Zoetis Business Consulting has released figures showing that Profit Solver, its financial analysis tool, has delivered an average EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 36% for the 28 UK practices that have used the new service since its launch.

Profit Solver was first launched in the USA, where the company says more than 300 practices have now benefited from the service.

Zoetis says that traditionally, veterinary practices have set their prices by simply adding a set mark-up, without knowing which services make a profit or loss and without understanding exactly how overall practice profit is being generated.

Profit Solver instead uses the practice’s own data to calculate the exact cost for the 130 most commonly performed veterinary services, representing 90% of the revenue generated by the practice. It then combines labour, inventory and equipment costs with time-and-motion studies for each service, and assesses the variance between cost and price to reveal profit or loss.

By using a collection of cost data, which staff perform which part of the procedure, how long the procedure takes and what equipment and materials are used, Profit Solver calculates the correct pricing to both cover costs and deliver a pre-determined profit margin.

Implementing Profit Solver is done with a Zoetis business consultant who guides the practice through the process, from data collection to examining the time-and-motion studies. They discuss the level of profitability the practice needs to deliver and help analyse prices to achieve this goal whilst preserving the price-point of highly competitive services and covering all the practice’s costs.

Ian Camm, Group Director of B&W Equine Vets in Gloucestershire heard about Profit Solver from a vet in a neighbouring practice who was impressed with how it had helped his business. Ian discussed Profit Solver with his Zoetis account manager and booked an appointment with Zoetis Business Consultant Anthea Pike who has helped him implement the software across B&W Equine Group.

He said: "Initially I was concerned that Profit Solver would suggest we put prices up where we felt that we would not be able to - people shop around for their veterinary services these days and many services are very price sensitive. The first stage in the process addressed this by looking at our figures, calculating the cost price for each procedure and then, by comparing with our fees charged, identified where we were losing money. The big question was whether we would be comfortable to increase our fees on loss-making procedures. The beauty of the system was that by looking at a large number of procedures which were done frequently, very small increases in fee would total to a significant improvement in the bottom line.

"The software has made us recognise where the real costs are and how to address these areas accordingly, for example we have identified that current stud packages are not profitable. One of the problems in arriving at true costs is the difficulty in accurately allocating time to various procedures when several different vets are involved or an expensive scanner is used, which can have a significant impact on the results. It’s early days, but I can already see the difference that Profit Solver could make to our bottom line and wouldn’t hesitate to recommend it providing the practice is prepared to make changes in light of the results. We are looking at improving our bottom line by a six figure sum over a 12 month period with what we hope, will be hardly noticeable price rises.”

For further information visit www.zoetis.co.uk/businessconsulting.

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