The No — Lo Practice — avoiding a practice worth less
Shock! Disbelief!, Owners are devastated when they learn their practices are worth only a fraction of what they anticipated as they approach retirement and contemplate a sale. But if you can understand why this occurs and identify if your practice is at risk, you can begin the process of recapturing this lost value for your practice.
The AVPMCA (Association of Veterinary Practice Management Consultants and Advisors) have published this important document which reports that veterinary practice appraisers (in the United States) have always observed a relatively small pool of low-value practices. These generally consist of solo practitioners delivering dated medical services from poorly equipped, marginal facilities and producing low profits every year.
But in recent years, appraisers have seen an increase in the number of practices with no, or an exceptionally low value (i.e. No-Lo Practices). Quite unexpectedly, appraisers are also observing asignificant change in the mix of practices occupying the low value end of the spectrum. In addition to the normally predominant solo practices, it now also includes practices traditionally expected to be profitable — practices that offer quality, progressive medicine with the latest equipment; are located in new state of the art facilities; and offer above average compensation packages to veterinarians and staff members. Owners in these practixes may take home more than $200,000 per year but still have No-Lo Practices.
The common thread linking all these practices is poor profitability in relation to the gross revenue they generate. To make matters worse, most owners of these low profit practices are not even aware of their perilous financial situation and discover the gravity of their situation only as they prepare to put their practices on the market.
The AVPMCA concludes that ‘the biggest mistake made by practice owners is to assume that all the money they take home from the practice (e.g. salary, management fees and rent) is their return on investment or profit’
Wherever your practice is located in the world, you can use a tool created by the AVPMCA to determine the true profitability of your practice:
Step 1 — download the No-Lo Practice Threat Advisory Worksheet at http://www.avpmca.org
Step 2 — Using Microsoft Excel, open the worksheet and print the instructions. Complete the worksheet to determine the true profitability of your practice. If your practices profitability is in the blue or green levels, congratulations! If however, your practice profitability is in the three lower levels, you have some detective work to do, investigate the underlying causes and institute the necessary sorrective measures. Need some help? — then contact the AVPMCA for a list of member consultants.
Vetstart: an innovative communication concept
Vetstart is an innovative European communication platform for veterinary students and professional partners to allow optimal preparation of newly graduated veterinarians for your professional career as a veterinary clinician.
Vetstart is an independent organisation supported by corporate and non-corporate partners and sponsors who all play a role in the international world of animal health as manufacturers of pet food and pharmaceuticals, companies providing veterinary equipment, supplies and services, as well as publishers and organisers of international congresses and symposia.
All our partners, companies and organisations are highly professional players in their field, that are happy to offer you support by providing science, products and services to help you make the best transition from student to practitioner.
Vetstart membership is FREE and open for veterinary students in the final 2 years of the curriculum as well as newly graduated veterinarians until 2 years after you graduate (registration closes 1 year after graduation). Free membership is provided to you in return for you accepting responsibility for providing Vetstart with the requested data, and informing Vetstart immediately of any changes in your personal profile such as changes to your address and email and actual date
Vetstart International Ltd, is a joint venture between Onstream Communications (UK) and Uppertunity Consultants (NL).
Vision: To be the leading independent international information exchange platform for veterinary students and recent graduates with the animal health related industries and organisations. This includes: pharmaceutical, pet food, finance (insurance and banking), architecture and design, automobile, veterinary organisations and associations, as well as the leisure industries.
Mission: To create an opportunity for learning and exchange of knowledge and information between veterinary (recent) graduate students and facilitate their introduction to veterinary practice management and to companies, products and services in the animal health related industries and organisations, by providing state of the art communication and information solutions, to benefit all parties involved.
You can click here to visit the Vetstart website
New CEO of the NCVEI
The National Commission on Veterinary Economic Issues (NCVEI) has named Karen E. Felsted, CPA, MS, DVM, CVPM as its new Chief Executive Officer.
Trends online: What is the biggest challenge facing veterinarians in the coming years?
Karen Felsted: There are several challenges facing our profession in the next few years. The first is the national economy. Whether or not we are technically in a recession doesn’t really matter; most people are feeling some impact from the housing problems and the rising cost of oil. That includes veterinarians as well as our clients.
