The ultimate veterinary practice killer
Recently I was contacted by an extremely personable veterinarian who's approaching retirement age after almost 50 years of struggling to keep clients and staff happy. He has not been able to save enough for a comfortable retirement and has an unprofitable (read: unsellable) practice. I expect that he will, unfortunately, someday be found deceased, slumped over his examining room table—unless he takes drastic action. Here's my advice to him:
I've studied your situation, your location and your fees and come to some rather unpleasant conclusions. First, let's look at some demographics. If I were to gather up all of the people within a one-mile radius of your front door, we would find that their average family income amounted to no more than $41,868, which is about 30 percent below average for the country. These close neighbors generate an average transaction of only $90 and are more than a little uncomfortable with an exam fee exceeding $40.
So why are you in this undesirable neighborhood? The answer is simple. When veterinarians look to start a practice, they are limited by zoning. And the areas that are affordable, available and appropriately zoned are usually at the fringes of town in less-than-premium locations. These lower rent/mortgage sites are surrounded by either agricultural or industrial areas. They are affordable because they are unattractive to business owners, being far from the residential client base.This area draws, to put it mildly, less affluent members of the population, few of whom are likely to demand or be able to afford the highest-quality medicine you can provide.
Now, if we were to look at residents beyond that first mile, the outlook would be much better. The next circle I surveyed—all households within a three-mile radius—has an average income of $81,898. Another circle that includes everyone within a five-mile radius averages out to $80,008 per average household. These outer two circles have helped your practice survive.
But unfortunately, the inner circle, this immediate one-mile radius from your front door, has had a toxic effect on you and your practice. In your difficult early years, a huge number of your initial clients were from that one-mile radius, with 30 percent less income to spend on pet care. These lower-income family situations became imprinted on your brain and they have severely affected your long-term vision of your clientele, putting you at a tremendous psychological disadvantage.
These days, when a new client comes in, you subconsciously think, "They can't afford my best treatment." These new clients may actually earn twice or three times the income of your closer clients, but you've had so many high-level medical recommendations refused that you've stopped offering the best options to anyone.