Creating Your Practice s Destiny

Transcription

1 Creating Your Practice s Destiny Chicago Veterinary Medical Association Management Seminar April 16, 2008 Presented by: Christine Merle DVM, MBA, CVPM cmerle@brakkeconsulting.com

2 Creating Your Practice s Destiny Christine Merle DVM, MBA, CVPM cmerle@brakkeconsulting.com Does it seem like increases in client expectations and the quantity of medical knowledge has you working harder than before? Is your practice s path to success full of curves and bumps that are leaving you mystified? Take back the control with this day-long interactive seminar for veterinarians and practice team members. Learn about: -What leads to financial success in veterinary practice. -Setting medical and science standards. -Implementing effective training programs, and -Strategic analysis of YOUR practice. This seminar will include lots of take-home information and opportunity for discussion that will help you run your practice more efficiently and increase your economic success. Defining Financial Success in Veterinary Practice page 3 Setting Standards in Your Practice page 9 Implementing Effective Training Programs page 12 Strategic Analysis of Your Practice page 20 Chicago VMA 2

3 Defining Financial Success in Veterinary Practice True Profitability Is your practice your job or your business? If it s your job- owning a practice is your way of achieving autonomy and control. If it s your business- your practice is a form of investment (both your time and money!). So, how do you define Financial Success? Is breaking even enough? What is fair profit? How much risk have you taken in your business? What type of return are you looking for? My practice grossed $1.4 million in sounds impressive right? But the reality is it s not about the revenue its all about the NET! Benchmarks and everyone in veterinary medicine have always talked about the revenue because it s the easiest one to share and due to various practice structures true profitability (net) has been difficult to assess. The financial statements that you currently use are tax-driven meaning they are designed to minimize profits to reduce taxes. HOWEVER, true profitability can and should be determined because this is what provides the VALUE of the business that you own. In January 2008, the Valuation Issues committee of the Association of Veterinary Practice Management Consultants and Advisors (AVPMCA) published the article The No Lo Practice Avoiding a Practice Worth Less and their accompanying worksheet shown on the next page. It provides an easy way for practices to determine what the true profitability of their practice is and finally gives them a way to look at their net and have a better understanding of their true practice value. Using this worksheet and tool you too can understand and monitor your practices financial success. Chicago VMA 3

4 The No-Lo Practice by AVPMCA published as a supplement to January 2008 Veterinary Economics (insert inside). Threat Advisory Worksheet available for download at NOTE: you must enable macros Chicago VMA 4

5 Key Production Indicators- monitored and reviewed monthly/quarterly Best to create a trend analysis for your own practice use veterinary benchmarks as reference. Additional reference- Revenue- billed amount for services and products provided o Medical- associated with Doctor/Veterinarian o Ancillary Services- Boarding, Grooming, Retail Benchmarks: determined on a per doctor (FTE equivalent)(~2,080 hours/year) My Practice Benchmarks $419,486 AVMA 05 data Total practice revenue per doctor $452,191 AAHA 05 Data Total practice revenue per doctor $564,700 WMP 06 Data Total practice revenue per doctor Number of Transactions- one transaction= one visit Benchmarks: determined on a per doctor ( FTE equivalent) My Practice Benchmarks AAHA 05 Data WMP 06 Data Practice trans per doctor Practice trans per doctor Average Transaction Charge- calculated by dividing the revenue by the number of transactions My Practice Benchmarks $88.00 AAHA 05 Data Total practice ATC $98.00 WMP 06 Data Total practice ATC Individual Doctor Production and Transaction Charge- prefer to break down into services and product for production. Track revenue, number of transaction and individual doctor ATC. My Practice Doctor 1 Doctor 2 Doctor 3 Benchmarks $508,800 Dr medical revenue-wmp 3425 Doctor trans-wmp $ Dr ATC-WMP Chicago VMA 5

