Practice management news and views from around the world – January 2008

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This month’s important statistic from Onswitch

 


Based on a programme of mystery shopping in more than 2,000 UK veterinary practices

“Only 3% of practices mention they are part of the RCVS Practice Standards Scheme. 26% of practices display a sign to indicate they are a member of the Practice Standards Scheme”

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Do your pharmacy fees need an overhaul?

by Gerald Snyder

There seems to be a new and dangerous trend among recent veterinary graduates: For whatever reason, they want to write prescriptions for everything and not bother with keeping or dispensing drug inventory.

On the surface, it sounds like a great idea. After all, physicians do it, so why can’t we?

The first and most obvious answer is that physicians get paid well for cranial exercises and we do not. Our clients more readily pay for what they are able to haul out to their SUVs than for the brilliance of our diagnosis or our artistic skill in removing offending organs.

We need to keep a pharmacy to provide drugs not readily available at their local pharmacy — in the strengths needed — as much as we need to provide another income source to supplement the public’s indifference to our high operating costs. That means that we must profit from the pharmacy.

Keeping pharmacy costs down by effective purchasing is just one side of the pharmacy-productivity equation. True productivity is keeping fees up while keeping expenses down. Let’s look at common strategies:

Despite our years of recommending against the procedure, there still are practices that double and triple drug costs to arrive at the selling fees. Anyone not using about $20 as a basic packaging fee plus double the pill cost is probably earning less than 20 percent on their pharmacy.

The typical solo practice spends about 15 percent of any month’s gross income on drug/dietary purchases. That amounts to about $10,000 a month for a practice grossing $700,000 a year. Management of this expense is crucial to financial success.

An easy pharmacy-budget rule for your technician to follow is to allow no more than 15 percent of last month’s gross revenues for this month’s purchases. Keep track of purchases. When the 15 percent is gone, buy no more. Discipline is paramount.

Our average annual tangible and intangible expenses for any prescription today include:

  • 1. Fair return on investment for drug-storage areas.Example: If 50 square feet cost $5,000 or more to build, a 15 percent return = $750 a year
  • 2. Heating or air conditioning those spaces costs at least another $750 a year
  • 3. Loss of interest on invested capital: $100,000 average for a solo practice @ 5 percent = $5,000 a year.
  • 4. Waste from expirations, breakage, out of vogue, etc. = at least $1,500 a year. What really adds up is the cost of staff labor — about 20 percent of gross. When you use that labor to provide services, you must mark it up effectively. Your accountant can tell you that the average technician minute must be charged at about 75 cents.
  • 5. Staff labor to order, sign for, unpack, check packing slips, invoices and statements, bookkeepers, writing checks, accounting, etc., averages 3 hours per week = $7,000 a year.
  • 6. Vial, typing labels, entering into computer, printing bills (assume 7 minutes) = $5.25 each prescription, or about $16,000 a year.
  • 7. Time needed to explain usage, staff time to count out medications = another 5.25 per prescription and another $16,000/year.

Put it all together and, based on six to 10 prescriptions a day, we are not talking much less than $45,000 annually and that does not include any medication, just overhead. You do the math: That’s at least $19 per prescription.

We recommend $19.85 at this time for a minimum prescription dispensing fee.

So, if a pill costs you a dime and you dispense 30 of them, you should double your cost 30 x $0.10 x 2 = $6 plus $19.85 = $25.85, but only if you intend to make a profit. Set your computer for a minimum prescription fee of $22.85 and prevent losses through the cracks in your system.

These dispensing fees are used for pills, ointments, liquids and anything requiring labeling and professional judgment. Over-the-counter products cannot be dispensed profitably for less than 2.6 times invoice cost. Don’t forget to include shipping and taxes, if applicable, in the base.

Some readers are laughing now because they are charging more than that, but too many are not and are subsidizing their clients big time. Then they wonder why their practice is worth so little when they want to sell it at retirement. By then it’s too late.

Pharmacy-fee overhauls literally can be made overnight (except for the prepackaged items such as 30 prednisone for $15, etc., which require a few months’ time), but once you realize that you were charging less than your actual cost, it’s not so difficult to say this to the client who demands to know why the fee went up: “We found out that the drug was costing us more than we were charging on it.” Or, just tell the truth: “It went up!”

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. You can contact him by e.mail at vetprod@bellsouth.net

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The Management Symposium 2008

programme presented jointly by the Veterinary Business Journal, the VPMA and SPVS

Seminar — Sat April 5th 2008 – a one day management CPD event covering such issues as managing difficult people, employment law, using finances creatively and wisely, what do customers think about costs and internal training costs

  • Workshops — programme and contents to be announced
  • Tutorials — Tuesday and Wednesday June 3rd and 4th, Solihull, West Midlands – an innovative, intensive half day session covering planning successful meetings, time management, performance management and feedback and appraisals

Full details and registration (00) (0)1733 325522 — or click here to send an e.mail to vetsonline

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A great Manager is a Great Communicator

by Sean McPheat

Who is a great manager? Well, this question can have many answers but anyone running a management training program or management training course will tell you that — A great manager is a great communicator. This does not mean however, that all the other skills that a manager possesses are redundant. That is not what it means. But, unless you are a good communicator you cannot be a good manager.

Management training programs and management training courses will point out that good communication skills are of paramount importance to a manager. A manager has to be a great communicator if he wants to become a great manager. A great manager is one who has a vision. But, this vision will stay just that unless you communicate it properly. Communicating a vision doesn’t mean you have large message boards with your vision written on them placed at strategic locations. It might be effective to catch attention but to retain that attention you are going to have to do something else. You have to make sure that your team understands your vision and shares your vision with you. Apart from articulating your vision good communication is essential to conducting business on a day to day basis.

