The dynamic of practice purchase/buy-in has been changing along with the enthusiasm of many of the big-city associates who
had previously felt that they wanted to purchase or buy in to the clinic where they work. In turn, many practice owners are
feeling caught between two daunting forces: sagging commercial real estate prices and escalating labor expenses relative to
Sellers' angst isn't lost upon the potential buyers, either. Savvy associates who had been considering buying in to the once-expanding
practice are now looking twice at the financial benefits to owning a piece of a business that has salary, overhead and insurance
costs advancing solidly while client transaction numbers are retreating noticeably.
These potential partners are caught between a pair of their own upsetting realities: uncertain return on their investment
in a practice and a serious decline in housing prices. A down residential market potentially impacts access to investible
home-equity funds. Associates who are upside down in their homes (owe more on them than their appraised value) appear to be
rethinking or delaying their decision to move forward with clinic buy-in plans. Naturally, when previously committed buyers
become discouraged, so do potential sellers.
This group seems to be particularly stressed—emotionally and financially—by the economic realities of the new decade. Board-certified
and board-eligible veterinarians are contacting me more than ever, and the topics we discuss have changed.
Previously, these highly trained doctors were interested in negotiating their best employment deal, having their contracts
fine-tuned or reviewing their benefits options in a universe of full employment.
The tenor of my discussions with specialists is often less upbeat these days. Here is a sample of what I'm hearing, particularly
from specialists in multi-specialty practices in big- or medium-sized cities:
- "I took this job on a percentage-of-production-only basis, and this practice can no longer provide me with enough cases to
match the salaried job I left in order to come here."
- "My contract calls for me to be paid the larger of either a base salary or a percentage of my gross production. I have asked
repeatedly to see the production numbers, but all I get are empty assurances that they are coming. Do you think my caseload
is so weak that they don't want me to know?"
- "These guys recruited me from a great practice on the West Coast, and I couldn't turn down the opportunity, especially the
signing bonus, which was supposed to be split into three quarterly payments. I've been here a year, and I can't get the second
and third bonus checks no matter what I do. I really don't want to be suing my boss and working here at the same time."
- "My practice has cut me down to less than full time but has said that my non-compete will be fully enforced. I just got out
of my residency and owe a fortune, so less money just won't do."
As I pointed out at the beginning, I am certain these doctors are feeling anxious for no good reason. Government figures prove
that the recession is over. You practitioners out there need to quit worrying and just start watching more TV.
Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians. Call
(607) 754-1510 or visit firstname.lastname@example.org