With every best wish for the New Year
Immunizing Your Veterinary Practice Against Theft
Question: How can you stop theft?
Answer: Who hasn’t suspected that money is mysteriously disappearing from the practice? Wondered about flea/tick/ heartworm preventive and pet food vanishing? Noted exceptions in the controlled-drug log? You’re rightly concerned:
In a recent AAHA survey, 86% of respondents said employees had stolen from their veterinary clinic. Perhaps the other 14% had yet to notice. Security experts estimate that as many as 30% of all employees steal and that another 60% would steal if given sufficient motive and opportunity. No practice is fraud-proof. Your practice is not immune.
Tips on preventing theft at your practice.
The Fraud: The Cash Drawer Raid
This is your most serious risk because cash is quickly and easily diverted.
- The cash drawer must start and end the day (or shift) with exactly the same amount of money (say $50 or $100). The morning receptionist should count the drawer before the first client transaction. The evening receptionist should close the drawer with the same amount. Cash overages or shortages must be reported immediately.
- A practice owner (not a manager) should review the end-of-day report and ensure it agrees with the daily deposit.
- Every transaction must generate a receipt, including those for employees and in-hospital use. Consider terminating any employee who fails to do so.
- Conduct random checks. Randomly add or subtract an odd-dollar amount to or from the cash drawer. That amount should show up as an overage or shortage.
- A practice owner (not a manager) should make the daily deposits.
- A practice owner (not a manager) should compare deposits on the monthly bank statement with the daily deposit slips.
The Fraud: The Void, Credit, Refund, Discount, Adjustment, or Write-Off Scam
The client pays and receives a receipt. Later, the thief creates an exception (void, credit, refund, etc.) and pockets the equivalent in cash from the drawer. Everything balances at the end of the day.
- An owner should review the end-of-day report (every single day) looking for such unexplained exceptions.
- Password-protect these functions so that only practice owners can initiate exceptions
The Fraud: Displaced Inventory
- Use the inventory module of your practice management software system.
- Conduct surprise counts of high-dollar items to ensure the quantity agrees with computer records. If you buy in bulk, consider off-site storage, or if held on-site, store securely in a locked room.
- Over time, monitor your drug and supply expense as a percentage of gross income. Increases should be investigated.
The Fraud: Purchasing Shenanigans
- Only practice owners are authorized to sign checks.
- Sign checks only when adequate proof exists for the disbursement.
- Don’t pay for what you don’t receive. A trusted employee should ensure you’re invoiced for only items actually received.
- Never pay an unknown vendor.
- Have bank statements mailed to an owner’s home address.
- Review the signature line of each cancelled check. If your bank no longer encloses hard copies of cancelled checks, consider hiring a bookkeeper to prepare your monthly bank reconciliation.
- Never, ever, allow the person who prepares checks for the owner’s signature to balance the checkbook.
- Require employee vacations and be extremely wary of anyone who refuses to take time off, including your partners and practice manager. Many frauds can’t be perpetuated when the criminal is absent.
- Consider a thorough background check on all current employees and future applicants. Those struggling financially are far more likely to embezzle.
Thieves Target Veterinary Clinics
Veterinary practices are attractive targets because they are generally small businesses with minimal internal controls and trusting owners. Because of their size, veterinary practices often have fewer checks and balances and less segregation of duties–assigning different people different tasks–than larger businesses.
Internal controls are necessary to deter employee fraud, embezzlement, and theft. They are the ounce of prevention worth a pound of cure. CPAs are trained to evaluate internal controls, so as a preventive measure, invite your CPA to review your systems and processes.
Shocking, But Common
One of the largest embezzlement cases I witnessed first-hand was at the Fellowship of Christian Athletes. Over a 7½-year period, the associate finance director, who had worked there for more than 20 years, stole more than $1.1 million. In veterinary clinics, we’ve seen it all–spouses stealing from one another; partners cheating each other; trusted hospital managers with a dark secret; receptionists enjoying new cars, boats, and lavish vacations financed through criminal acts.
As a small business, you may not be able to totally prevent theft, but you can take aggressive steps to deter employee deceit. The secret is not to become too trusting. The typical embezzler appears loyal, and trustworthy and is often a long-time employee. Always exert healthy skepticism, especially toward those you trust most.
Establishing and adhering to strong internal controls is not costly, difficult, or time-consuming. You have an obligation to steer your practice away from harm.