Most management training programs and management training courses will focus on the communication skill. It is important to understand that conversation is not communication. A good communication through conversation takes place when

  • You ensure that your message is understood
  • You must receive and understand the message sent to you
  • You have some control over the flow of the conversation.

So, communication skill is not just about speaking but listening as well. Good communication should avoid ambiguity. If there is a chance that a message might be misunderstood then it should be clarified. Remember, that words often have different meanings in different context and cultures. For instance dry country can mean without water or without alcohol; suspenders can keep up pants as well as stockings. So, it depends on the context and the culture. How can you avoid this? Here are some tips to do that

  • Repeat the message for confirmation
  • If necessary write back the message
  • Give proper background before speaking. This will make people aware as to which context you are going to speak about.
  • Similarly, ask others about the context in which they are speaking

If you have attended management training classes then you would have had a session on management training. Here you would have been told that just like any other activity you have to plan and prepare for your conversation. State clearly and firmly; whatever it is that you are going to say. Do not lose your temper if someone else does. Be assertive. When asking question assess the situation carefully and depending on the kind of information that you want ask either open ended or close ended questions. If all you need is confirmation, then close ended questions are enough. But, if you need more information then you have to go in for open ended questions.

Communication is a two way street. And this is something that all management gurus agree on. Check on any management training manual or book and you will see that this point is being made. So, just like others listen to what you say, you have to listen to what others say. Also, nothing is more intimidating than silence. People become nervous of silence and try to fill it up with information. So, this is a great way of gathering information. At the end of any conversation summarize what has been said. Also, emphasize the outcome of the meeting.

Management meetings are an integral part of a manager’s life. The meeting can be with your superiors or subordinates. For each type of meeting your preparation and presentation has to be different. Meetings can be formal or informal. Whatever type of meeting, you have to be prepared if you want the meeting to be effective.

All management training programs or management courses specify that communication skills are one of the most important skills of a manager. So, if you want to be a great manager, then be a great communicator

You can click here to visit the MTD website

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Veterinary Practice Management Association

The VPMA Congress will be held at The British Empire and Commonwealth Museum, Bristol from 24th to 26th January 2008

The business programme is packed with important topics and includes:

  • Powering through the storm of life: The Apprentice, in business and in life ” by Jo Cameron
  • Don’t you know who I am? Myers-Briggs personality traits by Sarah Speers
  • Finance by Peter Gripper
  • Interview Techniques by Caitrina Harrison
  • Learning Styles by Lisa Male
  • Networking by Nikki Glen
  • Management Consultants — what to look for by Derek King
  • Think Global — Apply Local by Leigh Morland
  • Successful and unsuccessful managers; the psychology of leadership by Adrian Furnham
  • Managing Internal Politics by Sylvia Wilson
  • Managing Generation Y by Stephen Walker
  • Creativity in the workplace by Dawn Jenkins
  • Relationship Marketing by Carol Holmes and
  • Within These Walls — ‘get your real problems solved here’ by Sylvia Wilson

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The Silent Killer of Business Success

by Laurie Hayes

It seems harmless and innocent enough, but its crippling effects run rampant in the business world.

Entire days are lost, projects sloppily thrown together, and work pushed aside as entrepreneurs become slaves to its hypnotic pull.

It was designed to make life easier and speed up communications, but instead has become the nemesis of the already overextended business owner.

Have you guessed what it is? If you’re reading this, there’s a good chance you’re also a victim of the cursed ’email.’

How many times a day do you check your email? How much time to spend each time you visit?

During a recent mastermind call, a colleague discussed challenges he was having with productivity and event management. As we broke his day into segments, we discovered he was spending 15 minutes of every hour checking email – the majority of which is spam.

Another member then shared the fact that he too had fallen into the email trap and had recently started a stat sheet. In one day alone, he checked his email 21 times! He was trying to curb his habit but was still struggling.

Several more of us chimed in confessing we had “slipped” in our email discipline efforts and were checking it more often than we should be.

Before the call ended we made a pact to check our email no more than twice a day and for a maximum of 10-15 minutes only. We will share our results at our next meeting.

An analogy one of our members shared really helped put things in perspective. Would you as a responsible business owner walk to your mailbox 10-15 times a day to collect bulk mail and advertisements? If not, why would you do it at your computer?

These challenges are not reserved for home business start-ups and amateurs. My mastermind colleagues who were discussing these difficulties are six and seven figure earners. Email infatuation does not discriminate!

My own coach, a multi-millionaire who has built several companies, recently discussed his obsession with email and the impact it was having on his productivity!

It’s an ongoing dilemma and all you, I, or any of us can do is be aware of it, keep our activities in check and do whatever it takes to stay the course.

This time I have taken extra steps to remove email from my mind. I open the application between 11:30 and noon and between 4:00 and 4:30 p.m., take care of business then shut it down.

If anyone needs you badly enough they will pick up the phone and call, and if they don’t, how important could it really have been?

Are you ready to get a handle on the silent business killer? If discipline is an issue, find an accountability partner or state your intentions to your mastermind group or peers. If you can’t do it yourself, have others rally around you.

It takes 26 to 30 days to create a habit. Stick this out – create productive, winning habits and once you’ve mastered the monster, you’ll be on the fast track to business success.

You can click here to visit Laurie Hayes’s website

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