5-year veterinary practice turnaround
Editor's Note: This story lays out a hypothetical scenario—a "What if...?"—with a veterinarian whose practice needs a turnaround. Visit http://thecvc.com/ to find out where you can see these authors together teaching on these topics.
Jameson Animal Hospital has three full-time practitioners, is located in a large and reasonably prosperous suburb and grossed about $1.3 million in 2013. Dr. James J. Jameson, the sole owner, is in his early 60s and starting to think about succession planning. What he'd really like is to sell the practice in the next year or so and retire. Unfortunately, he's not sure how to get started and has a suspicion that this process make take longer than he thought and that his practice isn't worth what he really wants to get for it.
Run the diagnosticsBased on seminars, journal articles and discussions with colleagues, Dr. Jameson thinks he may have a No-Lo practice—a practice with no or low profitability and value. His first step is to call on a consultant for a professional appraisal of the practice to determine the true profitability. If the practice is No-Lo, he also needs help to uncover the big problems. Is the low profitability due to poor doctor productivity? Too much overtime? Drugs and medical supply costs? Too many discounts and missed charges? Once the problem areas are identified, Dr. Jameson can take the steps needed to correct them and improve the profitability of the practice. This economic baseline is essential not only for diagnosing the problem but also for measuring the success of any improvement initiative.
Of course, finding a qualified appraiser with experience in valuing veterinary practices is critical. The appraiser should have a strong degree of financial knowledge, experience in valuing veterinary practices and formal appraisal training from a recognized appraisal organization. One option is the consultant directory for VetPartners (http://vetpartners.com/), an association of veterinary practice management consultants and advisors. Appraisal reports vary from one page to more than 50—the depth and type of information included should be agreed on before making the decision to hire a particular appraiser.