Practice efficiency takes on greater importance in current economy

Technology, benchmarking, and customer service important to veterinary clinics’ future success

Updated July 11, 2024

Terrence O’Neil, partner at the accounting firm Katz, Sapper & Miller (KSM), has seen some economic trends that have caught his attention.

Two-thirds of the American public are living paycheck to paycheck, according to a recent survey. Among those respondents, 69% cited inflation as a financial stressor and 59% cited lack of savings.

In 2023, the average credit card interest rate hit a historic high of 22.8%, according to the Consumer Financial Protection Bureau, and individual credit card holders had an average debt of $6,501 each, according to Experian.

Young female client picks up her puppy at the vet and pays wirelessly with her credit card
Customer-centric companies are all about their customers and make every decision and strategic move with customers in mind. Terrence O’Neil talked about how veterinary hospitals can become more efficient and strategic during his presentation “Increasing Efficiencies to Create More Profit” on June 22 at AVMA Convention 2024 in Austin, Texas.

At the same time, the veterinary industry is starting to see growth slow. One indicator, the change in the number of invoices, has started to plateau, according to data from the Veteirnary Management Groups' benchmarking database, VSG DATALINK, increasing 1.5% annually in 2022 and 2023. Meanwhile, veterinary practices have increased their prices in the past decade at a rate greater than inflation. In 2014, the average invoice was $148, compared with $229 in 2023.

O’Neil questioned how much longer that can occur.

“As business owners, you’ve had to pay your staff more and had to raise your fees to cover for that, right? I get that, but where are we on that rollercoaster on price elasticity? I think we’re in a scary spot right now, personally,” he said. “The disposable income people have to spend on veterinary care is just not there. So what do we do? We get more efficient.”

O’Neil presented the sessions “Increasing Efficiencies to Create More Profit” and “Trends at the Most-Profitable Veterinary Hospitals” on June 22 at AVMA Convention 2024 in Austin, Texas. He is a co-leader of KSM’s Veterinary Services Group.


One obvious way to boost efficiency is through greater use of technology. Many options are low-hanging fruit, such as text messaging for appointment reminders or monthly payment plans, which can help clients budget for their animals’ needs. Most practice information management systems (PIMS) now have these features built in. Artificial intelligence can help reduce doctors’ time by transcribing notes.

One other piece of advice: stay away from the “same as last year” mentality. O’Neil recommended having a conversation with staff and putting together a committee that includes younger staff members to help brainstorm ways to be more efficient. He did this at his own firm and ended up implementing several of the ideas that it generated.

“The hospitals that embrace technology to enhance service will be the leaders,” he said.


Another focus for practices is monitoring veterinary market trends to benchmark against practice data to help optimize operations. Invoice counts are the first thing he looks at to get a feel for the health of a veterinary hospital.

Specifically, O’Neil says the best efficiency measure is support staff minutes per invoice. According to VetWatch, the average was 98 minutes in the second quarter of 2019 versus 117 minutes in the second quarter of 2023.

Spending more time with clients isn’t necessarily bad, he said, “But if I’m spending 30 minutes with a client and my partner is spending 60 minutes, you have to charge more for that.”

When looking at the leverage ratio, which involves how many people are helping the veterinarian, the average was 3.7 in 2014 and 4.04 in 2023, indicating little change in this area.

For staff productivity, he says practices should be using an automated payroll clock and track total hours worked. Then they can use this information to inform staffing decisions. He also reviewed during his presentation a veterinarian productivity measure formula that he developed. It takes into account the number of days worked, number of hours seeing patients, number of patients seen per hour, revenue generated per day, and average invoice.

“Sit down with the doctors and go over the DVM productivity measure to help them know how many patients they need to see per hour to achieve how much they want to make or how many hours to work,” O’Neil said. “To educate doctors a little bit, I tell them, ‘If you’re only charging 60% of your time, you’re never going to get to where you want to be unless you get more efficient.’”

Customer service

The real key to efficiency, O’Neil says: keeping people happy. Trends don’t matter at clinics that don’t have good customer service because people won’t come back. That spells trouble when a 2% increase in customer retention is the same in profits as cutting costs by 10%, he said.

Customer-centric companies are all about their customers and make every decision and strategic move with customers in mind. According to research by Deloitte, customer-centric companies are 60% more profitable than those not focused on the customer.

“If you have a grump at the front desk, what do you do when somebody comes into your hospital? Not a very good experience, is it?” O’Neil said.

“Customer service and employee experiences is what’s going to drive your efficiencies,” said he added. “People are willing to pay a little bit more if they have a really good, positive experience.”

The AVMA has resources to help veterinarians, practice managers, and other staff members boost their clinic’s bottom line and best serve clients and patients. These include the following: