As clinicians it is second nature for us to assess and monitor our patients. The very least we will do is check temperature, pulse and respiration (TPR). Depending on our initial findings and/or whether we are dealing with an out- or an in-patient, we may well employ more sophisticated methods, e.g., radiography, ECG, ultrasonography, blood sampling etc. How often do we apply the same diligence in monitoring our businesses? All too often it is only after the accounts have been received from the accountants, months after the year end, that some practices know how well, or otherwise, they did the previous year!
Modern, progressive practices need to monitor their businesses to enable them to make informed decisions. That is assuming the owners have an overall plan and a direction in which they want to take their business and all those who are dependant upon it, including the clients and their pets.
Key Performance Indicators and Benchmarks
Key Performance Indicators or KPIs are the businessman's equivalent of TPR. They are parameters that owners and managers use to monitor the performance of their businesses.
The term 'benchmark' originates from the chiseled horizontal marks that surveyors made in stone structures, into which an angle-iron could be placed to form a 'bench' for a leveling rod, thus ensuring that a leveling rod could be accurately repositioned in the same place in future. In other words, it provided them with a known point from which they could compare measurements. In business circles the term refers to the process used in management in which organisations evaluate various aspects of their processes in relation to best practice, usually within their own sector.
The computer age promised paper free offices! We now have the ability to produce an endless amount of data, but how much of that is usable, relevant information? We have all heard the term 'paralysis by analysis' and where KPIs are concerned, the first important decision to make is what KPIs are going to be useful in monitoring the business? KPIs should be:
Easy to produce and reproduce
Restricted to a meaningful number
Capable of being benchmarked against comparable figures in the industry
When it comes to benchmarking it is important to ensure you are comparing apples with apples and not apples with pears. A common KPI is the Average Transaction Value (ATV). This is such a practice specific figure in terms of how it is interpreted by both practices and practice management systems that it doesn't lend itself too well to benchmarking. Figures that are to be compared with other practices' figures may be numbers or percentages and may include such parameters as turnover per vet, cost of materials as a percentage of turnover or per veterinarian, return on capital employed, etc.
KPIs shouldn't be restricted to financial parameters. After all, nobody wins at tennis by restricting themselves to studying the scoreboard! The financial results are, after all, only the end result of all that goes before, including the actions and efforts of the practice team and the compliance of clients. Client satisfaction is another area that can be measured.
KPIs and Benchmarking should include non-financial as well as financial parameters. The number of new clients registered each month; the average number of client visits per year; the percentage uptake of specific services and products may well be figures a practice would like to measure and compare.
When it comes to comparisons and benchmarking, where does one go for comparators? Internal comparators are useful when it comes to monitoring progress against projections and budgets. Quarterly results can be compared with the same quarters from the previous year. Moving Annual Totals (MATs) can be used to smooth out peaks and troughs. Inter-branch and comparators between team members can also provide useful management material.
When it comes to true benchmarking, there are a number of sources to go to, to find comparators. In the UK there are a number of regular reports linked to veterinary professional bodies that practices can utilise. Accountancy firms that deal with a portfolio of veterinary practices will be in a position to provide benchmarking as will computer companies, veterinary wholesalers and manufacturers.
You cannot manage something you cannot measure. That's the first step. Once you can measure performance, it is a natural progression to want to know how your achievements compare with those of others in the same field. The final step is to find out how those who outperform you, do it!