Benchmarking in Veterinary Practice: What You Need to Know
As a veterinary practice owner, you may wonder if you are making the right financial business decisions. You may also wonder how you compare with your competitors. Financial benchmarking can provide the hard numbers you want to make sense of hospital performance, but those figures may be less valuable than you think.
The VetBooks team encourages veterinary hospitals to view benchmarks as only one aspect of a larger financial goal-setting and planning strategy. Here’s how to get the most out of benchmarking in veterinary practice.
The role of benchmarking in veterinary practice
In a small business setting, you may need to compare your performance to others. Are you doing well? Were your competitors’ profits higher? What could you do differently? Benchmarks answer these questions with metrics, including cost of goods sold (COGS), average client transactions (ACTs), and gross revenue, each representing established industry or local standards.
Benchmarks also provide general information that’s helpful for goal setting, but they can lead you astray. Not every benchmark is attainable in every practice, so you shouldn’t herald them as gospel. These numbers are averages and, according to the laws of statistics, only a select few can rise above the average. Instead of aiming blindly for achievement, view benchmarks as directional tools to assess progress toward your practice objectives.
Internal versus external benchmarking in veterinary practice
Veterinary practices benefit most from a mix of benchmarking strategies, including:
External — This method compares clinic performance to published standards and can help you identify areas for improvement. However, external benchmarks can be flawed because of self-reported data, outdated figures, and lack of standardization. Use external benchmarks only as a reference and focus on setting and achieving financial goals that make sense for your clinic.
Internal — This method compares current goals and achievements with the clinic’s historical performance. Tracking metrics over time allows for pattern identification and realistic expectations.
Setting realistic financial goals
Benchmarking can push you to pursue too many objectives simultaneously to keep up with competitors. Trying to fix everything at once is overwhelming and you may not achieve any meaningful changes. Realistically, most businesses can tackle three to five objectives each year, and only your team can define the goals to determine that success.
Benchmarks in veterinary practice can be the starting point for understanding where you are and where you want to be. Meet with your trusted advisory team—consultant, accountant, lawyer, and bookkeeper—for deeper insights into hospital performance metrics and to prioritize areas that need attention. These professionals have experience across multiple practices and can provide real-world, contextualized recommendations from a 30,000-foot view.
Benchmarking as a tool for strategic planning
Veterinary practice owners should approach benchmarking strategically. First, define your meaning of success, which may be different from the hospital down the street or in a neighboring town. Next, use the end goal to set benchmarks that align with your long-term vision.
The real value of benchmarks isn’t in surpassing others—it’s about moving your practice in the right direction at your own pace. Focusing on strategic, intentional growth instead of chasing arbitrary numbers allows veterinary practices to achieve financial health and sustainability.
Want more insights into your practice’s financial performance? Contact our VetBooks team to learn about our bookkeeping services that will keep you on track to meet your goals.
