Karen E. Felsted
CPA, MS, DVM, CVPM, CVA
Take Charge columnist Dr. Karen E. Felsted is the founder of PantheraT Veterinary Management Consulting. She spent three years as CEO of the National Commission on Veterinary Economic Issues.Read Articles Written by Karen E. Felsted
Controlling expenses is a tough job for veterinary practice managers, especially now. They’re caught between rising vendor prices, the hospital owner’s profit demands, employees’ heightened compensation expectations, and the need to provide the labor, drugs and other supplies that go into quality care and excellent client service. Veterinarian pay is one of the biggest expenses incurred by any practice. How much to pay doctors and how it’s done have gotten more complicated over the past few years as clinics try to find and retain DVMs.
The most important compensation issue for veterinary practices is whether their doctors’ pay is competitive in the marketplace. How a hospital structures the compensation is essential, but if the total amount offered to a DVM applicant or paid to current doctors doesn’t match the market, it won’t matter if the pay is based on salary, hours worked or production.
What is competitive these days? Compensation will vary depending on the type of practice, its location and other factors. Stacy Pursell, the founder and CEO of The VET Recruiter and someone who facilitates many veterinary job offers, shared her perspective.
- She hasn’t seen any accepted offers in the past year with a base or guaranteed salary of less than $100,000. That number applies to large and small general practices, whether corporate or independently owned.
- Total salaries are often higher with production pay built in.
- Compensation is much higher in emergency practices and areas of the United States with a lofty cost of living.
- New veterinary school graduates are asking for starting pay of $100,000 to $150,000.
- Almost 100% of DVMs accepting job offers get a signing bonus, anywhere from $10,000 to $250,000 in general practices.
Check on Your Competitors
All veterinary practices need to review their doctor compensation levels and the structure regularly. Where should you start?
First, gather as much local market information as you can. Published salary surveys were helpful in the past, but with the rapidly changing market and difficulties in hiring, those figures might be outdated. Also, check advertisements for veterinarians in your community and similar locations to see what is being offered. And keep up with what doctors say online. All veterinarians looking for a job see the same information as you and likely won’t consider a position with compensation lower than the market range.
Next, look at your doctor situation. Many practices are trying to hire veterinarians, but before doing it, make sure your DVMs are happy and would recommend your hospital to others. Getting complacent about your doctors and assuming they are bonded to your practice is easy when they still come to work each day. However, the truth might be different. Businesses of all kinds are seeing a lot of “quiet quitting” these days. “Quiet quitters” are employees who fulfill the basic job responsibilities but don’t go beyond. They aren’t engaged in the work, possibly the first step in leaving.
Quiet quitting can devastate a practice, destroying the workplace culture, disrupting essential team relationships and driving away clients. Quiet quitting can occur for various reasons, ranging from low pay, poor benefits and a bad culture to a lack of growth opportunities and an excessive workload. There’s no point bringing in new doctors if they won’t stay.
Ask Your DVMs
Don’t assume that doctors paid less than the current market rates are OK with it. According to Pursell, “Any practice paying their veterinarians less than $100,000 in guaranteed base salary is at risk of losing their doctors.”
I advise proactively raising DVM salaries to market levels or changing benefits or work hours to improve the compensation package. Employees these days generally want shorter workweeks, additional paid time off and more continuing education dollars. The best thing to do is talk to your doctors about what is important to them.
While all employees value money, market-range salaries might not be enough to keep them in this hiring environment. Your practice must be a place where people want to work, and culture determines much of that. Don’t think there’s one kind of “good” culture or that a practice that doesn’t have a “bad” culture must have a good one.
The first step in building a good culture or improving an adequate one is to weed out the toxic elements, such as:
- Bad bosses.
- A lack of core values.
- Little or no understanding of what employees want.
- Constant drama, confusion and gossip.
- A lack of communication.
- A constant “policies over people” attitude.
Hiring and keeping people, no matter how much you pay, will be impossible without a good culture.
Adjust Your Fees
I often hear practice owners say they can’t afford to pay high doctor salaries, but if you want to hire or retain DVMs, you can’t afford not to. It’s a new world, which generally means practices often must focus on other changes to support higher payroll costs and keep profit margins strong. Appropriate fee increases, better marketing, improved efficiency and productivity, and greater investment in technology are critical.
Improving doctor productivity is one critical area of focus, but I’m not suggesting you tell your doctors to work harder. DVM productivity heavily depends on how management runs the practice, which means providing the environment, training and resources to make greater productivity possible.
Greater investment in marketing, efficiency, technology and doctor compensation might hurt profitability early on, but without stabilizing or improving doctor acquisition and retention, future profit increases will be hard to achieve.
While my focus in this article was primarily on offering competitive compensation, my next one will discuss the methodology for getting there.
RAISING THE BAR
Here are the areas of focus and the questions to ask when you’re trying to improve doctor productivity in your veterinary practice:
- Do your doctors have good time-management skills? What do the efficient doctors do that others don’t? What can your practice do to drive improvements?
- Can doctor scheduling be improved? For example, does every patient need a 30-minute appointment?
- Do your doctors have good communication skills? Are they making recommendations effectively? What training is available to improve their communication skills?
- Do your doctors have enough technicians and assistants to help? Are the team members appropriately trained?
- Are too many discounts and missed charges happening?
- How can you improve the system to reduce them?
- Does your practice measure client acceptance of doctor recommendations? If clients are saying “no,” why is that?
- The cost? Poor communication? Poor service?
- Are your practice’s work processes streamlined and efficient? If not, what can you change?
- Is your practice marketing itself enough and attracting the desired types of clients?