6 New Client- individual that is new to the practice (not a new patient) Benchmarks Measured on a per doctor basis My Practice Benchmarks AAHA 05 Data-mean 303 New clients per doctor WMP 06 Data-mean 281 New clients per doctor Active Client Numbers- an active client is defined as having visited at least once in the past 12 months. Benchmark Range clients per doctor - the more visits the lower the number Lost Clients- clients that have not returned to the practice in a 12 month period. Calculation: Lost clients = (Previous Year Active Clients + Current Year New Clients) Current Year Active Clients My Practice Total Active Clients ( seen in last 12 months) New Clients Lost Clients Accounts Receivable- track by 30 day intervals to a maximum of 120 days Benchmark: no more then 2% of your gross revenue My Practice Date % of Revenue Total A/R Current 1-29 days days days 90+ days Chicago VMA 6

7 Revenue by Category- Benchmarks My Practice WMP 06 Data AVMA 05 Data AAHA 05 Data Office visits & exams 12.6% 11.90% Immunization revenue 7.4% 4.4% 11.4% Laboratory revenue 17.2% 18.2% 13.9% Imaging revenue 4.5% 8.9% 3.7% Total diagnostic revenue 21.7% 27.0% 17.6% Hospitalization 3.0% 6.4% 3.5% Surgery 6.5% 13.8% 9.4% Dentistry 2.4% 2.5% Anesthesia 4.1% 5.0% 2.60% Other professional services 2.0% Boarding 2.9% 3.6% Grooming 1.3% 1.8% Dietary products 4.1% 4.0% Pharmaceuticals 13.2% 17.4% HW meds & Flea/Tick products 9.2% Over-the-counter items 1.1% 5.9% Total product revenue 27.6% 0.0% 27.3% What about Expenses? Expenses can t be forgotten but the key here is managing and controlling higher then normal expenses. There are five main areas of Expenses that are monitored. Again benchmarks are a reference. Individual practice trends should be analyzed. Variable Expenses-change in proportion to the number of patients seen; Include drugs, medical supplies, laboratory, food and credit card fees. Benchmark target: 22-24% of revenue Chicago VMA 7

8 Fixed Expenses- administrative overhead including advertising, office supplies, ce and some benefits (i.e. health insurance) Benchmark target: 8-9% of revenue Staff Compensation- wages, payroll taxes and retirement contributions. Note community economics and staff to doctor ratio result in great variability Benchmark target: 22-25% Facility Expenses includes rent, property taxes and insurance, utilities, cleaning, repairs and maintenance. Benchmark target: 5-8% Rent 4-6% Test: Divide your current rent by 6%- resulting figure should approximate your gross revenue. DVM Compensation- wages, payroll taxes and retirement contributions. Note geography and community economics result in great variability Benchmark target: 22-25% of doctor s production revenue Levels of Owner Compensation: 1) Production as a Veterinarian 2) Management of the Practice 3) If property owner- Fair Market Rent 4) Return on Investment The Intangibles In 2005, the AVMA Pfizer Study shared the intangibles to financial success. They are still as valid today as they were three years ago. The 3 Fundamental Ingredients to Financial Success 1. Employee Management o Employee development practices o Leadership (motivating others) 2. Financial Management o Business orientation o Frequency of financial data review o Negotiating skills 3. Client Relations o New client development o Client retention practices o Client loyalty Chicago VMA 8

