Recession prompts review of business decisions
Posted April 15, 2009
Nothing like an economic downturn can put practice management issues at the forefront of equine veterinarians' minds. For some, evaluating their business practices can cause even more anxiety than treating a horse with signs of colic. In that event, experts and other veterinarians have some words of advice on how to weather an economic storm.
• Change fees intelligently
Before the recession, Dr. Scott A. Spaulding raised fees about 3.5 percent, twice a year. He backed off doing so this past year, but the clinic continues to see an increase in the cost of business. Now, Dr. Spaulding is worried about staying ahead of inflation.
That's why this year, Dr. Spaulding is considering a 2.5 percent increase three or four times. "But in these conditions, I'm not sure if we'll be able to do that," he said.
Elise M. Lacher, a practice consultant, recommends taking a close look at the practice's situation.
"It would be nice in this economy to say don't raise your fees, but distributors haven't gotten that message. Vets' fees and costs are going up. They have to be paying attention to pricing and raise fees accordingly," Lacher said. "Raising fees is part and parcel of what's going on."
With that said, she cautions that veterinarians who do raise their fees but do not increase their service will be in for a disaster, "especially now, when clients are fee-conscious."
• Convey value to clients
According to Lacher, it's incumbent on equine veterinarians to convince their clients why it's important for a professional to treat their horses rather than the clients themselves.
"You need to distinguish why you are giving vaccines rather than them," she said. "Most owners have no qualms about giving horses vaccines that they can get through catalogs."
Dr. Spaulding works actively to recruit new clients and educate current ones about what his clinic offers. His practice puts on educational meetings for clients, paid for by pharmaceutical companies. Most recently, clients could learn about the practice's targeted deworming program. About 80 people came, double the usual number.
"People still want to be involved," he said.
• Manage staff efficiently
More often than not, a practice's biggest expense is payroll. For Dr. Spaulding, it accounts for 42 percent of his practice expenses. When business turned south last year, it was time for action. The partners agreed not to replace an equine veterinarian who resigned in August 2008 and a part-time veterinary technician who left for school. They laid off a receptionist and went to seasonal hours, meaning staff took a two-hour, unpaid break in the middle of the day. The practice also discontinued its IRA plan for employees. These changes resulted in a 20 percent cut in payroll costs.
"We've been forced to consider every expense," he said, even to the extent of looking at cell phone and snow plow costs, not to mention shopping for new insurers and bankers. "I think we'll be better off in the long run."
Some staff members Dr. Spaulding would think twice about letting go are veterinary technicians. They travel with the doctors and help with every call.
"On the busiest day of spring, I wouldn't have calls done by 9 p.m., and now we're done by 5 p.m. and I accomplish more," Dr. Spaulding said.
• Control inventory costs
Even before considering staff cuts, Lacher recommends looking at the medicine shelves. She said practice owners should pay more attention to their inventory and work harder to collect their fees, instead of giving away products.
Another money-saving move, Lacher says, is to pay better attention to the schedule.
"Frequently with one-doctor ambulatory practices, they do not think about what needs to be done with their day. They may be driving from one end of the county and back instead of being proactive with clients," Lacher said.
Proactively calling on clients, she suggests, works great if an equine veterinarian has two or three in one area, combining them all into one trip saves on gas and time.
"That's where wellness programs can help in this economy. You take control of the scheduling process," Lacher said. "Even if clients are not on wellness programs, pay attention to what's going on with them, and work the schedule."
• Worry less
Remaining focused on what's important and what's controllable can help in weathering the barrage of sour economic developments.
"This, too, will pass," Lacher said. "When is the question."
The American Association of Equine Practitioners aims to help equine veterinarians learn strategies that will be of benefit during the current economy. The association's theme for its summer practice management seminar will be "Thriving in a Down Economy." The three-day meeting will focus on a variety of strategies to help equine practices adopt current business practices and look for new opportunities. The meeting will take place July 19–21 in Columbus, Ohio. For more information, visit www.aaep.org.