How veterinary practices can get out of practice code debt – Part 2

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Look at the Data

Our team wanted to investigate this Practice Code Debt idea more empirically. We looked at 12-months of transaction data from more than 1700 practices.

The average number of transaction codes (with revenue against them) is 956. That’s the average! That feels like a lot of transaction codes to try and organize into a meaningful and useful framework.

So…how many transaction codes does a practice need? We don’t have the answer to that yet and there are lots of people working on that question. But here’s another interesting way to look at it. Across these practices we found that the top…

  • 10 codes generate 30% of practice revenue
  • 50 codes generate 60% of practice revenue; and
  • 100 codes generate 75% of practice revenue.

This seems to validate that there are A LOT of codes that aren’t used. Imagine – 100 codes generate 75% of all practice revenue. That leaves an average of 856 codes for the remaining 25% of revenue. There’s obviously a lot of room for clean-up.

Ask the Pros

I reached out to a few seasoned practice managers and consultants. They were all very responsive and all agree that there are negative effects for the veterinary practice when too many codes exist.

Michelle Guercio, CVT, CVPM and Education Development Specialist for Patterson Veterinary points out that “too many codes can create confusion when invoicing, and confusion can easily lead to invoicing errors. Too many codes also make it challenging to utilize reports to make management conclusions. When you couple together errors with challenging reports, the result is data not being trusted or utilized.”

Michelle’s colleague Debbie Hill, a CVPM, SPHR who manages six practices is even more direct. I asked Debbie: What are the effects of too many practice codes in the practice management systems of veterinary practices?  Her response: “Chaos! Self-imposed chaos is still crippling and limits our ability to efficiently look at our data and determine a plan of action.” Hill adds that “the time spent merging code data into a workable piece of information could obviously be used elsewhere.”

If Practice Code Debt is real, what can we do about it?

After having asked people anecdotally, looked at the data, and asked the experts, there seems to be strong evidence that practice code debt is real. So what can we do about it?

Ben Spinks, CVPM and Hospital Administrator for Tipp City Veterinary Hospital in Ohio has a rigorous code review program that includes looking at the occurrence of his codes over the last twelve months. In Ben’s words:

“I think that having well curated codes should be a priority for every practice. Any code that isn’t being used at least once per year should automatically be a candidate for inactivation. Codes used 1-12 times per year are good candidates for consolidation (ex. creating a catch-all code that can be used for all procedures that fall under an infrequently used category). Well curated codes help ensure that reporting and analysis efforts produce useful and actionable data.

Check out these findings from Tipp City Veterinary Hospital’s latest code review:

  • TCVH has 515 treatment/service codes active in AVImark
  • Only 50 (<10%) of the codes are used on a daily basis (>364/year)
  • 21 (4%) of the codes generate 50% of our treatment/service revenue
  • 70 (14%) of the codes generate 80% of our treatment/service revenue
  • 320 of the codes are used once a month or less
  • 56 of the codes were only used once over a 12 month period
  • 132 of the codes were not used at all over a 12 month period.

VetSuccess’ own CVPM, Karyn Ekola shared her experience from practice. Karyn appreciates the ‘Keep-it-Simple’ approach. In her practice they “used to have three different lab work codes for the exact same lab test, but would invoice depending on the situation: Pre-Anesthetic, Wellness, and Priority/Sick Pet.  Same amount of blood needed, same machine, same rotor. But they all had different prices. I averaged the price of all three, and combined them to one code, “CBC, Chem – In House”.  So, no matter the situation, you charge the same thing.” Simple and clean.