Evidence Based Practice Management

Transcription

1 Evidence Based Practice Management Growing Your Business Like a Doc Melissa Maddux, DVM Chief Innovative Human

2 Patient Health Evidence Based Medicine + Practice Health Evidence Based Practice Management Individual Clinical Expertise Improved Outcome Client Culture (Values + HAB + Expectations) Highest Quality Lowest Cost Care Best Available Clinical Evidence

3 History Economic Overview Care Guidelines Economic Conditions & Market Share Diagnostics Care Guidelines and Service Strategies Productivity and Caseload Income Statement KPIs and Benchmarks Productivity Income Statement Diagnosis Service Strategies Client Compliance Operations Efficiency & Profitability Financial Potential Market Potential Treatment Implementing Solutions Recheck Systems for Evaluating Outcomes Improving National Data

4 Diagnostics Get the Data Example Practice Rocky Creek Veterinary Hospital 1. Operations Summary 2. Income Statement

5 Operations Summary Labor Owner DVMs 2 FTE Associate DVM 7 FTE Support Staff 22 FTE

6 Revenue - Expenses Profit or Loss Strengths 1. Profitability of service 2. Operations before overhead Efficiency Limitations 1. Cash in the bank 2. Wealth (ROE) 3. Asset Efficiency (ROA) Profitability of the Operation 4. Financing (Leverage) How much is left after everyone has been paid

7 KPIs and Ratios Operations Summary Income Statement Average Doctor Transaction (ADT) Support Staff to DVM Ratio Number of Appointments Average Appointment time Number of Active Clients Average Doctor Revenue (ADR) Labor % of DVM and Owner Salary Cost of Professional Services (COPS) Rent Expense Profitability

8 Revenue Income Statement Assessment Mixed Animal Practice Benchmarks Rocky Creek Veterinary Hospital Average Doctor Revenue $240,000 to $320,000 Is this Appropriate for a 7 FTE DVM Practice?

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10 Revenue Income Statement Assessment Mixed Animal Practice Benchmarks Rocky Creek Veterinary Hospital $5,164,111 Average Doctor Revenue $240,000 to $320,000 $737,730 Is this Appropriate for a 7 FTE DVM Practice? Yes!

11 Income Statement Assessment Labor % of AHAA 2016 Benchmarks Rocky Creek Equations Labor % of 45% to 50% Non-DVM Labor % of 23% Is this high (inefficient) or low (efficient)? DVM Labor % of 21% Is this high (inefficient) or low (efficient)? Benefits % of 6% Total Labor Cost Non-DVM Compensation DVM Compensation Total Benefits Is this high (inefficient) or low (efficient)? Benefits CE, Dues, Insurance, License, PR Tax, Uniforms

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13 Income Statement Assessment Labor % of AHAA 2016 Benchmarks Rocky Creek Equations Labor % of 45% to 50% 31.1% Total Labor Cost Non-DVM Labor % of 23% Is this high (inefficient) or low (efficient)? Non-DVM Compensation DVM Labor % of 21% Is this high (inefficient) or low (efficient)? DVM Compensation Benefits % of 6% Total Benefits Is this high (inefficient) or low (efficient)? Benefits CE, Dues, Insurance, License, PR Tax, Uniforms

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15 Income Statement Assessment Labor % of AHAA 2016 Benchmarks Rocky Creek Equations Labor % of 45% to 50% 31.1% Total Labor Cost Non-DVM Labor % of 23% 9.8% Is this high (inefficient) or low (efficient)? Low Non-DVM Compensation DVM Labor % of 21% Is this high (inefficient) or low (efficient)? DVM Compensation Benefits % of 6% Total Benefits Is this high (inefficient) or low (efficient)? Benefits CE, Dues, Insurance, License, PR Tax, Uniforms

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17 Income Statement Assessment Labor % of AHAA 2016 Benchmarks Rocky Creek Equations Labor % of 45% to 50% 31.1% Total Labor Cost Non-DVM Labor % of 23% 9.8% Is this high (inefficient) or low (efficient)? Low Non-DVM Compensation DVM Labor % of 21% Is this high (inefficient) or low (efficient)? 16.6% Low DVM Compensation Benefits % of 6% Total Benefits Is this high (inefficient) or low (efficient)? Benefits CE, Dues, Insurance, License, PR Tax, Uniforms