9 Setting Standards in Your Practice Critical Pathways Human healthcare systems are faced with having to provide care for certain medical conditions at a fixed cost. To accomplish this task they have instituted a program called a Critical Pathway. To create a pathway for a disease the process starts with a team of people associated with providing service to the patient. The team includes doctors, technicians, case managers, and anyone else associated with the care of the patient. The team evaluates records and studies outcomes for each specific condition. From this information they craft a cost efficient and effective protocol for the successful treatment of the patient. The concept of Critical Pathways does have a place in veterinary medicine. The veterinary profession still operates on a fee for service basis and is not faced with managed care, but, we might be able to learn something from our sister profession. The idea of consistency of care is worth looking at. Have you ever noticed the number of different ways a cat abscess has been treated in your hospitals? Why not establish a protocol for the treatment of the abscess? This will provide a skilled, consistent way of dealing with the problem. It will ensure that each patient is given the same quality of care, and it becomes a standard of excellence for the practice. Clients desire dependability of care, and standards deliver that dependability of care. Critical pathways are a refresher course with a checklist. They maintain uniformity and quality of care. They improve efficiency, effectiveness and workflow of the team. Lastly they will increase the profitability of the practice. Once a protocol is established the process is not finished. On a regular basis all protocols are reviewed and improved upon. The process is known as Continuous Quality Improvement (CQI). CQI allows the practice to create the best practice mindset by reviewing the medical records and the use of outcome studies just like human medicine. Getting Started Start with the top twenty services in the practice. Develop the standards for these and train the healthcare team to use them. Once the team becomes comfortable with the process, delegate and empower members of the healthcare team to develop the standards and systems to improve the workflow and efficiency of the practice. Sharing the Standards The first issue is for all the doctors in the practice to agree on a standard. Clients need to hear the same story each time they visit, no matter who they talk with. Once you decide on a standard, hold a staff meeting to review the standard/protocol with the healthcare team. In the end, you want everyone to believe in, understand, and be able to communicate the benefits of your approach to pet owners. Outline the reasons for your approach and work with your team to develop a way to communicate your reasons Chicago VMA 9

10 to pet owners. In the end, your protocol/standard needs to benefit the pet, the client, and the practice. If your approach doesn t, revisit it and make sure there are tangible and intangible benefits for all parties. Monitoring Standards Compliance Each practice should analyze their clients compliance and implement programs and systems that help reinforce recommendations, improve client education and reflect the standards of the practice. One tool that may assist is the compliance coordinator. This staff member reviews all patients medical records before clients arrive for their appointments and notes what preventive health measures need to be discussed with clients. The coordinator may also be responsible for scheduling follow-ups in addition, to reviewing records and ensuring all charges were captured. This individual also ensures that the standards that the team has set are being followed. Standards to consider Medical Standards (Patient Care Standards) Wellness standards Examinations Vaccinations Parasite prevention Routine diagnostics Diagnostic standards Treatment standards Hospitalization standards Anesthetic standards Surgical standards Dental care Grooming Behavior Nutrition Service Standards (Client Care Standards) Image Facility Personnel Communication materials Communication Service Return phone calls from doctors Invoices that are significantly higher than estimates Late appointments Slow check-in Understanding the medical issues Visiting hospitalized pets Conduct Respect for other team members Gossip Chicago VMA 10

11 Office Role o Marketing of Practice Pre Visit Considerations Receptionist Roles o Schedule Appointment o Create Computer Record o Prepare Medical Record Doctor Roles o Examination of Pet o Client Education o Establish Diagnostic Plan o Prescribe Medications Office Role o Establish follow-up o Send Welcome course of action o Thank for Referral Visit Considerations Receptionist Roles o Greet Client o Create Invoice o Bring into Exam Room o Collect Charges o Schedule Follow up Appointment Hospital Attendant o Facilities Maintenance o Restrain Pet o Restock Inventory Room Nurse Roles o Collect History o TPR o Plan for Drs. Needs o Collect and Prepare Diagnostic Samples o Restrain pet o Fill Medications o Complete Invoice o Educate Client Post Visit Considerations Technician/Doctor Roles o Complete Medical Record o Interpret diagnostic Tests o Patient follow up Sample Critical Pathway Chicago VMA 11

