UK Vets Profits Down
Martin Hall has very kindly sent me a copy of the May issue of ‘in The Know – Veterinary’, the regular newsletter prepared by Dodd and Co, the accountancy firm based in Carlisle, Penrith and Lancaster.
The annual profits survey based on the accounts for their veterinary clients, reveals that the average profit represented just 17% of income (down from 20.4% reported in 2009).
Martin tells me that “the figures are based on accounting profit per the accounts as filed at Companies House, so the 2.5% directors remuneration only include any salary and pension contributions actually paid by the practice on behalf of the directors. This is generally not a commercial salary but a notional salary of the National Insurance threshold, plus any pension contributions paid as employer. If we add this back and instead deduct a notional salary for a vet in their clinical role of say £50k, this would leave a net profit of 7.5% of turnover”.
The profitability of most veterinary practices in the UK continues to be totally inadequate. What is required is a greater recognition by practice owners and managers and the professional associations that serve their interests, that better business management of veterinary practice is not just desirable, it is essential.
Is My Practice Worth One Year’s Gross?
In the past, our profession routinely tried to tie practice value to gross income. That was before the time of high student debt, increased competition, and the current level of business savvy that we see in today’s veterinarians. There are many, many factors that create value most of which have little to do with the gross revenue of the practice and there is virtually no correlation between the two.
What determines practice value? The impact of gross income is mostly psychological because many people still try to correlate it with value. If a practice is priced above a year’s gross revenue, there is artificial market resistance. Conversely, if it priced at a small fraction of a year’s gross there may be a false perception that it is a “good deal”.
It is profit that forms the foundation for determining practice value, because these are the dollars available to pay for the practice. Practice growth contributes an intangible value as does geographical location. If competition is stiff or if there is no competition, it must be considered as an influential part of value. Tangible asset value is the value of the equipment and the inventory. It is income that buyers want, not “stuff”. Of course certain equipment is necessary, but too much equipment does not increase value.
Long term, loyal, skilled employees add value, as does a reasonable transition period by the selling doctor. A small, “high touch, boutique” practice has more loyal clientele than does a high volume, “low cost” practice. A practice in a permanent location as opposed to a mobile practice will have more transferable goodwill because the clients will more easily remain with a fixed-location practice, hence, more value.
Averaging the last 3 years. Many appraisers use the average numbers from the past three years. This works if the three years are essentially the same, but if the practice is growing or shrinking to a significant degree, that method is dangerous and very inaccurate. Weighted averages that give more weighting to the most recent years are a much more accurate method of determining value.
Value and marketability are not necessarily the same thing. Simply because a practice has a certain, calculated “value”, does not mean it will sell for that price. For example, mixed practices in undesirable areas, with no emergency service available, are extremely hard to sell, and usually will require a very steep discount in order to entice a buyer to purchase. Practices in sought-after areas with good facilities and all the “bells and whistles” will often sell at a premium.
You can click here to visit the Simmons website
The Northern Vet Show
The Business Programme includes the following sessions
Friday 24th June 2011
- ‘Do you have a Tax planning strategy for your veterinary practice?’ – Find out how to reduce your Tax burden by Riz Akhtar FCCA ACMA
- Wysi-wyg!- Are you what you appear to be? Creating and sustaining a practice clients can come to trust – Mark Moran
- Patient health Vs Practice Heath. How compliance management can provide the key to creating an ethically sound and successful practice in challenging times – Mark Moran
- Conflict resolution including advanced communication, interpersonal skills, team conflict and NLP strategies – Darren Good
Saturday 25th June 2011
- No need to panic — the ‘low-hanging fruit’ may have been picked but the future for veterinary practice is great – John Sheridan
- Where can I find those numbers? — Does your Practice Management Software system generate the information you really need to manage your veterinary practice? – John Sheridan
- What is the role of customer experience when all owners ask about is cost? – Alison Lambert
Better Interviews – Proper Preparation Prevents Poor Performance
As with all things in life practice generally helps. From speaking with our clients we know that performing a selection interview is something that many vets and practice managers do not enjoy. And many actually find the process as bad, if not worse that actually being interviewed!
Why? Because rather than passively attending an interview, when you are in the driving seat you are expected to know what you are doing. But (as is so often the case in veterinary life) when were you ever trained to perform the perfect interview?
Holding a professional interview day can make all the difference with candidates often reporting being impressed by practices that do things well.
