According to a recent study conducted by the American Veterinary Medical Association, over 90% of veterinary school graduates start out their careers with significant debt. Over the last several decades, we've seen an unfortunate trend of dramatically increasing tuition costs and very little change in salaries, and this means that many young vets straight out of school are feeling the immediate pressure to make a profit. Whether you're a recent graduate or an experienced veterinarian, here are our five tips for having a successful and financially stable veterinary practice.
1. Pricing is Key
Too frequently when we talk about boosting profits, we focus on decreasing costs and neglect the importance of pricing. However, it's important to be realistic about how much you can actually cut, and to realize that just cutting your expenses won't necessarily lead to higher profit margins. In fact, a study focusing on the differences between veterinary practices with strong financial stability and struggling practices found that the financially successful practices had only 2% lower costs than the unsuccessful practices. The major difference between the two types of practices was instead related to pricing: profitable practices had an average of 13% higher fees than insolvent practices. You can only cut costs so far, after all, and raising fees may be a more guaranteed way to make a profit.
This being said, many veterinary practices feel as though they can't raise prices and remain in business. Low-cost spay and neuter clinics have popped up in almost every city, and vets often feel the pressure to match these clinics' costs in order to attract customers. However, this isn't necessarily the most reasonable solution. If your practice can't realistically match the costs of a clinic—and most can't—look for alternative ways to make your practice an attractive option for customers. For example, consider offering spay and neuter surgeries as part of a package that also includes vaccinations and exams for a year. While this means that your practice will have to absorb the initial loss for the cost of the surgeries, it will also guarantee your practice a monthly income and return business. Veterinary practices that offer these types of deals have found that the majority of their clients will end up renewing their pet's health package at the end of the first year, further ensuring continued income for the business.
Additionally, be sure that you explain your pricing to every new client by speaking directly with them about it and offering detailed bills. You want your clients to understand exactly what it is that they are paying for and what level of service they can expect from you that they won't receive at a clinic. Many clients are willing to pay a little extra for routine services if it means having a vet that is clearly dedicated to their pet's all-around welfare.
2. Understand Your Revenue
Another important aspect to boosting your business' profits involves keeping track of and understanding where your income is coming from. As a veterinary practice, you should primarily be making money off your services, not the products you are selling. It's great to be able to make money off of supplements, flea medications, and special foods, but it's also important to realize that your customers are more likely to purchase these things from more convenient locations (like the pet store). A practice that is dependent on selling products to turn a profit is not a sustainable business model.
If you find that you aren't making the majority of your money from the services you currently offer, consider adding additional ones. Teeth-cleaning and nail-cutting services are especially easy to add in since they are convenient things to do when your clients bring their pets in for checkups. You may also want to think about offering more novelty services such as boarding, grooming, or “date-night” pet sitting. Your goal is to make your veterinary practice as indispensable and helpful to your clients as possible.
3. Be Smart About Your Inventory
There are several changes that you can make to maximize your profits from the products that you do decide to sell. First of all, it's incredibly important that you keep an accurate inventory rather than just eyeballing the products that you have on the shelves. Ideally, you should be using some sort of inventory management software that automatically updates every time a customer purchases something. Having an automated system means that you may only need to double-check your numbers weekly instead of daily, which in turn translates to less wasted time counting products by staff members. Furthermore, investing in inventory management software will also help you keep better track of your stock and thus decrease unnecessary ordering.
Secondly, spend some time evaluating the products that you currently are selling. Do you really need to be offering five different types of flea medicine or seven different special diet pet foods? Your goal with your inventory is to have a comprehensive but small array of products that you can quickly sell. Don't throw your money away by having products sit on your shelves until they expire. It is far easier to track your inventory and monitor product expiration dates when you have a small inventory that has a high turnover rate. In general, it's worth the extra shipping or delivery costs to only purchase a month's supply of a product at a time.
Lastly, be sure that you are getting the best deals not only on pet medication and medical equipment but also on office supplies. Some veterinary practices get so caught up in meticulously tracking prices for their inventory that they end up neglecting to do research on the other items they have to purchase for their office. The money that you are saving with your small inventory will all be for naught if you are getting ripped off buying paper and pens. After all, it only takes a little bit of extra effort and a few seconds of internet research to compare prices and ensure that you are getting a fair deal on office supplies.
4. Bring in Technology
If you've been to the doctor recently, you've probably noticed that just about everything (medical records, prescription refills, lab results, etc.) is electronic now. Your veterinary practice should be no different. The days of paper and pen medical records are over; it's time to embrace electronic medical record (EMR) software. EMR software allows you to quickly access your patient's charts and tests with just a click of a button, so that within seconds of walking into an exam room and logging into your computer, you will have complete access to your patient's medical history. Furthermore, many EMR systems also come as packages that include practice management systems (PMS) as well. Practice management systems usually include easy-to-use scheduling, billing, and inventory functions, as well as a portal for your clients to quickly book appointments and view their pet's medical records.
There's no getting around the huge amount of time it will take to get set up with an EMR/PMS, but you will be absolutely astounded by how much time and money you will end up saving in the long-run. Billing that used to take hours to finish will now be done with just a few clicks, giving you more time to see patients. If you aren't particularly tech savvy, consider bringing in an outside source to help you get set up and to train your staff to help smooth the transition. No one becomes a veterinarian because they want to deal with paperwork, and EMR/PMS software will allow you to devote more time and energy to practicing medicine and less to record management.
5. Improve Your Client's Experience
While it's certainly important that your practice emphasizes your commitment to animal welfare, don't forget about the humans involved! Visits to the vet can be stressful for both pets and owners alike, and it's important to remember that the owners are the ones bringing your patients to your practice and paying the bills afterwards. Little things, like offering free parking, water or coffee in the waiting room (along with dog treats!), wi-fi, or reminder emails/texts/phone calls about upcoming appointments can make the experience a far more pleasant one for your human clients. Follow-up phone calls are also a nice touch to help your clients feel like you care about them and their pets and are not just out to make money off of them.
When it comes to the visit itself, make sure that you and your technicians are greeting both the pet and its owner. Make good eye contact, have positive body language, and dress professionally. Remember that doctor-patient time is what actually brings the money in for your practice, and use your technicians to get basic info and nothing more. Pet owners will get frustrated if you enter the room after your technician and proceed to ask the exact same questions all over again. Have good communication with your staff members, and be sure that everyone understand what their role is during a patient visit. Don't forget that your front desk reception is the first interaction that your clients will have with your practice, and be sure to hire individuals that are friendly and knowledgeable.
Lastly, be forthright about your charges. There's unfortunately a pervasive belief that many veterinarians take advantage of pet owners' love for their animals and lack of knowledge about veterinary medicine to rip them off and charge them for unnecessary vaccinations and procedures. Only about 1% of pet owners have pet health insurance, which means that the vast majority of your clients are going to be paying their pet's bills by themselves. Show your clients some respect by being upfront about costs before or during a checkup. Your clients should never be shocked when they are handed the bill at the end of a visit. You want your clients to understand exactly what they are getting for their money, and why it is worth their time and money to visit you instead of the practice down the road.
With many baby boomers retiring and selling their veterinary practices, now is a great time to buy your own practice. You don't want to spend your entire career working for wages and struggling to pay off your student loans, and owning your own practice can be incredibly rewarding emotionally and financially if done properly. Follow our five tips, and in no time at all you'll find your no-low practice transformed into a booming business.