Labor costs are the highest expense in most veterinary practices. Optimizing labor is crucial to both ensuring the delivery of exemplary care and to reducing labor costs. Although there is variability based upon practice type and structure, the healthiest practices maintain labor costs at approximately 35% to 40% of revenues. How do they do it?
First, they establish veterinary compensation that is either directly related to revenue production or indirectly related based upon production estimates and previous years' production. This provide clarity to both parties regarding expected compensation and labor costs. Second, these practices plan ahead and allocate staff to prevent excessive overtime which is very costly. Third, many use digital phone technology (VOIP) to track incoming calls, patient traffic times, and other data that yields valauable insights regarding the numbers of employees needed at various tiimes of the day and week. This data is powerful in helping practices to staff appropriately to meet customer demand while not having excess staff sitting around and not producing revenue.
Lastly, the most profitable practices are not afraid to send employees home for a few hours if their patient schedule shows that they aren't needed. Remember, as leader of your practice, you are tasked with optimizing profitability, because profits are what ensure strong compensation, excellent equipment and facilities, and the ability of the practice to sustain employment and exemplary service to your customers.