The second challenge is practice profitability and the corresponding ability to ultimately sell the practice for a good price. Practice profitability is a critical issue for all employees of the practice, not just owners.
Another challenge is the student debt situation. New graduates simply must be able to earn enough money to pay back their debt and still be able to live reasonably–buy a house, raise a family, etc. or we won’t be able to attract the next generation into our profession.
And then who will fill all those open positions in private, public and corporate veterinary medicine, who will we sell our practices to and, in a broad sense, how will we fulfill our role in society? This isn’t just a new graduate problem–this is everyone’s problem.
Trends online: What is NCVEI doing to address these challenges? Looking forward long-term, what is your goal for NCVEI?
Karen Felsted: I see the NCVEI as a catalyst that helps veterinarians attain their personal and professional goals by improving their business, economic and life skills. Every goal in life has an economic component and all of the issues above can be addressed through the acquisition of these skills.
The NCVEI has played a significant role in the increase in the average earnings of veterinarians over the past 7-8 years through its SKA (Skills, Knowledge and Aptitudes) research with PDI, the benchmarking tools available on the NCVEI website (www.NCVEI.org) and its educational outreach efforts.
The importance of communication skills in all aspects of veterinary medicine has become very clear recently and the NCVEI has added several interactive communication modules to the tools already available on the website.
All areas of veterinary medicine benefit from the improvement of productivity and profitability in the private practice sector.
And finally, we want to start analyzing and mining the data currently available in the NCVEI database. Thousands of veterinarians have entered their data into the website benchmarking tools; now we’d like to start identifying growth and profitability drivers.
Trends online: What does NCVEI do especially well for veterinarians? That is, when and for
what purposes should veterinarians turn to NCVEI?
Karen Felsted: The NCVEI’s website has a series of benchmarking tools allowing veterinarians to enter data about the financial and operational aspects of their practices and to receive feedback about how they compare to other veterinarians and what they can do to improve in these areas.
Customized tools are available for companion animal, food animal and equine practices. In addition, there are tools available for support staff members to help them improve their skills and knowledge. To date, about 15,000 practices have entered information into the data base. This continues to be a great tool for veterinarians in understanding how their practices compare to others and what they can to improve.
I would highly encourage all practices to enter their data. Not only does this give the practice immediately useful information but it will give the NCVEI more robust data for the future analysis of profitability drivers and sound business practices.
Communication skills are widely acknowledged as critical to educating pet owners, running a successful business and, in general, improving relationships with anyone you come into contact with.
CVPM Preparatory Review (North America)
July 24-October 10, 2008
This course is designed to help veterinary practice managers review the basics of veterinary practice management. It is also a very good introduction to management concepts for new managers, or review for experienced managers who wish to revisit the basics. The course is geared to legalities and resources for the United States of America at this time; however, participation is not limited to the USA only.
The course will be presented by Katherine Dobbs, a well known author and speaker for practice management topics including overseeing VESPA (the Veterinary Emergency and Specialty Practice Association). She has developed this review course to systematically help candidates to prepare for this certification.
Upon completio!n of this class, attendees:
- should be able to easily recall the basics of veterinary practice management, as outlined on
the CVPM Task Analysis handout.
- should be well versed in taking multiple-choice questions similar to those given on the CVPM exam.
- should have knowledge of how to locate information and utilize study materials.
- will have built a network of colleagues through interaction with other course participants for sharing ideas and resources.
There are no required texts for this course, however the course will follow the CVPM Recommended Reading List which is provided by the VHMA (Preparing for the Examination – Study Guide and Recommended Reading List) or in this course’s Library once the course opens.
This class cannot guarantee passage of the exam, but is designed to aid in studying for the exam by reviewing the information that a practice manager should know upon gaining the required years of experience as determined by the CVPM exam application, and the completion of the recommended reading list provided by the CVPM Study Guide.
