a better deal.
- Outsource the service if you think it is not worth providing.
- Focus on improving processes through technology.
Invest in Technology
It may seem counterintuitive that you have to “spend” more money in order to improve profitability, right? However, every year there are technological advances in the veterinary sector that allow you to improve your processes and the quality of the service you offer.
Investing in technological tools that help you reduce the time spent per patient will allow you to streamline processes and, consequently, be able to serve more clients. For example, by using a multi-parametric harness, you can easily monitor your hospitalised patients and save up to 60% of the costs associated with hospitalisation.
Raise Prices for Your Services
Another direct way to improve the profitability of your clinic is to raise the prices of the services you offer. However, this would have to be justified. For example, you may have upgraded your tools to offer the best service in your area, or you may have invested in marketing efforts to improve your brand positioning.
If you choose to raise prices, we want to share one last piece of advice with you. As you earn more money, you may tend to spend this surplus. Do it wisely! And always keep profitability in mind, if this is your main objective.
Profitability Beyond Money
To manage a veterinary practice, it’s necessary to take into account several factors. Do you want to learn more about managing your practice? We would like to share one of our ebooks with all the information you need to learn how to improve the profitability of your veterinary practice.
While financial profitability is important for a company, it’s also worth considering other aspects, such as social impact or quality of customer service. In short, when making your decisions, always keep your ethical values in mind to create a clinic that is worthwhile!