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19 Income Statement Assessment Labor % of AHAA 2016 Benchmarks Rocky Creek Equations Labor % of 45% to 50% 31.1% Total Labor Cost Non-DVM Labor % of 23% 9.8% Is this high (inefficient) or low (efficient)? Low Non-DVM Compensation DVM Labor % of 21% Is this high (inefficient) or low (efficient)? 16.6% Low DVM Compensation Benefits % of 6% 4.6% Total Benefits Is this high (inefficient) or low (efficient)? Low Benefits CE, Dues, Insurance, License, PR Tax, Uniforms

20 Income Statement Assessment Labor DVM and Owner Mixed Animal Practice Rocky Creek Equations Salary per DVM DVM Compensation # FTE DVM % of Production (ADR) 20% to 25% ADR x 20% Is this appropriate? Salary per Owner Owner Compensation # Owners % of Production (ADR) 20% to 25% ADR x 20% Is this appropriate?

21 7 FTE DVM Practice Owners 2 Associates 5

22 Income Statement Assessment Labor DVM and Owner ADR $737,730 Mixed Animal Practice Rocky Creek Equations Salary per DVM $91,707 DVM Compensation # FTE DVM % of Production (ADR) 20% to 25% $147,546 ADR x 20% Is this appropriate? No Salary per Owner $199,268 Owner Compensation # Owners % of Production (ADR) 20% to 25% $147,546 ADR x 20% Is this appropriate? Maybe

23 Income Statement Assessment Cost of Professional Services (COPS) AHAA 2016 Benchmarks Rocky Creek Equations COPS % of 23% to 25% COPS Is this high, low or WNL? Cost of Professional Services Supplies used to provide medical care: 1. Medications 2. Medical Supplies needles, syringes, blood tubes, exam gloves, etc 3. Lab Supplies Cartridges 4. Imaging Supplies Gel, films

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25 Income Statement Assessment Cost of Professional Services (COPS) AHAA 2016 Benchmarks Rocky Creek Equations COPS % of 23% to 25% 56.3% COPS Is this high, low or WNL? High!

26 Income Statement Assessment Rent Expense AHAA 2016 Benchmarks Rocky Creek Equations Rent % of Rent 4% to 6% Own 8% to 10% Rent Expense Is this high, low or WNL?

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28 Income Statement Assessment Rent Expense AHAA 2016 Benchmarks Rocky Creek Equations Rent % of Rent 4% to 6% Own 8% to 10% 4.5% Rent Expense Is this high, low or WNL? Low

29 Profitability Ratios Reference Values Rocky Creek EBITDA Ave 10% Earnings Before Interest Taxes Depreciation and Amortization Gross Profit Gross Margin How profitable are these services? Operating Profit (EBIT) Operating Margin How profitable is this operation? Healthy 14% - 16% Top > 20% Gross Profit Operating Profit

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31 Profitability Ratios Reference Values EBITDA Ave 10% Earnings Before Interest Taxes Depreciation and Amortization Gross Profit Healthy 14% - 16% Top > 20% Rocky Creek 5.4% $2,254,160 Gross Margin 44% Gross Profit How profitable are these services? Moderate Profit Operating Profit (EBIT) $245,881 Operating Margin 4.8% Operating Profit How profitable is this operation? Low Profit

32 Diagnosis Problem List Problem List Solutions 1. High COGS 2. Low Labor % of Underpaid or too few support staff Associates paid less than production 3. Rent too Low (if they own the building) Inventory Management System 1. Increase Support Staff or Support Staff Income 2. Match Pay with Production Increase Rent Payment

33 Link Solution to the Budget Cost of Professional Services Net Profit 4.4% Change % To Change in Profit COPS 56% 40% $826,258 Cost of Implementation $20, $20, Net Profit 20% $806,258

34 Evaluating the Outcome Cull or Keep Treating 1. Measure outcomes in a way that promotes the culture 2. Indicators for success 3. Indicators for modification 4. Indicators for discontinuation 5. Timeline

35 Building Practice KPIs

36 Find Your Potential Closing the Need-Demand Gap

37 Need vs. Demand For Veterinary Services Need The preventative care and illness care an animal should receive to maintain the health of the population. Care Guidelines Population Incidence of Disease or Injury Price Demand Quantity of services demanded at a certain price or the preventative care and illness care an animal actually receives. Price $ + Value Human Animal Bond Client Culture

