Key performance indicators (KPIs) are metrics that can help measure and determine the health of your veterinary practice. KPIs should support the objectives and goals you have set for your practice and need to be based on timely, accurate information. KPIs can also provide insight into revenue, costs, and efficiencies.
Understanding and effectively utilizing key performance indicators (KPIs) is crucial for success in your veterinary practice. With an array of metrics available, it's essential to identify those that are most relevant and impactful for your practice.
These indicators are not just mere numbers. They are powerful tools that, when correctly measured and interpreted, can significantly improve practice health, profitability, and patient experience.
KPIs should be:
Understanding and accessing KPIs are crucial steps in leveraging them for practice improvement. Key metrics such as the number of invoices, average invoice value, and new patient acquisition rates offer insights into operational efficiency. For example, a good volume benchmark is between 4,000 to 4,800 invoices per veterinarian.
Revenue per veterinarian is a vital KPI. A healthy range for small animal practices is at least $700,000 per veterinarian, with high-performing practices reaching $850,000 or more.
For large animal practices, a minimum of $250,000 with top performers achieving more than $375,000 is indicative of efficient operations.
Staff leverage is another critical metric. Effective practices can have a staff-to-veterinarian ratio as high as 7:1. For non-veterinarian staff revenue contribution, a minimum of $190,000 with high performers exceeding $215,000 indicates optimal staff utilization.
Understanding cost structures like the total cost of goods sold is pivotal. Aiming for less than 25% of revenue in this area is ideal, with top clinics achieving around 21%. Non-veterinary staff expenses should ideally be around 20% of revenue, with payroll expenses (excluding taxes) around 18-19%.
Strategic planning using KPIs is vital for growth and sustainability. This includes evaluating the practice's value for potential sales or expansions and understanding the evolving dynamics of the veterinary market.
The foundation of effective KPI management is accurate and timely data. Making decisions based on outdated or inaccurate information can be detrimental to your practice.
Regular review of financial reports and engagement with trusted advisors are recommended. Practices should allocate time to work “on” the business, not just “in” it.
Evaluating and adjusting fees and markups are a good place to start when considering how to act on your KPI goals, as these directly impact profitability. Investing in efficient inventory management and staff training can also yield significant improvements.
For veterinary practice owners, mastering KPIs is not just about understanding numbers; it's about transforming those numbers into actionable strategies that foster growth, efficiency, and profitability.
Engaging with trusted advisors, regularly reviewing financial reports, and being open to changes are key to leveraging KPIs for continual practice improvement.