Do you run a veterinary practice? If so, you may wonder, “What is a good profit margin for a veterinary practice?” Total Practice Solutions Group specializes in maximizing a veterinary clinic’s profit margin, especially when you’re ready to sell it.
Keep reading to discover how to maximize your earnings before interests, taxes, depreciation, and amortization. Whether you’re looking to sell your practice or increase revenue, we can help.
Understanding Your Financial Health
To understand your vet clinic’s financial situation, ask yourself: “How do I value a veterinary practice?” Determine your practice’s value based on how it compares to current trends.
Unfortunately, modern profit margins are trending low at 7-12%. Increasing your practice margin above that positions you for a quick and lucrative sale.
Tips for Improving Your Profits
What is a good profit margin for a veterinary practice? After calculating reasonable expenses, we consider a small animal veterinary adequately profitable if they bring in 14-18% gross profitability. If you have a lower margin, consider the following tips.
What is the markup on veterinary medicine? While most veterinarians don’t increase their medicine beyond a 200% markup, that’s still considerably lower than other healthcare industries.
If your practice is generous with low-profit margins on medicine and food, you have room for improvement without feeling like you’re cheating your customers.
Seek Out Discounted Fees
Examine which services and products you discount and look for opportunities to reduce or eliminate deductions. To determine whether a price reduction is necessary, ask yourself:
- Does the discount serve a purpose?
- Did I mean to discount this?
- Are they discounts from an affiliate or partner?
Expose Missed Charges
Medical billing is complex and nuanced, making it easy to miss charges occasionally. Spend 10 to 20 minutes a week auditing your billing. If you notice charges you regularly miss, establish a system for automating the charges for the service or product.
What is one of the largest expenses for a veterinary practice? Aside from rent and employee salaries, neither of which you can effectively reduce, the cost of goods provides your biggest opportunity for reduced expenses.
Try reducing the amount you spend on products you sell to 25% of your expenses or less. For example, if you spend $20,000 a month on food and medicine, see whether reducing your monthly spending by $1,000 increases revenue.
If you can serve more clients, you’ll also receive more revenue. Ask yourself two questions:
- How do I get more clients for my vet clinic? This might be as simple as offering more services or as complex as opening a second location.
- How can I promote my veterinary business? You can affordably increase how many clients you see by leveraging efficient marketing techniques. You’re likely marketing already, but where can you do better?
Contact Total Practice Solutions Group To Increase Your Practice’s Profit
What is a good profit margin for a veterinary practice? If you’re not achieving at least 14%, Total Practice Solutions Group can help improve your practice. Call 844-908-2967 to book your first consultation.