Accountants for Referral Veterinary Practices
Referral practice carries the highest capital intensity in the sector and the highest cost per clinical hour. Advanced imaging, theatre capacity and specialist salaries all commit money before a case arrives, which makes utilisation the number that governs profitability.
The Numbers That Govern a Referral Centre
- Equipment utilisation
- A CT or MRI suite has a cost per available hour. Knowing that figure, and the utilisation you achieve against it, turns an equipment decision into arithmetic.
- Specialist productivity
- Income per specialist against total cost of employment, including the support team a specialist requires to work effectively.
- Case mix and contribution
- Different disciplines carry very different margins. Reporting contribution by discipline is what allows sensible investment decisions.
- Referring practice concentration
- Where a large share of cases comes from a small number of referring practices, particularly if any are corporate-owned with their own referral network, that is a genuine business risk and it affects value.
- Insurance dependency
- Referral work is heavily insured. Changes in insurer behaviour, excess levels and pre-authorisation practice feed straight through to case volume and to debtor days.
Appraising a Capital Decision
Advanced equipment decisions in referral practice are large enough that getting them wrong is difficult to recover from, and they arrive with a supplier proposal that already contains an assumed case volume. The first thing to do with that assumption is test it against your own referral data rather than accept it.
We work out the cost per available hour across the finance term, the case numbers needed to cover it, and what happens at a materially lower volume. Then we compare the funding routes on total cost after tax rather than on the monthly figure, because outright purchase, hire purchase, finance lease and operating lease are relieved differently and end differently.
The same discipline applies to hiring a specialist. Income per specialist against the full cost of employment, including the nursing and support team a specialist needs in order to work at all.
Frequently Asked Questions
Should we buy or finance advanced imaging equipment?
How exposed are we if a large referring practice is acquired by a group?
Can a referral practice claim research and development tax relief?
Review Your Referral Centre Economics
Tell us about your case mix and your equipment base and we will show you where contribution comes from.