Don Vaughan is a freelance writer based in Raleigh, North Carolina. His work has appeared in Today’s Veterinary Business, Writer’s Digest, Encyclopedia Britannica, CURE Magazine and elsewhere. He is the founder of the Triangle Association of Freelancers.Read Articles Written by Don Vaughan
Running a successful veterinary practice can be difficult. Hospital owners and managers often focus on maintaining a high level of clinical care, but at the same time they have to confront potentially damaging issues such as staff turnover, declining profits and the loss of clients to competing clinics.
When a problem reveals itself, the inclination of many leaders is to try to fix it themselves. But when it becomes too big, or the owner or hospital manager doesn’t have the time to address it, hiring an outside consultant is sometimes the best move.
“Realistically, many practices need help at one time or another,” said Karen Felsted, DVM, CPA, MS, CVPM, CVA, president of PantheraT Veterinary Management Consulting. “Owning and managing a practice is harder than it used to be, and many of the necessary skills aren’t taught in veterinary school.”
Issues might fester for months or years before action is taken, but red flags are almost always evident. On the financial side, for example, indicators include poor cash flow, low productivity and high inventory costs. Non-financial signs can include excessive drama involving staff or clients, or perhaps poor scheduling that frustrates clients who have to wait 30 minutes in the lobby with their sick pet.
Pulled in Different Directions
High employee turnover and staff burnout can be indicators that a practice is in trouble, said Stith Keiser, CEO of Blue Heron Consulting.
“A lot of owners who are burned out spend all their time working in the business, but if you don’t run the business, the business is going to run you,” Keiser said. “At a certain point, veterinarians realize, ‘I’m in trouble and I need to right the ship before the ship just sinks altogether.’”
Working on the business is just as important as working inside the business, said Louise S. Dunn, owner of Snowgoose Veterinary Management Consulting.
“Most practice owners do not have the luxury of extra time to work on their business,” Dunn said. “Even those with a management team find they are busy working in the business and putting out fires, yet they find it hard to work on future needs.”
The varied problems faced by veterinary practices can have dire consequences, up to and including closure. Low profitability, for example, might mean a practice can’t achieve its mission of providing cutting-edge services, all because it can’t afford to hire skilled staff, offer employee benefits or buy new equipment. In some cases, the situation can become so challenging that the practice owner is unable to pay herself a salary.
“When you have no money, you get in fight or flight mode,” Keiser said. “You end up hunkering down, just trying to ride it out. Unfortunately, most of the time the problems that got us into a bad situation can’t be ridden out or run from. Eventually, we’ve got to realize that we can’t build a sustainable practice without a profit margin.”
Unresolved financial issues can have serious consequences when a practice owner is ready to retire and is confident that selling the practice will be her post-career nest egg.
“When they finally see a consultant, they learn that their baby, which they’ve had for 30 years, is worth almost nothing,” Keiser said. “That’s a big wake-up call for owners who are thinking about their exit strategy.”
Ongoing staff drama and turnover can drive away clients by making the practice an unwelcoming place. It also can diminish the quality of patient care.
“If you have a culture in which employees are upset and tense all the time and are not paying attention to their duties, they probably aren’t performing as well as they could,” Dr. Felsted said. “As a result, they could make treatment errors or other mistakes.”
Do You Need a Specialist?
Because practice issues tend to be complicated and diverse, veterinary consultants often practice within specialties and subspecialties. Dr. Felsted, for example, focuses on financial issues because she has experience as a certified public accountant. James Wilson, DVM, JD, the founder of Priority Veterinary Management Consultants, most commonly deals with legal issues such as employment contracts, compensation and restrictive covenants. Dunn, who has a background in office management, specializes in team performance, training and accountability.
As a result, hiring the right consultant depends on the issues that need fixing.
“Do not hire a consultant without contacting at least two references,” Dr. Wilson said. “If the consultant doesn’t have references, don’t hire him.”
Dr. Wilson also recommends getting a letter of engagement that defines the issues and what is expected of the consultant.
“Drafting a customized description of the engagement takes a fair amount of time for both parties,” he said. “However, if you as the client and the consultant don’t have a description of the project that fits what you are seeking, it’s unlikely you will get what you want.”
