How to achieve 15% cost savings on ‘tail end’ spend
From an article published in Practice Profit — an online resource for General Practitioners in the UK
I just found out how to achieve 15% cost savings on ‘tail end’ spend. If you’re familiar with the 80/20 principle then you’ll understand that 80% of practice expenditure is typically spent with 20% of suppliers.
Having got visibility of who their key suppliers are and where they should look for ‘big ticket’ cost savings, managers will then want to step back and have a good look at ‘tail end’ spend.
Tail end spend is frequently ignored but often able to yield double digit cost savings; an additional 15% cost reduction is fairly typical. In times when
every penny counts, this forgotten opportunity could mean the difference between a profitable practice and one in financial hardship.
There are two types of practice manager: one enjoys good spend visibility, has prioritised their cost reduction efforts and is confident that they’re getting
the best deal from their suppliers. The other has made some attempts to save the practice money but, through a lack of time and resource, hasn’t followed the process through.
Plagued by calls from sales representative all claiming to ‘save money’, managers are quite rightly dubious about how much they might be able to save the practice.
If like many managers you’ve got limited resources, then you’ll want to set priorities and identify how the practice is going to reduce expenditure. The
obvious choice is to focus on what makes the most impact: the largest spend categories and the most important suppliers to the practice. Pharmaceuticals,
medical equipment supplies and ‘phones are popular targets. This leaves whatever is very small or non-critical off the manager’s ‘radar screen’.
There’s a widespread misconception that tail end spend is mainly comprised of large numbers of trivial purchases. However, in reality, it’s actually spread
across several cost categories. When we analyse practice expenditure, we typically find upwards of 40 tail end suppliers covering categories spanning printing, insurance, computer consumables and catering.
Whereas high-spend categories such as pharmaceuticals and utilities will require specialist input and careful negotiation, savings opportunities are more easily accessible at the tail end since less expertise is required to source such areas. So if you’ve identified that this an area worth looking at then we’d suggest you consider these three simple measures:
- Consolidate the Supplier Base. ‘Emergency’ purchases or ‘one-time special deals’ contribute increasing numbers of practice suppliers. Stationery and computer supplies are good examples of products which involve several suppliers. Whilst introductory offers are appealing, adding extra suppliers is generally a false economy. Payment terms, differing bill payment methods and additional invoices bring further administrative effort. In fact it’s not unusual to find a practice processing 500+ invoices per year, the majority of which will typically be low value transactions. Therefore, the practice should seek ‘preferred’ suppliers with whom they seek to consolidate as much buying as possible.
- Streamline the Purchasing Process. Adopt a requisition process that encourages practice staff to use existing suppliers. Avoids creating new accounts outside of existing contracts. Promoting a list of ‘preferred suppliers’, seeking prior approval to use alternate suppliers and improved demand management can all help. For example, a practice might place its stationery orders every second Tuesday. By using a simple purchase order, staff could add ‘new products we would like to enquire about’ to the list of products they want to order.
- Payment Method. Adopt a payment method that reduces administration. Writing cheques to suppliers and refunding staff credit card purchases is inefficient. In fact, most purchasing professionals agree that the end-to-end cost of processing an invoice through a business is around £50. Bank purchasing cards are probably the most cost effective method of paying tail end suppliers. Purchasing cards avoid the time and cost of the practice establishing the supplier on their finance systems (eg SAGE, IRIS) and the supplier opening an account for the customer. They are also useful when used like an ordinary credit card, instead of petty cash, for ad hoc purchases at retail outlets as deemed appropriate by practice manager.
For practices that tackle their tail end spend head on, the rewards are significant. In these tough times, there are few practices who can afford not to address such a critical area. Capturing a further significant percentage cost saving could make the difference between a profitable and an unprofitable practice.
Veterinary Specialists in Private Practice
The 6th Annual Conference of the VSIPP will be held at the Roosevelt Hotel in the revitalised city of New Orleans, Louisiana, February 2 – 5, 2010
The agenda includes seminars, round-table conversations, panel discussions, workshops and plenty of time for networking
The VSIPP conference has become a date which serious veterinary specialists won’t miss. Sponsors include some of the biggest names in the industry, including: CareCredit, Hill’s Pet Nutrition, Pfizer and Marshfield Laboratories.
VSIPP’s annual conference provides attendees a forum to share information and communication that lead to a better understanding of the challenges they face in large group and small/solo practices while serving the human-animal bond.
As the only non-scientific conference for specialists in the veterinary industry, the sessions include information regarding marketing and promotions, corporate governance, legal issues, operations as well as human resource issues. Two post conference specialty tracks will be held February 6, 2010. These tracks will focus on solo/small specialty hospitals and emergency and critical care practices.
VSIPP attracts specialists, practice owners and hospital managers worldwide.
You can click here to visit the Veterinary Specialists in Private Practice website
Scubascene 2010: diving and CPD on the Red Sea
Vets are being invited to enjoy CPD combined with diving in Egypt¹s Red Sea at the Society of Practising Veterinary Surgeons (SPVS) third annual Scubascene, which takes place between June 18 and 25th.
Practitioners are invited to enjoy CPD on the ocean waves aboard the luxurious five-star Blue Melody boat complete with its own restaurant, entertainment room and diving deck.
CPD will include small animal dentistry by Bob Partridge BVM&S MRCVS and the Use of Psychometric Analysis by Alan Leyland BVSc MRCVS. Delegates can also enjoy five days of reef and wreck diving time.