38 Closing the Need-Demand Gap Better Care for More Animals 1. History Current Need-Demand Data 2. Market Share and Market Potential 3. Client Culture and Human Animal Bond

39 Where Do Producers Spend Their Money Data Source AVMA American Association of Bovine Practitioners 2016 Economic Report

40 Parallel Providers Data Source AVMA American Association of Bovine Practitioners 2016 Economic Report

41 Distributer > Service Provider 95.9% Product Impact 26.1% Service Impact 66.7% Product or Service Impact Data Source AVMA American Association of Bovine Practitioners 2016 Economic Report

42 Revenue Sources Call Fees Other 17% 5% Lab 3% 26% Repro Services & Embryo Transfer Preventative Care 8% Radiology 3% Products 9% 13% 3% 6% 7% Surgery Sick Animal Consulting Tech Generated Data Source AVMA American Association of Bovine Practitioners 2016 Economic Report

43 Market Share and Market Potential

44 Example Bovine Exclusive Practice Cattle Beef and Diary Service Area Counties Blount, Jefferson, Sevier

45 Step 1: What s My Service Area? What You Need Client List (with farm addresses) saved as a CSV (comma-separated value) file How You Get It 1. Extract your client list from the Practice Information Management System (PIMS). If your clients have a separate mailing address from the farm address, be sure to use the farm address. 2. Save the data as a CSV (comma-separated value) file.

46 What is My Service Area Geographic area where you can reasonably expect your clients to reside May include multiple neighborhoods, villages or municipalities (urban, suburban) or multiple towns (rural) Goal Determine where 90% of patients (herds) reside Client List Method GIS Mapping Software Method Blount County Jefferson County Sevier County

47 Step 2: How Many Head of Cattle are in my Service Area? Using USDA National Agricultural Statistics Data Visit

48 Step 2: How Many Head of Cattle are in my Service Area?

49 Step 2: How Many Head of Cattle are in my Service Area?

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51 Step 2: How Many Head of Cattle are in my Service Area? 26, , ,400 70,400 70,400

52 Step 3: Potential Revenue on the Table 70,400 1,689,600

53 Step 4: What s Your Share 70,400 1,689,600 $750,000 $1,689,600 44

54 What s Your Strategy? Connecting the Dots for Producers

55 Service Strategies Wellness Care AI Genetics Reproduction Sexing Calf Care Producer s Nutrition Goal Efficient and High Producing Female Illness Care

56 Equine Example Linking Care Guidelines, Pricing and Marketing Care Frequency Wellness Exam Trip Fee Core Vaccines EWT + WNV Core/Lifestyle Vaccines Rabies + PHF Lifestyle Vaccines PHF Parasite Control Ivermectin + Praziquantel Fecal Egg Count Coggins Dental Float Nutrition Consult Annual Bi-Annual Bi-Annual Annual Annual Bi-Annual Bi-Annual Annual Annual Annual

57 Annual Budget Vet Online Best Wellness Exam $55.00 $55.00 Trip Fee $ $ Core Vaccines EWT + WNV $90.00 $90.00 Core/Lifestyle Vaccines Rabies + PHF $35.00 $35.00 Lifestyle Vaccines PHF $25.00 $25.00 Parasite Control Ivermectin + Praziquantel $20.56 $13.95 $13.95 Fecal Egg Count $33.00 $33.00 Coggins $30.00 $30.00 Dental Float $ $ Nutrition Consult $38.75 $38.75 Total $ $13.95 $ % Discount $ Monthly Charge $44.15

58 Equine Example Adding Colic Insurance $7, Monthly Charge or 10% Discount $44.15 Free Enrollment Instead of Discounted Services Annual Budget Clinic Data Annual Cost to Client Monthly Cost to Client Frequency of Surgical Colics Seen by the hospital Annually 3% Number of Horses Seen Before 1 Horse Requires Surgery (1/0.03) 33 Insurance Cost Breakeven $7,500/33 $ $18.75

59 What s Your Strategy? Leverage Labor Coordinate Services Add Services

60 Up Next Establishing Practice Value Treatment Implementing Solutions Recheck Evaluating Outcomes Shark Tank

61 What Questions can I answer? Melissa Maddux, DVM Chief Innovative Human mmaddux@eruptsolutions.org Phone