12 Implementing Effective Training Programs Why Train? A practice can reasonably expect that a well-designed training program: Will be an effective selling tool for attracting doctors and healthcare team members Ensures that new employees are off to a good start The quality of the training and the training materials provide a lasting impression, for better or worse, of the hospital s standards It is very difficult to change employee perceptions formed during the first few weeks Increases job satisfaction (and hence, employee retention) Helps compensate for the scarcity of skilled labor Good employees with minimum experience can increase their skills and move into higher level jobs Improves quality of both medical and client service Provides a means of improving a practice s competitive advantage The hospital can quickly be trained to adapt to changing business and medical conditions Increases practice revenues Consequently provides opportunities for increased staff compensation Helps the practice avoid legal problems Because of these undeniable benefits, there are very few practices that don t have some sort of training program. Whether a practice is planning to enhance existing training, or develop a completely new program, a solid training plan will ensure that the allocated time and money provide the expected results. First Things First The first step is to ensure that management supports the concept of a formal training program. Depending on the clinic, management means some combination of owners, doctors, and the practice manager or administrator where one exists. In seeking this support, it is essential to do enough homework to produce a well thought out, written training proposal that management can review and understand. This proposal is an outline, not the full-scale training plan. It shouldn t be more than a page or two and ensures that time is not wasted developing a plan that will never be accepted nor implemented. The outline should include: 1. Goals of the practice, currently and in the next few years 2. Types of training proposed and how each will help the practice achieve these goals Good rule: always tie anything/everything to how it will support the goals of the practice Chicago VMA 12

13 Types of training, in this context, means new-hire orientation, job specific phase training, continuing medical and client service education, outside conferences and seminars, distance learning (computer based training program) and self-study, etc. 3. Names of practice members who will be responsible for each type of training 4. General length and schedule for each type of training 5. The method by much the success of the training will be evaluated Second things second If the proposal receives a go-ahead, then the second step is to ensure that all the employees are involved, providing input and feedback at all stages of program development and implementation. Needs Assessment Before starting to develop an actual training program, it s vital to determine: The practice goals, both long and short-term The skills/competencies needed to accomplish these goals The skills the staff members already have Although training delivery requires substantial administrative and scheduling detail, it is by far the easiest part of a training program goals, competencies to achieve these goals, and current level of competencies (the needs assessment) are the hard part! It works much better if the assessment is broken down into manageable pieces, assessing one goal and set of sub-goals at a time. The goals from the proposal probably need to be: Expanded, refined and stated very specifically in terms that can be quantified: for example: Increase pre-anesthetic blood work by 10% or Hold in-house training meetings 50 out of 52 weeks per year Expressed with specific sub-goals, for example: Major Goal: Improve client service visibly and measurably Sub Goal: Client is in treatment room with staff member within five minutes of scheduled appointment time Sub Goal: All regular clients and their pets are greeted by name when they walk in the door Sub Goal: Every hospital member is trained in grief and bereavement counseling Chicago VMA 13

14 Training Delivery and Materials There are a variety of ways to deliver training. The most successful practices use as many different methods as they can -- varying the training sparks interest and promote retention. Here are examples of different training delivery methods: Lecture/speakers, questions and answers Group discussions Role-playing On-the-job training Individual study and then group review of handbooks and manuals different sections assigned to different staff members Weekly training meetings Videos Veterinary conferences and off-site programs Self-study Distance learning, including e-learning Visits to other practices Good training materials create excitement and interest, and save significant staff preparation time. There are videos and CDs covering many topics, plus a wide variety of course materials developed by training and professional organizations. A flip chart or a white board is a real adjunct for capturing and reviewing key points of a lecture or a team discussion. Each practice should develop its own library of medical and client service books and publications appropriate for internal training use Most practices already have some written training materials or handouts. It is essential to review these existing training materials to ensure that they are: Accurate and complete Up to date Easily read and used Titled and have numbered pages Attractive The hospital should have a standard style for all of its training materials: font type and size, case, page layout, page numbering system, hospital logo, etc. This should match the style for hospital client handouts and marketing materials. Existing training materials in the hospital computer system should be edited to match this standard. New-hires can be given an attractive notebook when they join the practice. It is easy to print out cover and spine sheets with the hospital name, logo and the employee s name, and slip these into the binder s clear plastic cover. The notebook should have a set of tabs and be big enough for additions. Chicago VMA 14