Course organiser SPVS President Elect Jacqui Molyneux said: “Scubascene has proved an extremely popular event in the SPVS CPD calendar over the past few years with many of those attending passing their PADI Open Water certificates at both standard and advanced levels. For anyone not already holding a PADI Open Water Certificate, it should be possible to complete the PADI Open Referral Course during the trip.”
She added: “The CPD is always diverse and informative and the week represents excellent value for money.”
The cost is £999 for the holiday element (same as brochure price) and then £325 + VAT for the CPD element (only payable by the vets, as some delegates also come with family or friends.) The price includes flights, transfers, seven nights full board on Blue Melody, all diving, a single 12 litre diving cylinder and lead per person, marine park fees, an entry visa to Egypt and bottled water and soft drinks.
For more information and a booking form, please contact the secretariat on 01926 410454 or you can click here for further information and to book your place
Long-term drug monitoring made easy – Get your patients taking long-term medication as part of a recheck plan
From an article originally published in the DVM 360 news magazine
If you knew that a long-term medication monitoring program would bring in more than $70,000 a year at your practice, would you implement it? Dr. Ernest Ward, a Veterinary Economics Editorial Advisory Board member and owner of Seaside Animal Clinic in Calabash, N.C., hopes so. Because it’s not just revenue at stake, it’s patient health.
More than a third of Dr. Ward’s patients older than 7 are on some type of long-term medication, and careful monitoring heads off possible complications and helps him catch potentially life-threatening problems early. Here’s the scoop on how his program works.
When Dr. Ward identifies a pet that will be taking a medication long term, he orders a standard blood test to make sure the pet can safely metabolize and excrete the medication. If everything checks out in this initial test, Dr. Ward prescribes the drug and schedules a recheck for two to four weeks later.
During the recheck appointment, a team member uses a brief survey to learn how the pet is responding to treatment and to probe for potential side effects. Then he or she draws blood for a recheck blood screen based on the pet’s condition and medication. If the pet seems to be benefiting from the drug, the client hasn’t reported any side effects, and the lab results don’t indicate a problem, the staff member schedules an appointment for follow-up blood work three to six months later. If the team member finds an abnormality, Dr. Ward stops the prescription and weighs other possible treatments.
The boost to the bottom line
Dr. Ward charges about $116 for the initial visit, which includes an exam fee, and $52 for each follow-up visit. He estimates that 350 new patients undergo long-term medication monitoring at his clinic each year, which brings in about $77,000 in revenue, assuming two follow-up visits in a 12-month period:
($116 + $52 + $52) × 350 = $77,000
His only hard cost is for the blood test–about $26 for the initial visit and $14 for rechecks. After paying for this lab work, he sees $58,100 in profit every year:
“Long-term drug monitoring is a great way to stay involved in the pharmacy business and increase my contact with clients,” says Dr. Ward. “And consistent contact with patients helps me diagnose many life-threatening conditions early I diagnose more Cushing’s disease, for example, through long-term medication monitoring than any other way.”
You can click here to visit the DVM 360 news magazine website
More Brain Stuff. From Cambridge University
Olny srmat poelpe can raed tihs. I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt! if you can raed tihs psas it on!!
The Pan Pacific Veterinary Conference 2010
Join fellow veterinarians from around Australia and New Zealand for a week of learning and networking in this perfect meeting destination
Come and join us in Brisbane in 2010 for the joint AVA and NZVA Annual Conference
Making resolutions and sticking by them
Last time we started an important discussion for your success: making resolutions and sticking by them. We also stressed that sticking to decisions is a hallmark
of the veterinary professional but that there is an additional aspect to it; sticking to decisions made by choice and based on what one loves to do and what one thinks
is going to make all around difference in his/her career. If you wrote down what you love to do and what you don’t, it’s time to move on to the next step.
A resolution: “I am not going to do what I don’t love doing because doing so takes me further away from a fulfilling career”. Sounds like a good one? A veterinary hobbyist may say, “this is ridiculous, I can’t stop doing what I don’t love to do in my career”. A veterinary professional on the other hand, will say, “OK, I have neglected taking care of my needs long enough, now it’s time to do what I love to do”. Once you make this decision you will realize you have much more control over your career.
The big question is whether you can stick to your decision to completion. Can you? If you don’t make a decision or if you don’t stick to your important decisions, life will make decisions for you and not necessarily will they be to your liking.
Assuming you want to have more fun in your career, let’s move to the next step of your new resolutions: doing what you love to do and making more money doing so. Don’t get us wrong, it doesn’t mean you shouldn’t be involved with charity activities or hobbies, not at all. What it means is that you do what you do by choice; that if you give free service, you do it because you choose to, not because everybody in our profession does it. Most everybody in our profession is acting like veterinary hobbyists. Does that mean you should too?
So now that you understand the difference between the two and have a list of what you love to do and what you love to do that makes you money, let’s clarify a few things. Not every activity you love doing and that is making you money is doing so equally to all others; there are good ones and then there are great ones. How can you choose which? Great question and one we will get to in great detail next time.
You can click here to visit the Veterinary Success Services website website
The UK Pet Insurance Market
The UK pet insurance market continued to experience strong growth in premium income and policy numbers in 2008.
In 2008 the market grew at a slightly reduced rate of 13.1%, which is only marginally below its recent compound average annual growth rate of 14.5%. The increased GWP was a result of both higher premium rates and increased market penetration of the product.
With the economy in recession, the number of unemployed people has increased by 26.1%, as of the first six months of 2009, compared to the 2008 average. This has led to many consumers cutting their expenditures and adopting a personal fiscal stance that is more careful with discretionary spending, such as pet insurance.
You can click here to visit the Market Research website