If you are on the hunt for another veterinarian or have recently hired one, then it’s important to have a plan for how to get the best results from your new doctor.
How can you maximize the revenue that your new doctor generates?
Here are four ways to ensure your new associate has a positive impact on the bottom line for your practice.
Set Efficiency Benchmarks
If your new associate spends more time than necessary to perform a given service, then your practice is leaving money on the table. Think about it: that time could have been spent generating more revenue by seeing other patients.
But how do you know the right amount of time to spend on each service?
By setting efficiency benchmarks.
You need to establish a standard amount of time it takes a doctor to perform every service.
How? By literally getting out a stopwatch and timing how long each service takes. And you’ll want to measure each service multiple times just to be certain your benchmarks are accurate.
Now you might think that sounds excessive, but consider the following illustration.
Let’s say your new associate will perform 4,000 services a year. If the average amount of time wasted on each service is 5 minutes, then that means your practice lost out on more than 40 days of work (assuming an 8-hour work day). And until time-management improves, you lose that time year after year after year. Think about all the lost revenue due to 5 minutes wasted on each service.
Setting efficiency benchmarks is the only way to find inefficiency and determine exactly how much time is wasted. Once you have these standards in place, your new associate can increase productivity by staying within the time limits for each service.
Prioritize Billable Doctor Duties
Improving how efficiently your new doctor performs services is only helpful if that extra time saved is spent on more billable activities. You don’t want your new associate taking care of patients in record time just to spend all that extra time doing work that could be delegated to administrative staff or technicians.
Would you ever pay a receptionist or a tech the same as a veterinarian? Of course not; so your new associate needs to stick to doctor work as much as possible.
When your veterinarian performs tasks that a tech could be doing instead, you’re essentially paying a doctor’s labor rate for technician-level work. This absolutely kills your profit margins. And doctors taking time to do non-billable work is even deadlier.
Obviously, there are extenuating circumstances when a doctor has no choice but to do work that could otherwise be delegated to a lesser-skilled employee, but those instances should be few and far between.
Unfortunately, delegating is often easier said than done. Many doctors would sooner do a task themselves than assign it to lower-level employee because they want to make sure the job is done right. Delegation is hard because it means giving up control and trusting in your team.
All of that to say, it will take more than repeated admonitions to get your new associate to truly understand the importance of prioritizing veterinarian-level duties. To really motivate your doctor you’ll need to show how a certain increase in billable activities will produce tangible, meaningful results.
You’ll need to get out the spreadsheets and do the complicated math of calculating exactly how much additional revenue the practice stands to gain if your new associate commits a certain percentage of time to billable activities.
Yes, it is time-consuming, but coming up with the hard numbers is necessary.
Sit down with your recently hired veterinarian and show what’s possible when 60%, 70%, even 80% of the schedule is filled with billable doctor-duties. Then make a concrete goal based on real numbers and watch your new doctor’s production increase.
Expand Operating Hours
Hiring a new veterinarian may provide an opportunity to extend your practice’s operating hours. This could help your practice increase the number of patients you see per week and also attract new customers who prefer the new availability.
But don’t just assume that more operating hours will automatically result in more profit. You’ll need to take the time to run in-depth projections and see if the expected additional revenue outweighs the extra costs of keeping the doors open longer.
Use your own historical practice data to estimate how much income you can safely expect to generate during the expanded hours. Keep in mind that it’s best to err on the conservative side; don’t overestimate revenue.
Next, you’ll need to account for all the expenses associated with the new operating hours. The additional staff time is the biggest factor here. Calculate how much it will cost to pay your technicians and administrative staff to work during these extra hours. You’ll also want to add up any other variable costs that increase with more hours, like utility bills. Compare the expected revenue to the expenses and see if the profit justifies extending the practice’s hours.
Be sure to mention the operating hours to your interview candidates before making a hire; it’s only fair that a veterinarian fully understand the responsibilities of the role before accepting an offer.
In the event you’ve already gone through with a hire, it may be best to have an open discussion with the new associate rather than surprise them with the announcement of an expanded schedule.
Outlining how an extended schedule is beneficial for everyone involved can help a new veterinarian be more understanding about taking on non-traditional working hours.
