As a student in veterinary school, I became a master at cutting costs. I bargain shopped, I couponed, and I opted out of TV service and a data plan. I walked to school and rode my bike to the grocery store. My only real expense was rent, and even that was as low as I could find. Why? you may ask. The debt from tuition alone was mounting high enough, and I didn’t want to add to it by borrowing money for living expenses as well. However, once I graduated, it was hard to buck the habit. I still practice frugal living in my household and at every clinic I’ve worked, but is it right for yours?
In business, there’s a pretty simple equation that determines how much revenue your clinic makes. That equation is money in minus money out. Hopefully your money out is less than your money in — far less. If not, it’s time to make some cutbacks. Don’t worry, it can be quicker and less painful than you think.
Cutting Costs Starts With Your Employees
Hold it, I’m not saying to get rid of all of your employees or even to skimp in this area — quite the opposite. Instead, make sure your employees are happy and fairly compensated. Hiring and training new employees costs time and money, and it can be a real hassle — so do it less. Increase employee retention by providing flexible and fair schedules, offering good benefits, and creating a happy and stable work environment. Value your team’s opinions and ask them frequently for their input. Happy employees are more apt to be productive and efficient, and to stick around. The more you appreciate them, the more money they’ll bring in for you.
Another way that you can make team members happy and increase revenue is by doing away with overtime. Now, most employees will argue that they want the chance to earn time and half or even double time, but the fact of the matter is that overtime can really cut into your revenue margin. Instead of paying overtime, have your employees make a schedule that is agreeable for everyone and still covers all bases. What team member wouldn’t want a four-day weekend once a month? And, if you’re providing good compensation, most team members aren’t going to miss the overtime pay.
Along with pay, offer your team a quality benefits package. While this may be a large chunk of money out of the practice’s pocket, it will also help retain hardworking employees. Evaluate these benefits annually, making sure you’re still offering quality products while getting the best deal possible. This goes for any associate vets as well. If you’re paying an associate a salary versus a percentage, evaluate this every year to be sure you’re giving the highest value you can.
Cutting Costs in Inventory
Should you purchase six bottles of Epi-Otic or eight? Inventory may be one of the hardest areas to nail down when you’re looking at cutting your overhead costs. After all, you want to have the things you need at hand, but not too much. Like Goldilocks, you’re looking for that “just right” amount. The quick and easy thing to do is to track inventory with your practice software. Everything that you purchase goes into the computer, and everything that clients buy goes out. Many programs will be able to provide a chart or list of exactly how much of everything your practice goes through on a monthly, quarterly, or yearly basis. If last year you only purchased six bottles total of 100mg Rimadyl, it doesn’t make sense to order 10 at one time.
However, this type of inventory tracking doesn’t take into account products used within the clinic, only those sold to clients. So, if you’re having trouble tracking some of those in-house products, like bags of LRS for example, try the red dot system. At some point during the year, have someone put a red dot on all products that are used in-house only. Then, several months or a year later, go back through and see how many of those red dot products are remaining on the shelf. This will give you an idea of where you’re ordering too much.
It’s also important to consider that many pharmaceutical distributors offer next-day or two-day shipping. That means if you run out of something, it won’t be long before you can get more. Keep this in mind when ordering those more expensive, non-emergency type items. You may even decide to keep only one (or none) in stock and order on an as-needed basis.
Shop Around and Then Shop Some More
We all love our pharmaceutical reps. One who frequents our clinic never fails to bring us donuts or cookies, which are always appreciated during a tough day. But don’t let those baked goods keep you from getting the best price for the products you need. Shop around. Now, this is definitely not a time saver, but checking prices at multiple companies is well worth your time. Fortunately, all the major companies offer online stores that make this easier for you to do. Just be sure that you’re comparison shopping with every order, as prices can change dramatically overnight. Also, look for generics. If your main supplier doesn’t offer a generic version of a product, find a place that does.
Keep your eye out for deals. Having your practice software track your ordering and retail behaviors will help you take advantage of those buy six, get one deals. These can really save you money, especially when you’re talking about flea and tick products or NSAIDs. Just make sure that you’ll use that inventory before the product expires.
Go Easy on the Equipment
For most for us, the hardest part about leaving veterinary school is the realization that we won’t have all the bells and whistles that we’re used to — no endoscope, what?! There’s a good reason many privately owned vet clinics don’t have these tools: the cost. Before you drop a ton of money on the latest and greatest gadget out there, take a step back and consider how much you’ll actually use it and if passing that purchase cost on to your clients is feasible. You can still practice good medicine without high-tech equipment, so don’t take a plunge that’s deeper than your pockets.
Even if you’re not technology hungry, your equipment is still a huge investment, so take care of it. This goes back to treating your employees right. The more they feel valued and part of a team, the more they’ll work to take care of your stuff. And if you find yourself in need of some of the basic veterinary equipment, don’t forget to shop around. You’d be surprised at the number of quality items you can find on eBay for a good price.
The Minute Miscellany
If you’re still looking for some penny-pinching ideas for your veterinary practice, I’ve seen the gamut. From autoclaving syringes and scalpel blades to rationing paper towels, every little bit helps. The important thing is to be sure to get everyone on board. One person using the backs of already-printed-on paper isn’t going to cut it; it takes the whole crew.
On that note, instead of just cutting costs, look for areas that you’re losing money. A big one is billing. Every veterinarian has been stiffed by a client when they try to collect payment later on. It’s just so easy for these payments to get forgotten or lost, and just a couple of them can amount to a lot of money. Ask for payment at the time of service. It’s also important to make sure clients are billed for all procedures and products. This, again, comes back around to making your team happy. The more satisfied a team member is with their job, the more they’re willing to do it right. Proper record keeping is a must to document everything that was done during a visit, and periodically having someone do a quality control check for a day will ensure that everyone knows the correct procedure.
Cutting costs in your clinic can really go a long way toward increasing your bottom line, and it doesn’t have to be a painful or even feared proposition. It doesn’t require a dramatic change, just little steps that involve the whole team.