So to enhance your recruitment chances, here’s a list of eight tips that will help you look and feel professional when conducting your next selection interviews for your vet practice.
- Avoid ‘no shows’. Once you have made your shortlist, call and email candidates with specific instructions for the interview day. Then, two days before the interview send a second email to make sure that everyone knows when and where to go for interview. It is a good idea to host a page on your website with the relevant information then you can link to this page in your email. We recommend having the practice address and contact details. Plus instructions on how to get there by rail, bus, road or taxi.
- Make a good impression – running round like a headless chicken five minutes before the interview is due to start is not the ideal way to prepare. Instead, clear your diary, book the interview room and make sure you have given your reception team written instruction on who is coming for interview that day. We recommend verbally briefing them as well. Think how much better an impression it makes for your team to know who to expect and greet them warmly, than be taken by surprise.
- Mix up your interview panel – you should have at least two people, one clinical and one non-clinical. This allows you to view a candidate from several perspectives and helps to form a balanced objective viewpoint when making decisions later. Make sure to clear some time in your clinician’s diary as well. Vets are really good at not taking the non-clinical stuff seriously.
- Use a script and provide all panelists with a copy of candidate CVs and cover letters. If you find yourself getting nervous and losing the place in an interview then write down some headings or some key questions. We don’t recommend reading verbatim however as this sounds corny. But it can help just to know that should you need it, there’s a gentle reminder on the table in front of you. And a quick glance when the other interview panelist is talking will help you to stay on track.
- Talk less, listen more. Verbal diarrhoea is a common affliction for those who are inexperienced in performing interviews. You were given two ears and one mouth so ask your questions and then listen to the answers carefully. You’ll learn a lot more and, generally speaking, people like managers who are capable of listening rather than just broadcasting.
- You may be going to interview several people in one day, so take notes as you go and give yourself space between interviews to write down your thoughts before you move on.
- You are under no obligation to provide expenses for your interview, though this does demonstrate your willingness to invest in staff and helps you to stand out from the crowd. Plus you are more likely to attract talent from a wider area if you offer this perk. Just be clear in your invitation emails whether you do or not to avoid any awkward misunderstandings later on.
- Manage expectations and be polite. At the end of your interview conclude by allowing your candidate to ask any further questions then make sure they know when you’ll contact them. Make sure they have a copy of the job description and salary package and you have all their relevant contact details. When you make your final decision it is good practice to contact all unsuccessful candidates with an email or letter. It takes two minutes and helps build a professional reputation, which is all-important in the recruitment market.
9 steps to a perfect veterinary appointment
Everyone talks about the “new normal” and the “new economy” these days, but what’s really new is today’s veterinary client. With less income to spare, today’s pet owners are becoming smarter shoppers who are learning to spend money on what really counts. In the veterinary practice, they’re scrutinizing treatment estimates, questioning charges, and refusing services if our explanations are lacking.
Veterinary medicine’s biggest challenge is explaining exactly what we do for pets and why. We need to start educating clients in the exam room with the same passion we spend treating and preventing disease in pets.
It’s time to make sure you’re building bonds with clients that help you deliver the best veterinary medical care to patients. You need to show pet owners you know their pets and you’re invested in their well-being, not just your bottom line.
Here are the nine ways my practice builds what we hope is the pet owner’s perfect appointment–before the veterinarian arrives, in the exam room, and afterwards:
Before the veterinarian arrives
- Assign veterinary technicians to patients. Clients want to know that you and your staff are familiar with their pets. The best way to guarantee this is to assign particular technicians to patients before they arrive. Before an appointment, the assigned technician can perform a complete record review of such key areas as vaccinations, diagnostic testing, chronic disease and medications, and dental or weight issues. The technician can include notes in each patient’s master problem list or history of non-wellness visits. This pre-appointment review makes it easy to identify recurring issues you may otherwise miss.
- Ask receptionists to know names. Technicians aren’t the only team members who need to brush up on the day’s visitors. Your receptionists can huddle up with the technicians before appointments, too. The more educated your entire staff is regarding the patients they’ll be seeing that day, the better you’ll look to clients.
- Ask receptionists to review clients’ arrival times and welcome clients and patients by name as they enter the building. If the receptionist knows Mrs. Smith has a black lab named Bruno coming in at 10 a.m., it’s a safe bet that the black lab walking in the door at 9:53 a.m. is Bruno. If the receptionist knows why Bruno is there, it makes the arrival even more pleasant.
