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Veterinary Forum April 2008 (Vol 25, No 4)

Doctor to Doctor: Controlling your costs

by Ronald E. Whitford, DVM

    Controlling expenses can add substantial profit to your bottom line. Unfortunately, about 75% of the daily overhead expense is fixed and can be changed little, if at all. Therefore, it is important to maximize the efficiency of both your facility and personnel.

    Some of the best marketing strategies cost little but require considerable time, thought and effort to be effective. Low cost may not equal low effort.

    Controlling costs begins with a budget. Use your line-item costs from the previous year to help establish the first budget. Monthly profit-and-loss statements may not accurately reflect the gross income or profit because they cover such a short period. Therefore, quarterly profit-and-loss statements are probably better for monitoring the number of new clients, transactions, gross income vs. expenses, average transaction per veterinarian and gross income for each profit center.

    Even though personnel costs can be your largest line-item expense, freezing salaries, substituting inexpensive labor and reducing or eliminating benefits will only work against you. In contrast, paying for production, job sharing through the use of part-time workers and cross training can be beneficial. Remember to evaluate personnel individually, and equip them for efficiency.

    Facility expenses also should be evaluated. Consider refinancing at a lower interest rate. Maintain a maintenance-free exterior, and keep the parking lot sealed — sometimes using a janitorial service or hiring a repair worker to take care of routine maintenance and inspection can be cost-effective. Always look for ways that you can maximize the current facility.

    To control equipment costs, follow the maintenance schedules that are set by the manufacturer, and keep receipts and warranty information on file.

    The decision to purchase equipment should include the following questions:

    • Will it allow me to offer new services?
    • Does it give my practice a competitive advantage?
    • How labor intensive is it?
    • How much does it cost to operate?
    • Can I afford to have it?
    • Can I afford not to have it?
    • What are my payment options?

    To operate your computer system at peak performance, it is important that your employees keep dirt, dust, food and drink away at all times. Humidity can corrode computers, so provide adequate ventilation in all rooms with computer stations. Back up your data at least daily, and keep the backup copies off-site. Because power surges can destroy vital information, surge protectors are not optional.

    As veterinary clinic operating expenses continue to rise, it will become increasingly important to monitor and control all expenses as well as increase the volume of sales to be more profitable.

    It may take a little more effort to spend a lot less money.

    NEXT: Dog blood donor program launched


    Did you know... In a weak economy, compliance is even more crucial. Analyze your current activities and identify ways to increase compliance through robust client education and maximizing all avenues of communication. Read More

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