AVMA - American Veterinary Medical Association
07/16/2024 | News release | Archived content
Just one thing: A quick pulse check on productivity
A veterinary practice's productivity metrics are crucial measures of its economic health, comparing business outputs (like revenue) against the inputs required to achieve them (like labor hours or square feet of space).
One key metric to monitor is revenue generated per square foot of utilized space. Since tangible costs are associated with each additional square foot of space, this represents an input used to generate revenue.
Here's a quick way to start
Calculate your practice's revenue per square foot of utilized space, and compare it with industry benchmarks. This can be tackled in 15 minutes or less by taking the following steps:
- Find your hospital's total utilized square footage. This number may be available in your lease or purchase agreement. Ensure it excludes non-relevant spaces, such as residential apartments on the property.
- Determine your practice's gross revenue from the previous year, which can typically be found in your practice management software.
- Calculate your revenue per square foot by dividing gross revenue by the hospital's utilized square footage.
- Compare against industry benchmarks. These are reported annually for different practice types in the AVMA's Report on the Economic State of the Veterinary Profession. See the 2024 report here.
Example
Consider a companion animal exclusive veterinary hospital that used 2,000 square feet of space and generated $800,000 in gross revenue. Dividing the revenue by utilized square footage shows that the practice generated $400 in revenue per square foot.
The 2024 AVMA Report on the Economic State of the Veterinary Profession shows that companion animal exclusive practices have the highest average revenue per square foot at $424. The upper and lower quartiles provide a comprehensive picture of the distribution of this productivity metric.
In this example, revenue per square foot of $400 is below the companion animal exclusive median value, indicating potential opportunities to streamline operations and enhance productivity.
What comes next?
Every hospital's individual situation is unique, and numerous factors influence why revenue per square foot is higher or lower than benchmarks. The comparison gives you a jumping-off point to identify potential opportunity, and monitoring this metric over time can help you see whether you're making progress in improving productivity.
By calculating and comparing your practice's performance on this productivity metric, you can take a step towards ensuring your hospital's economic health.