22 Jan 2025
Poor profitability is one of the biggest threats facing any veterinary practice – especially start-ups. But a balanced scorecard approach can provide the kind of comprehensive framework needed for tracking key performance metrics to ensure your new practice thrives…
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Starting a veterinary practice is both an exciting and challenging endeavour. Beyond providing excellent care for patients, new practice owners must ensure their business is financially sustainable.
In the critical first year, achieving break-even is often the primary goal, requiring a strategic focus on measurable outcomes.
Tracking the right metrics ensures that efforts are aligned with success, helping you identify opportunities, tackle inefficiencies and build a loyal client base.
The balanced scorecard approach – developed by Vet Dynamics – offers a practical framework to organise these metrics.
By dividing key performance indicators (KPIs) into financial, client and patient care, operational and process, and learning and growth perspectives, you gain a comprehensive view of your practice’s performance.
This article outlines essential metrics under each perspective, explains their importance in simple terms, and highlights how they interact to guide your practice to profitability.
The balanced scorecard framework ensures that no critical area of your practice is overlooked. Financial health is essential, but long-term success also depends on satisfied clients, efficient operations and a skilled, motivated team. Let us explore these dimensions in detail.
The financial dimension is the foundation of your practice’s sustainability and the easiest to measure. In the start-up phase, the basis of good financial performance is stable bottom-line cost control and good top-line production. This is measured in your monthly management profit and loss (P&L) accounts. You achieve this through income generation by optimising work volume, pricing and good financial systems.
Income generation is measured though your practice management system (PMS). Good practice analytics, combined with business coaching, helps you understand how vets and veterinary practices work, and the best ways to optimise practice performance, clinical care and profitability. From your monthly P&L, you can measure the following metrics.
Monitor the monthly and quarterly increase in revenue from services and product sales. This metric reflects the overall efficiency of your business processes.
Calculate the point where total revenue equals total expenses. Knowing this number helps you set realistic financial goals, manage cash-flow and determine when profitability begins.
Profit is income minus all costs. Track the proportion of revenue spent on operating costs such as drugs, wages, rent, utilities and supplies. Keeping this ratio in check ensures your practice isn’t over-spending or under-spending, and is achieving a good profitability.
Measure how much revenue remains after covering all expenses. A higher profit margin indicates financial health and allows for reinvestment in the practice.
As operational performance metrics, we recommend the following from your PMS as a minimum:
Visit https://vetdynamics.co.uk/index to view industry benchmarks for recommended metrics.
Understanding your financial metrics allows you to allocate resources effectively; for instance, if your average invoice value is low, you might explore missed opportunities, offering more services or optimising pricing.
Revenue growth often hinges on client satisfaction (client perspective), while cost management benefits from efficient operations (process perspective). Financial health enables reinvestment in team development (learning perspective).
Your client and patient experiences are at the heart of your practice’s success. Marketing is the activity of attracting and converting clients that you can serve best. Client compliance is the activity of client retention and satisfaction, thereby meeting the needs of your patients’ health and welfare.
These PMS metrics assess how well you’re meeting their needs.
New client acquisition: in the first year, all clients will be first-time clients visiting your practice. Effective marketing and word-of-mouth referrals contribute to this metric.
Client retention: reflects the percentage of clients who return after their first visit. A high retention rate indicates trust in your services and long-term loyalty.
Patient follow-up compliance: Track the percentage of clients who comply with recommended preventive care, follow-up visits or clinical treatments.
This highlights both client trust and the quality of patient care.
Boosters: primary ratio measures vaccination retention and potential life-time value.
Use surveys such as the net promoter score or feedback forms and technology to gauge client satisfaction with their experience, including staff interaction, waiting times, and treatment outcomes (visit www.netpromotersystem.com)
Satisfied clients are more likely to become repeat customers and refer others, fuelling your growth. Follow-up compliance ensures patients receive appropriate care, enhancing outcomes and trust. Client loyalty drives revenue (financial perspective), and satisfaction depends on efficient workflows (process perspective). A well-trained, engaged staff (learning perspective) improves client interactions.
Operational efficiency is essential for managing costs and delivering a seamless client experience. The following metrics help you assess your practice’s clinical processes.
Subsequent: a ratio of primary consultations indicates the proactivity of vets to manage caseload and recommend follow-up consultations and treatments.
Diagnostic ratios are measured as a percentage of interventions per 100 clinical consultations. These include laboratory and imaging (x-ray, endoscopy and ultrasound) procedures.
Anaesthetics per 100 clinical consultations is a reasonable proxy for surgical procedures.
Pre-anaesthetic bloods, fluids and postoperative care packages per 100 anaesthetics are good indicators of vets following clinical protocols and standards of care.
Euthanasia rate reflects your natural churn rate for replacement.
Efficient non-clinical processes, such as debt control, inventory control and client communications, save time and money, while freeing up costly resources and improving client satisfaction. As an example, technology-reducing appointment booking and waiting times improves the patient experience, and allows you to see more clients.
Operational efficiency supports financial performance (lower costs, higher throughput) and client satisfaction (shorter wait times), while reliable processes empower your staff (learning perspective) and reduce errors.
Your team is your most valuable asset. Investing in team culture and their growth ensures consistent, high-quality care and a positive workplace culture. Use one to one reviews with all staff, as well as more formal assessments.
Employee engagement scores use surveys to assess team morale, job satisfaction, and alignment with practice goals. The Gallup Q12 questionnaire is a good place to start at www.gallup.com/q12
An engaged, skilled team delivers better patient care, improves client satisfaction, and reduces costly errors or inefficiencies. A well-trained staff supports smooth operations (process perspective), enhances client interactions (client perspective), and contributes to financial stability (financial perspective).
The balanced scorecard is not just about individual metrics; it’s about how these metrics work together. As an example of this,a rise in client satisfaction scores (client perspective) can drive higher revenue growth (financial perspective) through repeat visits and referrals. Investing in staff training (learning perspective) improves procedure accuracy rates (process perspective), which builds trust with clients and enhances retention.
Monitoring inventory turnover (process perspective) helps control costs, positively impacting your profit margin (financial perspective).
By regularly reviewing metrics across these perspectives, you can identify trends, prioritise interventions and align your team around shared goals.
Industry trend data is available on the Vet Dynamics website to benchmark your information.
Reaching break-even in the first year is possible, but requires a balanced approach to monitoring your veterinary practice’s performance.
The balanced scorecard framework offers a clear path by focusing on financial, client and patient care, operational, and learning perspectives.
By tracking these metrics and understanding their interconnections, you can make informed decisions that drive growth, efficiency and client satisfaction. Start small, stay consistent, and watch your practice thrive.
Implement the balanced scorecard today to navigate your start-up journey with confidence. With the right metrics, your practice can achieve both financial and operational excellence. Good luck.
