You have the power to stop growth decline

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Jun 01, 2001

The bluebird of happiness is not dead; far from it. However, for many of his/her cousins, the buzzards are circling.

While at least 30 percent of American veterinary practices are in high growth areas and post higher numbers year after year, too many in stable growth or declining growth areas are suffering from declining Roverflow.

Signs of the timesThe number of new clients is level or declining and regular clients are trimming their visitation rates.

Last month, I received three calls from consulting clients, each telling about the same story. The practice a mile away was closing. The owner tried to sell his/her practice, but the profits just were not enough to make the practice attractive to any buyer, so they were just trying to sell the records and their equipment before closing their doors. Their dreams were shattered.

The sad stories I heard were simply because these owners had had a decade of poor management with just 20-25 percent net and the current drop in the numbers of clients coming in was the fatal last straw.

Where 2.2 visits per year per patient was the norm in the '90s, the rates have fallen below 2.0 and the result is a 5-15 percent drop in transaction numbers. One might think that that would mean a 5-15 percent drop in net revenues. Life just isn't that fair.

Recall that until you reach that breakeven point where the fixed costs are all met, there is zero profit. After that, up to 80 percent of each dollar can fall to the bottom line. The drop of 5-15 percent in the over-breakeven dollars and a 15 percent drop in gross can mean a 20-25 percent drop in net.

What to do? What to do?

Only solutionThe only solution is to bring more dollars through the front door. How do you do that, you ask? Well, if you cannot bring more people in those doors, you have to earn more dollars from those who do come in. You do that by increasing your average transaction, and you can increase that average transaction in only, count 'em, two ways. You can raise fees for the services you provide, or you can provide more services for the patients you see.

Sadly, the average patient arrives with 2.3 treatable medical/surgical diseases. Disastrously, the average veterinarian identifies and treats only 1.7 conditions for each pet. Is this because the pet's lesions are occult? Heck no! It is, I am sorry to say, purely and simply because of "AlleyMark Syndrome." Yes, the veterinarian did not care to perform his or her very best!

Yes, it's true! The practice did not hire the best people available and invest enough dollars in initial training before that employee ever saw the first client. That same veterinarian did not provide the continuous training programs necessary to enable that employee to interact with the patient's guardian to elicit a proper medical history.

Then that veterinarian did not conduct a system by system physical examination of the pet. They forgot the maxim … "You miss more diagnoses by not looking than by not knowing."

And then, with whatever lesions they may have found, fewer than half of our profession knows how to present the facts to the client in a way that the client's compliance with their recommendations exceed 80 percent.

Flagrant example

A flagrant example is the dental disease present in 85 percent of our patients more than 5 years old. As these make up at least 40 percent of our patient load, the veterinarian seeing 15 patients each day should be performing 0.85 x 0.4 x 15 = 5 dental procedures per day. That means 100/month per veterinarian @ $120 each (lab being separate) or about $150,000 each ear.

Of course, you could always just increase your fees. The best course of action is a combination of more thorough examination and increasing the fees that you have been undercharging lo, these dozens of years.

Lest you think that your fees may make you unaffordable in your area, let me give you the simplest of formulas. The average transaction that the average client in your neighborhood can well afford is the Average Household Income for your zip code: (drop the thousands attached) x 1.6.

Example: Average Household Income of 60,000 … 60 x 1.6 = $96.

Your local chamber of commerce can give you the average household income for your zip code. If that's not available, you can FAX me (561) 989-8558) your current average transaction and your zip code, and your phone and FAX numbers and we'll try to FAX back within 10 days.

Re-examinationMeanwhile, re-examine your staff training programs. If they are not weekly/monthly, you are letting them down and you may, someday need to sell your medical records.

Re-examine your dental procedures as a function of your gross income. Less than 5 percent of your gross income should cause you to hang your head in shame.

Re-examine your laboratory procedures as a percentage of your gross income. Less than 15 percent of your gross income should make you run, not walk to the next continuing education seminar on clinical laboratory medicine.

And, of course, less than a 40 percent net before veterinary salaries should make you wonder whether your practice is salable at retirement. Waiting until two years before your intended retirement to find out what your practice is worth makes you appear as not the brightest crayon in the box.

Dr. Snyder, a well-known consultant, publishes the Snyder Advisory Letter, a newsletter for practice productivity. He can be reached at 17094-1 Boca Club Blvd., Boca Raton, FL 33487-1225; (800) 292-7995; vethelp@gate.net; FAX (561) 989-8558. M