Are you tasked with scaling your consolidations exponentially over the next 3-5 years? Wondering how you’ll meet those objectives while maintaining client satisfaction and increase the profitability your shareholders expect?
A Balanced Scorecard (BSC) management system provides a data-driven approach and decision-making tools that can be used to set goals and benchmarks, measure performance, and help to position the business for long-term growth and scalability.
Using a veterinary balanced scorecard system provides an overview of the organization beyond the business’s financial aspects. While financial measures, such as EBITDA, are essential to consolidators, they only paint a picture of the past and current economic landscape. A consolidator needs to consider all aspects of the business, including the future outlook, in addition to the finances if they intend to achieve significant growth while maintaining the integrity of the practice.
Let’s explore the fundamentals of a balanced scorecard and why it is vital to your consolidation operation.
What is a Balanced Scorecard System?
A balanced scorecard is a performance metric used to identify, improve, and control a business’s various functions and resulting outcomes (source).
The balanced scorecard system has been around for a long time and is used by thousands of companies in all industries. The balanced scorecard was originally developed by Dr. Robert Kaplan of Harvard University and Dr. David Norton as a framework for measuring organizational performance using a more balanced set of performance measures. Traditionally companies used only short-term financial performance as the measure of success (source).
The balanced scorecard can be used in creating an organizational strategy by defining and communicating what is important to the business. A Veterinary Business Scorecard, or Veterinary Balanced Scorecard system helps your corporation identify the right things to measure so that strategic goals can be met.
There are four key areas of the Balanced Scorecard, often referred to as perspectives:
- Learning and Growth. Culture, infrastructure, and technology are key elements of this perspective. Is the business positioned so that staff has the resources and the technology to learn new things and to stay ahead of the competition?
- Internal Business Processes. How efficient are the internal business processes? Are there tasks that can be streamlined? Can you pivot quickly if business conditions change? What is the quality of these processes?
- Customer Knowledge. How satisfied are your customers? Are you gaining new, and retaining current customers? Having happy customers is a direct correlation to the future success of the business.
- Financial Performance. Are your consolidation operations making money? To succeed financially, will shareholders be happy with the ROI?
Within each of the 4 areas, you will want to add objectives, projects, and KPIs. Also keep in mind, the 4 perspectives of the BSC work together as a unit. They are not mutually exclusive of one another, meaning that if you invest in your employees with better training opportunities, they will feel more empowered and take pride in their work and will therefore do a better job, which then helps internal processes run more smoothly, thereby resulting in the ability to serve customers at a higher level. Finally, these actions and results will all roll up to more cost efficiency, higher customer satisfaction, and greater financial return for the organization’s shareholders and overall health.
Why is a BSC Applicable to Veterinary Consolidation?
As the trajectory of consolidations continues to explode in the veterinary space, it is more important than ever for consolidators to be able to assign tangible metrics to assess the business performance in the 4 areas listed above. Measuring metrics that matter helps an organization to keep track of business performance as well as outside influences.
Every veterinary practice has its own culture, internal processes, exam codes, billing procedures, etc. As the veterinary group, it is your job to identify what data is available, what is important to measure, and how that information can be standardized to provide a trustworthy holistic system for managing strategy.
In looking at the 4 aspects specifically for veterinary consolidations, some examples of the internal metrics that might be collected, include:
- Financial – cash flow, operating income, cost of goods, appointment volume, net profit;
- Customer – net promoter score, ratio of return visits;
- Internal Business Process – ERP, CRM, PMS, unit costs, error rates;
- Learning and Growth – retention rates, employee engagement scores, training for staff.
Without a holistic approach, you could be sacrificing one or more of the BSC areas and risk losing customers, technicians, or even the veterinarians themselves, resulting in roadblocks for continued expansion.
As a consolidator, wouldn’t it be great if you could track and monitor business performance using simple dashboards and generate reports so that issues could be identified and action-steps put in place to resolve problems quickly?
How to Design a BSC for a Veterinary Group?
The best way to design a Veterinary Business Scorecard is by using a template. We’ve provided some basic sample templates for you below. Here are the key components to include as you build your BSC (source).
Determine the vision. The vision is the heart of the balanced scorecard. No matter what aspect of the company you look at, the company’s goal or vision should always be front and center. We highly recommend using the Value Creation Plan framework to make it specific and clear as opposed to fluffy and generic.
Add the BSC Perspectives. Learning and Growth, Internal Processes, Customers, and Financial Performance.
Add objectives and measures. Within each perspective, define specific objectives, measures, targets, and initiatives.
Connect each piece. Link each perspective to the others using arrows to indicate that they’re all interconnected when achieving the company’s overall vision.
Share and communicate. Use the balanced scorecard to demonstrate how different initiatives and short-term actions are contributing to the long-term strategic objects of the company.
Example of BSC Template for you to start
Download a BSC Template:
Consolidation Balanced Scorecard Summary
For long-term success, increased growth and profitability, more streamlined processes, client retention, and shareholder satisfaction, a veterinary balanced scorecard is imperative. If you would like to know more about balanced scorecards and developing your BSC strategy, VIS can help find and apply the one that works best for you.
If you need help creating, implementing, or have questions about the balanced scorecard approach, contact VIS today.