For more information, you can
click here to send an e.mail to the VSPN office
When You’re the Top Dog – Leading like a professional or barking up the wrong tree
Judging by the way we elect some of our political leaders, you’d think that the three most important qualities to leadership are: popularity, an outgoing personality, and loyalty to your supporters. Coincidentally, these just happen to be the three most outstanding traits of our overweight 6 year old Corgi, affectionately named “Sadie.”
Sadie is popular with everyone she meets. She’s outgoing to the point of being embarrassingly familiar with strangers. And she’s loyal — to us and anyone else at the park with a milkbone. Perhaps the only reason Sadie hasn’t been elected to public office is that she has breath issues.
When you are the “top dog” in an organization, there are indeed three keys to leading others that will strengthen customer loyalty, increase spending per customer, and enhance team spirit. They distinguish you as being a professional — significantly more effective than amateurs who have a title but nothing beneath the surface.
1. Harness the power of the pack.
Too often, amateurs get wrapped up in their own egos. They expect their people to support them simply because they are the “boss”. Captain Bligh adhered to this management philosophy. ‘Nuff said. Professional leaders also have huge egos. But their pride is centered in their belief in their people. In fact, they go as far as involving their staff in the creation of an organisation mission statement. Boring stuff? Only when some marketing person drafts it, gets the boss’ endorsement and hangs it on the wall in the lobby; never to be remembered or referred to again.
The real value of a mission statement lies in involving everyone in its creation. People discuss why they do what they do for a living. You discover shared values and an underling purpose to work beyond taking home a paycheque. You tap into the common bonds that are the true motivators of the human spirit. Sound touchy-feely? Absolutely. Why else would they want to work for you? . . . Job security? That’s difficult to provide. People want to work in an environment where they feel like they are a part of a greater good. They can be forced to work for you because you have a title — just ask Captain Bligh. Professional leaders think of themselves less as a boss and more as an activist rallying support for a worthy cause.
People will support a leader who has a strong sense of mission, who’s values match their own. Captain Bligh was an amateur. Abraham Lincoln was a professional.
2. Sniff out the right information.
To a professional leader, there’s no use in finding a faster way to climb the ladder if the ladder’s leaning on the wrong wall. They constantly, systematically, proactively check to make sure their heading in the right direction. Tools they use include:
- Ask your competition. Professionals learn to innovate by discussing issues with their competitors. Sound absurd? Join your trade association. It’s filled with competitors who recognize that none of us is as smart as all of us. Amateur leaders shun the competition. Professionals understand that today’s competitor may be tomorrow’s business partner.
- Ask your customers. Amateurs think they understand their customers needs because they do business with them. Yet, how many times have you eaten at a restaurant and decided that you wouldn’t go back? Statistically only one out of every 27 dissatisfied customers actually complains. Amateurs wonder why business is dropping off. Professionals admit they need to know what their customers really think. So they regularly test and verify client satisfaction.
- Consider using local business students to conduct surveys. Students get huge response rates. Think of it -wouldn’t you be more likely to answer a few questions to “help a student with their class project?” Bonus: students are a lot cheaper than commercial firms.
- Ask your employees. After all they’re closer to the customers than you are.
- Educate yourself. Amateurs are know-it-alls. They seem to believe that they are supposed to come up with all the good ideas. Professionals rely on other peoples success and apply that to their own practices. So professionals read books, listen to tapes, and attend seminars.
3. No tricks here
Amateur leaders ooze with golden promises and good intentions. They think that the key to being successful is popularity. And they try to deliver on their promises. In other words, they lie a lot.
Example: a customer asks when you can deliver something to them. You think you can get it to them by Wednesday. The amateur’s response, “I’ll try to get it to you by Wednesday.” But something comes up, so delivery is delayed by one day, until Thursday. At least you tried. No big deal, right?
Right. It’s only a big deal if you had any aspirations of being respected. Professional leaders know that their most valuable asset is their personal reputation. It’s simply not worth jeopardizing that reputation by making a commitment they may not be able to keep. So professionals make a practice of underpromising and overdelivering.
As someone with a title, you are the ‘big dog’ trotting by the yard where the neighbourhood dogs are lounging. Whether you lead like a professional or an amateur will determine whether they are motivated to run with you, or just stay on the porch.
You can click here to visit Jeff Mowatts website