Make effective use of your team
Veterinarians generate active income. The all-important passive income starts with the staff members.
In too many clinics today, compensation for all members of the veterinary health care team is inadequate.
Why, on average, do dentists enjoy personal incomes more than double their veterinary counterparts? Why are starting salaries for optometrists nearly twice that for veterinarians? Why do dental hygienists make more than many veterinarians?
The good news is that most clinics can address and resolve these problems. There are great opportunities to improve veterinary practice productivity.
How is revenue or income produced in a veterinary clinic? (Note: For purposes of this discussion, revenue and income are synonymous with other commonly used terms such as “gross” and “gross income.”)
Revenue is generated when pet owners give up something of value, typically money, in order to receive something of perceived equal or greater value —in this case, veterinary services and products. The greatest opportunity for veterinary practices is to grow revenue. There is typically far less opportunity to enhance practice health through cost-cutting. Rare is the practice that cuts its way to prosperity. Unusual is the veterinary practice where expenses are wildly out of control.
Because growing gross income is the key to higher hospital productivity and income, let’s dissect hospital revenue further.
Active and Passive Income
I broadly classify gross income into two categories: active income and passive income. Active income can be generated only through the doctor’s direct, full-time involvement. Examples include:
- Examining the pet.
- Prescribing and initiating treatment.
- Surgical procedures.
- Certain client consultation activities.
Passive income can be produced without the doctor’s direct, full-time involvement. Passive income is critically important to overall practice profitability and productivity. Examples of veterinary hospital services that generate passive income include:
- Routine dental cleanings.
- Radiographic procedures.
- Lab work (fecal tests, heartworm tests, urine tests, CBC’s and biochemical profiles).
- Nail trims.
- Ear cleaning.
- Anal sac expression.
- Suture removal.
- Bandage changes.
- Anesthesia induction.
- Pet adoption programs.
- Behavioral programs.
- Weight-management programs.
A Background Presence
It’s important to note that although the doctor might have some involvement in the delivery of “passive” services, the veterinarian need not be involved on a direct, full-time basis. The doctor might be in an exam room or the surgical suite, generating active income, while the services are delivered.
For example, assume the doctor orders a radiograph. Team members are capable of taking radiographs, which constitutes the bulk of the time and effort. The veterinarian then could read and interpret the radiographs. Both processes are vital to an accurate diagnosis —that is, good images to read and competent interpretation of those images. In this scenario, each party is assuming an appropriate role. Team members are performing tasks for which they have adequate training and experience (taking the radiograph), while the doctor is performing tasks for which he or she is rightly trained (ordering and interpreting the radiograph).
Examples of veterinary products that generate passive income include:
- Heartworm prevention products.
- Flea and tick control and prevention products.
- Nutritional products.
- Refilling other prescriptions.
- Shampoos and other skin and coat products.
- Other pet supplies.
Look around your clinic and you’ll see myriad veterinary services and products that produce passive income.
Why You Need Passive Income
Passive income is critically important to the success of a practice. Why? Because in a veterinary practice, the veterinarian’s time is the constraining factor —or the most limited, finite and scarce resource.
A doctor has only 24 hours each day to generate active income. As a result, there exists a “cap,” or physical limitation, in terms of how much active income a veterinarian can generate. As other professionals have found, that cap might be quite low. Therefore, dramatic increases in hospital income are a function of how well the practice is positioned to generate passive income.
The principle of having people undertake tasks or activities for which they are adequately trained and experienced is called delegation. Delegation is required in order to generate passive income. That is, if a doctor is unable or unwilling to delegate to others, only active income can be produced. A veterinarian can and should delegate to members of the health care team everything not specifically required of the doctor. Then, veterinarians can begin to command the level of income they deserve and competitively compensate other team members.
Recall your last visit to the dentist for routine care. How much time did you spend with the hygienist? How much time did you spend with the dentist? Most likely, the great majority of your time was spent with the hygienist. The hygienist probably examined your mouth, cleaned your teeth, applied fluoride and perhaps took radiographs. Next, the dentist examined your mouth and read the radiographs. Again, each member of the dental health care team assumed an appropriate role, each doing what he or she was specifically trained to do.
Similarly, recall your last visit to the optometrist for routine eye care. Which tasks or activities were delivered by the optician or optical assistant? Which were reserved for the optometrist?
The economic or financial consequences of delegation are staggering. Imagine how many more patients a dentist or optometrist can see each day by appropriately delegating to team members.
If the dentist performed tasks typically assumed by the hygienist, could he or she see even half as many patients? If the optometrist fitted each set of eyeglasses and performed all the eye tests, could he or she see even half as many patients? In both cases, the answer is “no.”
These professionals have found that by effectively delegating to members of their health care team, they can focus on the more complex —and the more remunerative —tasks and activities.
Although veterinary medicine, dentistry and optometry have been specifically mentioned, the principle of delegation is relevant to all professional service businesses.
What tasks or activities are performed by a veterinarian in your practice, that could be delegated to members of the health care team? Brainstorm things that could and should be performed by non-veterinary personnel.
Veterinarians are often surprised by the confidence, competence and talent of their support staff. Also, team members usually enjoy the opportunity to use their skills and abilities to contribute to pet health and well-being.
Effective use of veterinary health care team talent cannot be overemphasized. In general, veterinary income and the income of team members is woefully inadequate.
Dramatic increases in hospital income are a function of how well the practice is positioned to generate passive income.
Fritz Wood owns a Kansas City, Missouri, consulting practice serving veterinarians and animal health companies. He serves on the Today’s Veterinary Business editorial advisory board.