You can click here to visit the MyEVT website
You can click here to visit FRitz Wood’s website
Equine Practice – Check these four critical issues
Wish you made more? Wish your practice was worth quite a bit more? Wish you had more time off? Hope you’ll eventually fund a worry-free retirement when you sell your practice?
Strong management practices are key to achieving all of these goals. So start with these four key areas, and lay the foundation for success.
While gross is good, positive net cash flow is more important to building the value of your practice. As the saying goes: Gross is for your ego; net is for the family. After all, your practice needs to generate a profit to pay for new equipment, eliminate debt, and help create value. You can improve profitability by:
- developing a fee schedule that addresses cost-based, value-based, shopped, and, on occasion, flexible fees.
- seeing more clients
- performing more needed services for the patient
- reducing any accidentally forgotten or discounted charges
- and keeping expenses at or below national benchmarks.
Once you’ve set appropriate fees, you shouldn’t feel compelled to discount charges or give away services. And if you do, each discounted or lost charge represents pure profit that you’re handing straight back to the client.
If you find many charges escaping, it may be time to rethink your policies. If the fee is fair for the client and the practice, then I think any missed charges need to be brought to the attention of the offending doctor. And I’d consider subtracting the fees he or she gave away from his or her gross receipts.
Is the practice growing at a reasonable rate? If the practice is growing only 3 percent each year, it’s just keeping up with the average annual rate of inflation. Of course, new clients lead to growth. But you also need to make sure your team is satisfying established clients and maintaining their bonds with the practice. Maintaining established relationships is critical partly because it costs less than it does to continually attract new clients. So use high-quality medicine, strong communication skills, and both internal and external marketing to create clients who act as advocates for the practice. Advocates willingly seek out and pay for your services and often refer new
clients to the practice.
Your healthcare team
Your team members are one of your practice’s biggest assets. Yet for too long, practice owners looked at staff members’ salaries and labeled them as a liability.
One of the biggest reasons for this mindset: Owners felt they should be the sole source of knowledge for the practice. Thankfully the pendulum is moving in the other direction. Doctors have begun leveraging staff members–and boosting productivity–by letting the veterinarian focus on medicine while other team members manage other responsibilities. A knowledgeable, well-trained healthcare team with defined job expectations can make great contributions to practice productivity. And if you share your vision, these team members will be even better armed to improve the lives of the horses and clients the practice serves. Your team members will help you achieve your mission, if you let them know what your goals are and how they can help.
Manage key financial issues
Here’s a hard truth: You’ll never create a valuable equine practice if you just show up for work–even if you manage to generate a high gross and pay the bills. You need to really manage the financial side. Three key questions you should ask:
- What’s your gross profit before paying doctors and buying equipment? According to Veterinary Economics Financial Editor Cynthia Wutchiett, CPA, a healthy equine practice will generate a gross profit of between 45 percent and 48 percent. You’ll use this sum to pay doctors, buy equipment, and generate the owners’ return on investment. If you’re not hitting this profit mark, you may need to evaluate your expenses for drugs and medical supplies, nonprofessional employees, or even vehicle expenses. Also look to see whether you’re capturing all the charges for services rendered by reviewing all of your invoices, medical records, and travel sheets.
- How much revenue does each doctor generate? Ideally, each doctor should be producing about $325,000 a year (Ed – 2005 figure)If you’re not measuring up, it could mean that you need to review your fees. Also think about whether you’re optimizing the doctors’ valuable time with intelligent scheduling and effective use of support staff members’ talents.
- What’s your credit policy? It’s not unusual to see an equine practice with 10 percent or more of their annual work sitting in accounts receivable. In essence, you’re loaning total strangers money. Why are you accepting all the risk? Instead, think like a bank and ask for the three C’s before you extend credit: a credit report, a record of cash flow, and collateral. Consider creating a credit policy that gives clients alternative payment options. And turn accounts receivable into a profit center by assigning a fair, detail-oriented, hard-nosed person to focus on managing this important job.
A return on your investment
I know most of you want to create a practice that’s attractive to potential buyers and that offers you a reasonable return on your investment. These are both achievable goals. But you’ll need to work on your practice instead of just in it.
So set aside regular time to work on management issues. Learn to delegate more of the day-to-day management to competent, trained, and knowledgeable healthcare team members. The world really doesn’t need to sit on your shoulders. Find ways to share the responsibilities, and create other leaders for your practice. The choice is yours!
The bottom line – Every doctor assumes his or her practice would be a good investment for potential buyers. But you need to understand the true value of your business. And the reality is that practice value can’t be decided by rule-of-thumb estimates. You need to analyze the financials of the business to learn what your practice is really worth.
