Tools for Financial Conversations
June 15, 2018
Starting Difficult Financial Conversations
It can be difficult to step into a conversation related to financial stewardship and how everyone on the team is responsible for the hospital’s good fortune and prosperity. Management and team members tip-toe around the topic of finances, when simple approaches may make a “taboo” subject comfortable.
Team members may benefit from knowing the general financial state of the veterinary hospital, identifying and implementing new services and tracking lost charges.
Technicians frequently ask me, “How do I get a raise?” I often respond, “Be a better steward of the hospital’s finances.” Usually, not what they want to hear!
Share the bottom line; Open-book management
Your team members may see the cash flow in (they review treatment plans with clients, generate invoices and process payments), but do they understand the cash flow OUT? Do they have a basic understanding of “beans-in and beans-out”?
Team members don’t want to know how to build a watch (nor do they want to know the details of the finances), they just want to know what time it is (the bottom line).
To keep the finances in perspective, consider sharing a simple graph showing monthly income and expenses. In this way the team visually sees the ratio of services provided and what it costs to provide those services. Then review it on a regular basis.
“Many companies that share financials offer accounting classes and meetings on a monthly or biweekly basis to explain the details and field questions. Companies don’t hand out 10-Q reports but offer simplified versions of the records that provide the core vitals of the company without overwhelming employees. The meetings allow not only an open sharing of the figures but also a discussion of what those figures mean going forward,” explains Gregg Henglein in the Pros and Cons of Open-Book Management.
Learn more about the benefits of “Open Book Management” by reading the articles listed in the reference section.
Increase services, increase income; Top ten services
You may have experienced this; when finances get tight, the first reaction is to cut costs. However, this is a band-aid as, over the long haul, it’s really by increasing services that income will also increase.
During an upcoming meeting, ask team members to identify all the services your veterinary hospital offers. Generally, they will mention the usual services; wellness exams, dental procedures, surgeries and vaccinations.
To create a comprehensive list of services may take some time. The point is, identifying an all-inclusive list of your services will help you identify what you currently offer and other services you may be able to provide.
Then use the Top Ten Services worksheet. It is designed to help team members consider the services they provide in a day from a unique perspective.
Take a look at the info-graphic in the CATALYST Tool Box of top ten services as an example. You may find the Nationwide list for top ten insurance claims helpful. Chances are these are precisely the cases you see each week within your general practice.
An example of a new service may include an assistant is willing to provide puppy socialization classes. Or you may have a veterinary technician interested in becoming a specialist in anesthesia creating an opportunity for numerous new services. Increasing services is creating financial stewardship.
Track lost charges; Laminated fee sheets
Being cognoscente of lost charges can prove to be beneficial. Various surveys and documentations point to the fact that uncharged services costs a practice tens of thousands of dollars.
A team concentrating on properly charging can directly, positively, impact the bottom line.
- Checking invoices thrice may be a step in the right direction of financial stewardship. Consider implementing a “thrice” rule before a patient is picked up and the client is checking out. These are services the client has been provided, not “up-selling” services, simply making sure the charge is on the invoice.
- Creating a flow sheet for outpatient care, inpatient care and surgery will assist the team in tracking lost charges. If your practice is paper less, create laminated charge sheets.
- Identifying one or two team members to review charges before lunch and prior to the “mad dash” at 4:30! This will prove to be beneficial!
- Measuring and charting “found charges” can be a visual aid encouraging them to keep it up and seeing how they make a difference as a financial steward.
Here is a simple example: If your team finds $5.00 of missed charges (to make the math easy) on 10 invoices a day, that’s $50/day for a 6-day week, equaling $300/week and $15,600/year!
A team that understands the practice’s basic income and expenses (open-book management), positively impacts the services provided (top ten services) and finds “lost charges” (laminated fee sheet) is participating in financial stewardship.
That’s creating a teamwork of financial stewardship!
Yours in Financial Stewardship,
Rebecca Rose, CVT
Pros and cons of open-book management, Gregg Henglein, All Business, https://www.allbusiness.com/the-pros-and-cons-of-open-book-management-12302038-1.html
Veterinary practice management by the open-book; Dr. Ross Clark, DVM360, http://veterinarybusiness.dvm360.com/veterinary-practice-management-open-book
Top ten reasons pets visit vets, Nationwide, https://phz8.petinsurance.com/healthzone/pet-health/health-conditions/top-10-reasons-pets-visit-vets