Playing the percentages Beware of pay pitfalls - DVM
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Playing the percentages Beware of pay pitfalls
Center Valley Veterinary Hospital; Springfield, Calif.


Year 3

Table C
In Table C, the owner is now concerned and raises prices across the board by 5 percent. Client numbers level out this year, and the associate and owner take pay increases from the 5 percent price hike. Expenses creep up to 72 percent of gross. The practice is now in the red. The owner takes a pay cut and is taking home less than the associate. Both veterinarians are blind to these realities. The owner considers new options, one of which is to reduce the percentage pay.

What you see in these examples is a common three-year cycle in veterinary practices — status quo, followed by production and expense increases, followed by reactionary price increases brought on by these expenses and the eventual poor financial performance.

This is exactly the type of scenario that leads associates like Ben to start a new veterinary practice.

The time bomb: percentage pay for specialists
Please note that I could have chosen 22 percent as pay for associates and tinkered with the overall expense equation, but eventually it leads down the same path to poor financial performance unless the owner makes some healthy increases in prices.

Why does this happen?

Production pay doesn't always deliver because production does not equate to efficiency. A growing practice is not very efficient because doctor production attracts expenses to itself.

Secondly, expenses are expanding faster than gross can catch up because new technologies and building costs are expanding faster than veterinarians are prone to pass the cost on to their clients. This expansion makes a certain "gold standard" pay percentage, be it 25 percent or 22 percent or 19 percent, a moving target —frustrating to associates and owners caught in the crunch.

What to do?

David M. Lane DVM, MS
Veterinarians and consultants have had to backtrack. They now conclude that 25 percent is intolerable. Some say 22 percent is untenable. Is there any end to it?

Part of the answer is happening before us — part-time veterinary medicine (which may be best paid for on an hourly basis), better expense control, and paying veterinarians based on salary plus bonus system, might be helpful.

Time will tell.

P.S. I would like to have feedback on this issue because it seems to crop up everywhere I go. Please send comments to

Dr. Lane is a graduate of the University of Illinois. He owns and manages two practices in southern Illinois. Dr. Lane completed a master's degree in agricultural economics in 1996. He is a speaker and author of numerous practice management articles. Dr. Lane also offers a broad range of consulting services and can be reached at


Source: DVM360 MAGAZINE,
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