You can click here to visit the DVM360.com website
Don’t Be a Grudge Manager
So, how are you doing as a manager? Do you feel that you are managing your practice, or is your practice managing you?
I work with many managers and some are very effective and others are having a hard time keeping their head above water. Many managers spend their day doing what I call “grudge work.” They spend their entire time making sure everyone else is doing their job. They micro manage their employees and thus never get any of their own work done.
What is the job of a manager? It certainly is to make sure that everyone else is doing their job, but that is not the end all. The manager must also help the practice look ahead and be visionary. To me this is the real fun of management. Just making sure the day to day is done, gets boring after awhile. Helping the practice grow and develop is much more exciting and challenging.
So, how does one get from “grudge manager” to visionary? The first step is to realize you are a grudge manager and start to break that cycle. Remember – one of the keys to effective management is not to expect what you don’t inspect, so build in effective feedback systems to tell you when things are getting done or not in your practice.
For example, do you know if your medical recalls have been done today or in fact this week? If you said yes, how specifically do you know? Was a report put on your desk? Did you read notes or comments made in the medical record? I would suggest you need to build in an inspect of the expect. The person or persons making the medical recalls can place a report on your desk to inform you that the medical recalls have been done. In this way, you know they are getting done without you having to go and ask or review the record. Any critical task such as reminders, recalls, inventory, payroll, etc. needs to have an inspect built into the expect.
Once you have built in some of the feedback controls, maybe you will have some free time to actually envision the future of your practice. Have you ever planned a practice retreat? Wouldn’t it be great to get all of your management team together, off premises, and talk about what you wish to accomplish and do during the year ahead? Most of us spend more time planning our vacation than the success of our practice.
With the slower time of the year upon us, what have you planned to do to help to improve business? Consider targeted marketing for dental or senior wellness. How about developing a graduated Thank You for Referrals program in order to bring in some more new clients?
The point is that there are many things you can do as a manager to help grow your business or improve upon your customer service. Employee training programs and incentive programs may be just the trick to get your team working as a team. Don’t get so involved in the day to day that you fail to see the future of your practice and what needs to be done to make it even more successful.
You can click here to visit Mark Opperman’s website
Unmet Client Needs in Veterinary Services
Veterinary clients may exit a veterinary practice with unmet needs. If this happens, the quality and value of the practice experience decreases. In order for us to deliver the best service, we can focus on doing what is possible to address the unique and individual needs of our diverse clientele. When a client’s needs are not met, whether stated or not, retention and referrals drop.
How do we fall into the trap of sometimes ignoring our client’s individual needs?
Often times, as health care providers, we develop rote behaviors in given situations. We often deliver the same talking points when discussing medical issues. However, these talking points may lean towards canned recitals. Worse, we may not provide ample time for clients to express their needs before interrupting them. It has been shown that human medical patients only take 6 extra seconds to conclude their agenda or concerns, if allowed to do so without interruption by the doctor.
In the hospitality industry, individual requests for regular clients are pre-emptively met. This takes addressing needs to a high level. Examples may include room amenities, meals, etc. The same holds for the food service industry: “Hello, Mr. Jones. Will you be having the regular tonight?”
Veterinary clinics are not hotels or restaurants. However, we do have a service component in our industry as well, and we can learn from those industries that specialize in service.
Building a client-centered practice may sound self-evident, but in day to day workflow we may fall into the trap of being a practice where client relations become centered around the needs of the doctors or staff. One way to build the importance of unique, individual client needs into the work flow is to first recognize how critical this aspect is for the veterinary leadership. Next, through mentoring, the practice leaders lead the team through a process of active discovery during a meeting, where the staff realizes what happens when a client’s unique and individual needs are not met. The staff learns that happy clients mean better days for them, both in work and in the community.
At this stage, a “client unmet needs” process must be installed. This starts with the front staff identifying any particular unique need or concern the client has, whether related to the practice, procedures, or other factors in the client’s lives. The receptionist then empathizes and address it when possible. Simple recognition and a kind word may be adequate if the unmet need is a client life issue (recent deaths, divorce, emotional strain). If it relates to the practice, the front staff does what they can to meet the need effectively.
The exam room nurse then repeats or continues the process. Finally, the veterinarian does the same.
The importance and support the client experiences will markedly enhance their relationship with the practice, and allows them to leave with the confidence that they are a big part of your veterinary practice.
And they are correct!