15 Sample New-hire Orientation Content: Brief (two-three minute) welcome by one of the doctors Tour the facilities (provide map/floor plan) Meet the rest of the doctors and the staff Complete required Human Resources paperwork. Review the Employee Handbook Review any Policy and Procedure manuals and hospital forms that apply to everyone Provide a very brief overview of each position at the hospital and its responsibilities plus a brief overview of doctors job responsibilities Review client and hospital handouts, newsletters, bulletins boards Discuss hospital s philosophy of Client Service and general guidelines for working with clients; sample topics: The importance of client service; what clients really want What services make this practice unique from others? Good manners with clients Good listening skills; good communication skills Dealing with grieving clients; difficult clients; client complaints; irate clients Dealing with children Fee questions; why veterinary medicine costs what it does; credit and collections policies Persuading phone shoppers to visit the practice Hospital tours for clients How to respond to questions when you don t know the answer Words and phrases not to use Provide general OSHA and safety training as it applies to all hospital staff Provide information on whom new staff members can go to if they have problems Many practices find it helpful to have a New Employee Checklist to ensure that everything was covered Paying Staff for Training Time Support staff should be paid for all required in-house training, whether during or outside of regular practice working hours. Further, most state laws require that support staff members are paid for the actual hours spent in required off-site training whether locally or out-of-town; pay for travel time is negotiable. If there is any question about this, check with the state workforce commission or labor department. Phase Training The purpose of phase training is to provide staff members with specific training in the skills required for their particular job (receptionist, technician, kennel staff, practice manager, etc). The length varies according to the particular job and the hospital, but frequently is divided into three or four phases. Chicago VMA 15

16 Testing Participants Testing is almost always used at the conclusion of each phase. In addition, at the beginning of each new phase, the prior phase s training is reviewed, with employees demonstrating the skills they learned. Developing a realistic and a fair test requires some skill. It s best to prepare a draft of the test and circulate it among staff members who work in the function (receptionist or technicians or kennel staff, whatever position is being trained) for their review and suggestions. In any case, testing should always be presented as a positive training tool to help participants learn, never to punish them or make them feel stupid. Calling it a quiz may be less intimidating. Written Training Check List This standard list makes training infinitely easier because it spells out the who, what, when and where. It should include: Name of the training Receptionist job description Objectives of the training for each phase Names of attendees Date(s)/time Location Names of trainers Outline of the training content Training aids used by trainer Handouts for participants Tests/quizzes Training evaluation form Job Description All phase training starts with the written job description of the position. It must be an accurate description of the current job It lists all job responsibilities It is up-to-date. Jobs change gradually over time, and the description of six months ago may not apply to the position today. Content of Training The content and outline of the training should follow specifically the job description, point by point. If this seems difficult when developing the actual training outline, then there is something wrong with the job description, and it should be revised. Below are sample training topics, based on a receptionist job description: Client check-in Client check-out/invoicing Mail protocols Making appointments Records-creating, using, filing Opening/closing procedures Using the hospital s computer system Client service for receptionists Chicago VMA 16

17 Beginning the Training Session Start with an enthusiastic welcome. Distribute a schedule of the training dates, times, location, and general outline of the content. Assess the level of knowledge the individuals already have: Make a checklist of required skills and competencies for the position (following the job description) and have the new staff member rate his or her ability to perform, for example, on a scale from 1 to 5. It doesn t have to be done this way, just so the goal of assessing current competency is achieved. Some hospitals use a skill checklist as a part of their application process. If this is the case, this checklist can be used. The point is to train what is new and needed and to adapt the training to the specific employees. Distribute and discuss the Job Description. Distribute and discuss the Performance Evaluation form, showing how it relates to the Job Description. Ending the Session Allow plenty of time for questions. Administer the test or quiz covering the current phase training. After the participants complete the quizzes, discuss the correct answers, using them as a further teaching tool. Subsequent Phase Training Sessions Briefly review the previous session, asking for questions and comments. Evaluating the Effectiveness of the Training At the conclusion of the training, distribute a one or two-page evaluation form. Ensure that the form matches the outline and order for the training, so that each major section of the training is covered and in the order it was delivered. Make this very objective and specific, asking how well and how completely the information was covered and how it could be improved. Don t ask them to assess the skills of the trainer(s). Training Meetings On-going training is usually a part of staff meeting. As with all other types of training, the more carefully it is thought out, the more successful it will be. Start by determining the objectives. As before, write down exactly what the hospital staff is to get from the weekly meeting and the on-going training. Use the concept of performance-based objectives in writing these goals. Chicago VMA 17