In Person or by Phone?
How practice consultants engage with clients varies and is based on factors such as the type of problem, the degree of complexity and how much money the hospital can spend to fix it. Some consultants spend days or even weeks on-site, observing the business and interviewing everyone from the receptionist to the associate veterinarian to the practice owner. Others consult by phone or Skype. Many consultants contract for ongoing services and are available for regular phone consultations.
Most consultants charge by the hour or the project. Lengthy on-site visits with regular follow-ups can cost into the tens of thousands of dollars, depending on how much needs to be done and other factors. Phone consultations might cost a couple of hundred dollars each.
Veterinary practices often seek a consultant’s services when the situation is at its worst and the clinic is in desperate need of help. A consultant might be seen as a white knight whose recommendations will save the practice from dissolution, but even then, the staff might resist an outsider.
“Every once in a while, I’ll run into managers who push back because they feel that if I see something that needs improvement, it’s a criticism of what they have done,” Dr. Felsted said. “I try to deal with that by being respectful of the contributions people have made to the practice and recognizing what they have done. I also try to involve them in the planning related to changes I believe need to be made. Sometimes, however, you’re going to have people who are unwilling to listen and disagree with everything that is said. Those people may need to go for the benefit of the practice.”
A consultant’s proposed solutions can result in dramatic improvements. One of Keiser’s most memorable clients was the sole owner of a rural, two-location mixed animal practice. She was exhausted, and the practice had zero revenue growth.
“She was living on credit cards, was making no money and was unable to keep staff,” Keiser said.
His company worked with the client to clarify her definition of success, which was to effectively serve a rural community that didn’t have a lot of access to veterinary care and simultaneously make a decent living.
“We had her define what quality medicine looked like, then we had her develop minimum protocols,” Keiser said. “This was not us telling her how to practice, it was us guiding her through the process of defining how quality medicine looks. Then we focused on communication and client education. It took about six months to go through the entire process, but within a year we had her average doctor transaction go from $93 to $225, and we didn’t touch prices. She continues to grow month after month and now has net profitability in the upper teens.”
Another of his clients was a large practice with six locations, 15 doctors and a support staff of about 100. The practice was profitable, Keiser said, but the owners felt they could do much better.
“For them, we started with the organization,” Keiser said. “We looked at the org charts because what they lacked was leadership. Each hospital had its unofficial leader who had their own vision of the best medicine.
“We had them define success, and then we went back to minimum standards, making sure the staff bought into it and believed in it. Then, we focused on marketing and helped them with their brand. In one year, we increased their net income by $997,000.”
Dunn recalled a client who needed help dealing with high employee turnover. Dunn put systems in place that covered hiring, training, performance improvement, real-time reviews, consequences and rewards, an employee handbook, and standard operating procedures. She also provided the management team with standards to go by and protocols to which staff would be held accountable.
“Turnover has dropped, and now the only turnover is when poor performers are released,” Dunn said.
Change Takes Time
Hiring a consultant should be given a lot of forethought and never done in haste. Talk to several consultants before hiring one, and don’t hesitate to ask questions to ensure that the consultant will be a good fit.
“The first question should be, ‘What are your strongest suits and do really well?’” Dr. Wilson said. “The second should be, ‘Why are these your strongest suits?’ And the third should be, ‘How would you handle things if my problem was different from one of your strongest suits?’ The answer should be, ‘I would refer you to one of my colleagues who has that expertise.’”
Practice leaders get the most out of working with a consultant if they adopt a positive attitude toward change, Dunn said.
“Change takes time and effort; it is not immediate,” Dunn said. “Consultants, like veterinarians, have different styles. The best thing is to find a consultant who the owners and team feel comfortable with and can trust.”
Most important, the owners and staff of a troubled practice must be willing to face the reality of their situation and work toward realistic solutions.
“To get the most out of a consultant, you must be willing to look in the mirror,” Keiser said. “The majority of practice problems stem from the top. You have to decide, ‘Do I want to change badly enough that I’m willing to act on that change?’ For owners who aren’t sure, I encourage them to ask what that change truly means for them. For owners willing to commit to the change, it can often mean a happier staff, more free time to spend outside the hospital pursuing other passions and even financial freedom.”