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.
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.
The time bomb: percentage pay for specialists
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
What to do?
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?
David M. Lane DVM, MS
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 firstname.lastname@example.org
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 email@example.com