- Turn technicians into front-line educators. Have technicians talk to clients before the doctor’s arrival to touch on any relevant topics–wellness or illness–that you feel are important to discuss. Don’t worry that technicians and doctors will cover the same territory–that’s the point! In my practice, we find that technicians and doctors get different answers to the same questions. Clients will remember new details in between the technician and doctor discussions.
When the veterinarian arrives
- Focus on your top three. When our doctors open the exam room door, they’ve got three crucial tasks on their mind. First, they build the bond by warmly acknowledging the owner and the pet by name. Next, they show their focus by addressing the reason for the visit within the first few minutes. Finally, elevate the team by telling the client that the technician has explained the patient history and that they have a few more questions.
- That last step is crucial. When doctors show the importance of the technician, they’re demonstrating to clients that the other faces they see during a practice visit are valued, trustworthy members of the veterinary team.
- Talk during the exam. During any physical examination of a patient, veterinarians should discuss what they’re seeing, hearing, smelling, and touching. Clients want to know they were right to spend the money and time to take their pet to your practice. They want to see that the physical examination matters.
- Talk through the treatment. When it’s time for recommendations, discuss them in detail with the client. Let the pet owner know the probability of each differential diagnosis. This way, you can tailor diagnostics and treatments to the individual pet. If you take a cookie cutter approach to all cases, you run the risk of clients feeling like nameless customers paying for unnecessary tests.
- Recommend the right way–your way. Your recommendations can easily cost a client several hundred dollars in the blink of an eye. Consider breaking treatment up over time or giving more than one treatment option.
- If you do offer alternative treatment options, don’t undercut your plan A. Consider a good example and a bad example:
- Good: “Our first approach is Plan A. The reason why we want to do this is … An alternative approach is plan B. If we go with Plan B, then we’d need to watch for these serious issues (if the patient is ill) … or we need to be more careful of (if the patient is well) … “
- Bad: “The best approach is Plan A. Here’s why … We could also try Plan B, which is … There’s also Plan C … ” Explain honestly and clearly the risks involved with less aggressive treatment options. But remember that clients may need to choose less-than-ideal treatments for good reason. There’s no reason to shame or embarrass them for making what may be a difficult financial or lifestyle choice.
- Estimate in the exam room. After you’ve recommended care, give an estimate in the exam room, face to face with the client. “Sticker shock” at the front desk is no fun for clients–or receptionists. If the veterinarian doesn’t give an estimate and its justification in the exam room, the client may balk at the front desk–and that may be the last time you see him or her.
After the client leaves
- Follow up, follow up, follow up. Don’t make me say it again. Clients should receive callbacks until they and the veterinarian are comfortable with the resolution of the issue. You can add a personal touch and enhance at-home education with snail mail and e-mail as well. For a personal touch on a difficult case, suggest that the owner of the practice call the client.
- If the doctor who saw the patient can’t call, make sure the receptionist or technician refers to the attending doctor during the conversation: “Dr. Smith wanted me to call you to see how Frankie is doing today.” The client will probably remember the doctor from the visit.
- We can be successful, even in the era of the “new client,” if we work to fine-tune the relationship between team members, veterinarians, and pet owners. And relationships have never been so important. Sit down with your team. Figure out what you can do better. Do it.
You can click here to read the original article on the DVM360 website
Big thumbs up for think tank
There will be no ‘return to normal’ when the recession finally ends. One of many of the conclusions coming out of a ‘Think Tank’ event held between the 2nd and 3rd March in Birmingham. The event gave the opportunity for forward looking vets and practice managers to brainstorm the critical challenges and opportunities facing our industry in the coming years.
Feedback received from participants after the event was unanimously positive. “Quite simply the most useful and thought provoking management seminar I have ever been on!” commented Doug Alexander, Partner at AlphaPet.
“A good environment was created for us to talk and discuss ideas. Some exciting thoughts to take back into practice for now and for future development” suggested Andy Nelson, Partner at Leonard Brothers. “Some vets believe that they just need to hold out for the recession to finish” explains Ashley Gray, Managing Director of the host company, Total Veterinary Insurance Ltd. “The reality is that, when the recession finally ends, we will awake in a world that is completely different. To some, such changes are very frightening, for others, they present exciting opportunities.”
“Whichever camp you fall into, planning, preparation and collaboration between like-minded vets are all critical for success” continues Ashley. “We thank everyone for their participation and look forward with pleasure to doing this again in the future.”
You can click here to visit the Total Vet Insurance website