Running a veterinary practice is more than just providing great care for your patients—it’s about keeping the business side healthy too. And the secret to a thriving practice? Data. Specifically tracking the right Key Performance Indicators (KPIs). KPIs provide a clear view of how your practice is performing and help you make decisions that can improve your bottom line.
In this blog, we’re going to explore the essential KPIs every veterinary practice should be tracking and how they can guide your practice toward growth and profitability.
Without KPIs, managing a practice is like trying to navigate a road trip without a map. You might get to your destination eventually, but it will take longer, be more stressful, and you’ll miss valuable stops along the way.
KPIs give you a pulse on your practice’s financial and operational health. They offer insight into areas where you’re excelling and highlight opportunities for improvement. In the fast-paced world of veterinary medicine, these data points help you proactively manage challenges before they become problems. More importantly, they allow you to make informed decisions that drive growth, efficiency, and profitability.
Let’s get into the must-track KPIs and how each impacts your practice.
What it is:
Total revenue is the sum of all income generated by your practice, including services like exams, surgeries, diagnostics, and any ancillary services like grooming or boarding.
Why it matters:
This is the most basic measure of your practice’s success. A steady or growing revenue stream is essential for covering costs, paying staff, and investing in the future of your clinic. Declining revenue? That’s a red flag that requires immediate attention.
How to track it:
Look at your revenue on a monthly, quarterly, and yearly basis. Break it down further by service categories (e.g., exams, surgeries, boarding) to see where your practice is excelling and where there’s room for improvement.
What it is:
This KPI breaks down total revenue into specific categories or profit centers like exams, surgery, pharmacy, and diagnostics.
Why it matters:
Tracking revenue by profit center helps you identify which services are driving income and which are underperforming. For example, if your surgery income is below the industry benchmark, it could indicate that your team needs to recommend surgical procedures more effectively or that pricing adjustments are necessary.
How to track it:
Most practice management systems (like Digitail) allow you to pull reports that show revenue by service category. Compare your performance against industry benchmarks to see if you’re on target.
What it is:
This KPI measures the revenue generated by each veterinarian in your practice. It’s an excellent way to gauge individual performance and the overall productivity of your team.
Why it matters:
Tracking production by provider helps you evaluate the performance of each vet, ensuring they are meeting expectations. This data is particularly useful if you’re considering salary adjustments, bonuses, or promotions based on production.
How to track it:
Many practice management systems can automatically assign revenue to the attending veterinarian for each service rendered. Review this data monthly and discuss it with your team to set realistic goals and encourage professional development.
What it is:
This KPI measures how much of your revenue is being spent on running the practice, including inventory, payroll, rent, and utilities. The goal is to keep expenses at or below industry benchmarks.
Why it matters:
You might be generating strong revenue, but if your expenses are too high, your profit margins will suffer. Monitoring this KPI ensures you’re running a lean operation without sacrificing quality care.
How to track it:
Work with your accountant to regularly review expenses. Tools like QuickBooks can categorize expenses, and you can then compare them to your gross revenue to calculate your percentage.
What it is:
The average client transaction (ACT) is the average amount a client spends per visit, across all services.
Why it matters:
Your ACT gives you a snapshot of how much clients are spending and can indicate whether your pricing, bundling, or service recommendations are hitting the mark. If your ACT is below the industry average, it might suggest that clients are skipping additional services, or perhaps that your team isn’t upselling appropriately.
How to track it:
Calculate ACT by dividing total revenue by the number of transactions in a given period. Compare your ACT to industry standards and adjust service offerings or client education accordingly.
What it is:
Accounts receivable (AR) measures the amount of money owed to your practice by clients. Ideally, this should remain below 2.5% of your gross revenue.
Why it matters:
AR is crucial for cash flow management. If clients aren’t paying on time, your practice will struggle to cover its own expenses. High AR can signal problems with your payment policies or a need for better follow-up on overdue accounts.
How to track it:
Use your practice management software to run AR reports and keep an eye on overdue balances. Set up reminders for clients and consider offering payment plans or financing options to keep AR low.
What it is:
This KPI tracks the number of new clients coming into your practice each month.
Why it matters:
New clients are essential for long-term growth. A decline in new client numbers could indicate a drop in marketing effectiveness or growing competition. By keeping this number up, you ensure a healthy influx of new business to complement your existing client base.
How to track it:
Most practice management systems can track new client data. Make sure to monitor monthly and quarterly trends, and adjust your marketing efforts as needed to bring in new patients.
What it is:
Client retention measures how many clients return to your practice after their initial visit.
Why it matters:
It’s more cost-effective to retain existing clients than constantly acquiring new ones.
A high retention rate reflects satisfied clients who trust your practice.
A low retention rate may signal issues with services, pricing, or communication that need addressing.
How to track it:
To calculate your retention rate, follow these steps using your practice management software:
Client Retention Rate (%) = (Pets Retained / Pets Added) × 100Tracking retention helps identify trends, benchmark your performance, and develop strategies to improve client loyalty over time. Use this metric to evaluate your practice’s success and pinpoint opportunities for growth.
Now that you know which KPIs to track, here’s how to put them to work for your practice:
KPIs are powerful tools that provide actionable insights into how your veterinary practice is running. By regularly tracking and analyzing the right KPIs, you’ll be better equipped to make informed decisions, grow your practice, and improve efficiency and profitability.