Adjust Service Fees
With a new doctor comes new expenses: salary, benefits, bonuses, taxes, and more.
While you can expect your new associate to help increase overall production for the practice, it isn’t a given that this revenue will initially be enough to cover the costs of the doctor’s employment.
You may have a serious cash flow issue until the new veterinarian’s production starts to ramp up. And you could easily be even more strapped for cash if you take on other additional expenses to help support the new doctor, like hiring additional technicians.
The point here is that you can’t bank on a new associate to carry his or her weight, at least not initially.
So how can your practice avoid running into cash flow issues after hiring a new doctor?
The answer is pretty straightforward. Bring in more revenue by making the right adjustments to your practice’s service fees.
These adjustments need to be thoughtfully implemented to address the unique circumstances of your practice. The key is knowing which service fees to adjust and how much to adjust them.
Across-the-board percentage increases and industry benchmark pricing both fall short because they aren’t custom-tailored to your practice.
Now you may very well be using one or both of these price-setting methods at your practice. And your practice could very well be plenty successful. But when you drag-and-drop benchmark prices into your practice or use preset annual price hikes, your practice’s success is limited.
Since neither strategy is personalized to your practice, many (if not all) of your fees will be too high or too low.
If your finances are in the black, then you might be wondering why you should bother changing how you currently set your prices.
Here’s why: because if you don’t know which fees are too high and which are too low, then you can’t know what is actually driving your profit.
One simple truth that you can always count on is that your costs will always increase year after year. Wages and salaries increase each year. The cost of providing benefits increases each year. Drug prices increase every year. The lease on your building will eventually increase. And if you own your building, then you have property taxes going up each year.
The ONLY way to keep up with rising costs is to make appropriate adjustments to your fees. But manipulating the prices of your services without knowing the current profit (or loss) of those services is taking on a bigger risk than you may realize. A handful of grossly mispriced services could easily derail revenue.
Overcharging for certain services can turn customers away and cause you to lose business. While undercharging for a service could mean you’re actually losing money every time you fulfill that service.
You need to be able to know which fees are too high and by how much and determine how that is impacting your customers. You also need to know which fees are too low and by how much and determine how that is impacting your profit.
Knowledge is power when it comes to setting the right services fees. This knowledge will empower you to set service fees that maximize profits without inadvertently disenfranchising or scaring away your customers.
The Tool that Does It All
You may have noticed that we haven’t explored the details of how to actually put these four strategies into practice. The truth is that applying these strategies can be incredibly challenging.
How do you establish efficiency standards for your doctors? How do you know what amount of time is considered efficient?
How do you set billable activity goals and calculate their impact? If your new doctor spent 10% more time on billable doctor-level work, how much more profit would that generate?
How can you know whether or not expanding operating hours for your new associate will be profitable for the practice?
How can you know which service fees to adjust and how much to adjust them in order to cover the new costs associated with hiring another doctor?
Even more, implementing these strategies is time-consuming. The real question is this: will you actually actually ever have the time to do it?
Profit Solver’s patented software can do all of this for your practice. In less than 8 hours, you can implement Profit Solver and help ensure you get the most from your new associate. Here’s what Profit Solver can do.
Profit Solver has a proprietary database of time-and-motion metrics from thousands of practices that show the average amount of time it takes to perform a given service.
You can immediately use this data to set time efficiency benchmarks for the doctors and staff in your practice.
Profit Solver allows you to set practical billable activity goals by showing you how much additional profit your practice can generate if your doctors increase their billable activity by a certain percentage.
Setting goals with tangible results gives a huge motivational boost and increases the likelihood of reaching those goals.
Profit Solver lets you run projections to see if expanding operating hours would make financial sense or not. The software calculates the additional costs associated with the expanded hours and compares that to the expected revenue that would come during those new times.
You can make an informed decision that can help you increase profits or avoid losing a lot of money.
Profit Solver’s most powerful feature is its ability to analyze your practice and determine how to adjust your service fees in order to cover your costs and reach a certain profit goal.
Our software identifies which service fees to adjust and shows how much to adjust them.
If you’re looking for a surefire way to get the most from your new associate, then consider implementing Profit Solver in your practice. We’ve helped over 1,800 practices of all types and sizes all across the country. Maybe it’s time we helped yours!