Myth 5: Your ACT is the best indicator of practice health.

Veterinarians talk about their average client transaction (ACT) number, but focusing on the ACT can undermine a clear understanding of what's really happening. For example, when you're focused on driving up your ACT, follow-up visits — which are essential to quality medicine — are less of a priority because they tend to drive down the ACT.

A better indicator of practice health is annual services per pet (ASPP). The ACT is subject to short-term considerations, while the ASPP tracks the total healthcare services provided per animal per year. Improved follow-up care drives up the ASPP, while the ACT stays the same or falls.

Myth 6: New clients grow your practice fastest.

Yes, new clients are important, but the big growth comes from your current clients.

The best way to grow is to provide new and improved services. You can do this by applying more of your budget to staff and veterinary education. We used to be happy with 10 percent growth from our current client base. With the economy today, and with veterinary medicine "maturing," the new standard is 5 percent to 10 percent growth from the current client base.

What services will you nurture and expand to ensure practice growth?

Myth 7: More advertising creates more growth.

Every advertising dollar should generate at least three times its cost in new business. A practice spending 5 percent of its budget on advertising should grow by 15 percent per year. That's usually unrealistic.

Exceptions exist. For emergency medicine practices, high advertising costs are a part of doing business. The rest of us need to track our advertising to keep it under control.

Myth 8: No-lo practices are bad.

This isn't true! No-lo practices just follow a different business model than corporate practices. The reality is, the more corporate practices thrive, the greater the need will be for the noncorporate practice model. In veterinary medicine, as in human medicine, this is part of the rule of opposites.

It works like this: From each dollar taken into a typical no-lo practice, 55 percent goes to goods, labor, expenses, and facilities. The veterinarian takes the remaining 45 percent.

In a high-rolling corporate practice, the expenses typically run at 90 percent of revenue, leaving a 10 percent profit to shareholders. That's a good return for a retail store, but not for a veterinary services corporation that needs to justify investment and secure funds for development.

The no-lo practitioner needs to generate $300,000 to take home $135,000. The corporate practitioner who's not a partner is an employee of the corporation and must gross $540,000 for the same take-home pay.

Treating a practice as an investment is only one business model. The no-lo practice operates under a different model, one in which you "purchase" your job like a franchiser. Each model has its pros and cons.

To balance the issue of investment disparity between no-lo and corporate practitioners, the no-lo practitioner can set aside 10 percent of annual income in an investment portfolio to create a nice nest egg.

Watch for another article later this year about even more practice-management myths.

Dr. Riegger, dipl. ABVP, is chief medical officer at Northwest Animal Clinic Hospital and Specialty Practice in Albuquerque, N.M. Call him at (505) 898-0407, or e-mail him at Riegger@aol.com
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