18 When should we meet? Pick a regular time on the slowest day of the week. Two or three hours in the morning usually work best. Educate your clients in advance that the hospital will be closed for staff training. Everyone wants a hospital that stays up to date and continuously trains its staff. Post formal notices on the doors that the hospital is closed, including emergency information. Put the phones on the answering machine, including emergency information. Have a Consistent Structure to the Meetings These are some agenda items Administration Housekeeping Introduction of new team members Obituaries Client service share time Client service training Medical training Establish Ground Rules Have a group discussion to set ground rules. Examples of Meeting Do s Headline your thoughts state the main idea up front, clearly and succinctly Manage your listening Build on other s ideas Use the how to and I wish I knew phrases Remember that no idea is a bad idea Assign a Facilitator for Every Meeting It is preferable that the owner of the practice is not the facilitator. The facilitator initiates the agenda but doesn t necessarily run the entire meeting. A different secretary should be assigned for every meeting, to take notes of the pertinent discussions and decisions: Team members who are absent from the meeting are able to stay informed. Notes hold everyone accountable for implementation of decisions and/or new policies. Copies distributed to all attendees remind them of the important issues discussed in the meeting. Plan client service and medical topics in advance Select the discussion leader/trainer at the same time the topic is chosen. Use outside speakers and pharmaceutical vendors from time to time. Ensure that staff member trainer has time to develop the training. Prepare hand-outs so that participants can retain what they have learned. Chicago VMA 18

19 Select training aids (videos, flip charts, white boards). Develop a quiz to be used at the end of the session. Make it fun! As with all training, incorporate games and small prizes. Ideas for Medical Training Topics should be procedures, services or products used in the practice. These are mini-presentations of topics that provide an update that is of interest and importance to the whole staff. Medical terminology Vaccines and Immunization Vaccine reactions Pre-anesthetic lab work Pain Medication Using human drugs in pets Common toxicological questions Nutrition and Diets Parasites and Control Fleas and Control Dermatology Ears and Teeth Puppy and Kitten Care Restraint Heartworm Disease and Prevention Ideas for Client Service Training Each meeting, one staff member is assigned to lead a discussion on a client service topic. It also works well to use an outside speaker from time to time. Telephone skills Recommending outside services (boarding, grooming, etc) Body Language Handling grieving clients Dealing with irate clients Words not to use Handling phone shoppers Creating value in wellness services Don t forget to have fun with the training! Include simple games, inexpensive prizes People learn more effectively when the enjoy what they are doing And don t forget to reward everyone! That means the trainers, the participants, and the management that ensures that the money and the time for the training will be there. Develop a specific reward system tailored to the hospital. Ensure lots of opportunities for sincere praise and recognition Consider certificates for each staff member, customized with the hospital name and logo, and a place to add a seal or star as different types of training are complete Consider small gifts or bonuses especially for staff members who have served as trainers Consider raises for specific levels of achievement Chicago VMA 19

20 Strategic Analysis of Your Practice Internal Environment Analysis- Strengths/ Weaknesses Areas Veterinarian s Compensation Staff Compensation Women in the Practice Ability to meet demand for Services Efficiency of the Veterinary Service Skills of the Veterinarians Staff Knowledge of the Veterinarians Staff Aptitude of the Veterinarian Staff Attitude of the Veterinarian Staff Pricing Strategy Discounts Use of Business Practices Employee Development Practices Leadership Financial Acumen Frequency of Financial Data Review New Client Development Client Retention Practices Client Loyalty Major Strength Minor Strength Performance Minor Neutral Weakness Importance Major Weakness High Medium Low Chicago VMA 20

21 External Analysis- Opportunity/ Threats Opportunity Matrix Attractiveness High Low Success Probability High Low 1) 2) 3) 4) Threat Matrix Seriousness High Low Probability of Occurrence High Low 1) 2) 3) 4) Chicago VMA 21

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