Can your practice pull an all-nighter?

Can your practice pull an all-nighter?

Make sure 24-hour care at your hospital will appeal to you, your clients, your team, and your pocketbook.
Oct 22, 2008

Q: I own a busy three-doctor general practice and want to offer after-hours emergency service. How do I figure out whether it's a good move?

Dr. Jim Clark, MBA
Considering the dynamic growth in emergency and specialty veterinary care and the benefits of round-the-clock care to clients and patients, it's no wonder you and many other veterinarians want to expand your hours and services in this way. Before making the leap, however, carefully consider the pros and the cons of operating a 24-hour practice.

First let's talk about the financial aspects. In considering the additional cost to operate an after-hours emergency service, you've probably realized that you're already paying some of this overhead. Your building and all that equipment are sitting there every night, weekend, and holiday, whether you use them or not. Thus you have an opportunity to expand hours of use without increasing these fixed costs.

But while fixed costs won't change, don't forget about your increased labor costs. Savings in fixed overhead are small compared with the associated increases in staff salaries, benefits, and payroll taxes. In analyzing the impact that adding an emergency service would have on your cash flow, you need to pay most attention to the additional labor costs you'll assume.

The bottom line
Let's say you're currently open Monday through Saturday from 8 a.m. to 6 p.m. That's 60 hours per week. If you expand to provide 24-hour care, you'll add 108 hours of operation. You'll need to staff all of those hours with doctors and team members willing to work nights, weekends, and holidays. Your new team members will need to be highly skilled to provide care for sometimes critical emergency patients. Recruiting and retaining the necessary staff in our current veterinary labor market could be a major challenge.

Veterinarians and veterinary team members typically don't want to work weekends and overnight shifts, so you should anticipate needing to pay higher doctor and staff salaries for after-hours work. Also keep in mind that when you commit to staffing 24 hours a day, your payroll becomes a fairly fixed cost. In other words, whether you see one case a night or 20, you'll have to pay a doctor and typically two or more team members to be on duty.

Theory into practice: 8 questions to ask before you commit to emergency hours
With all that in mind, you can see that operating an after-hours emergency practice in the black requires significant gross revenue to cover the inherent labor costs. My experience suggests that you'll need annual gross revenue for the emergency service of at least $500,000 or $600,000 to break even. This number will be higher in some areas of the country and lower in others. It also doesn't include additional time for managers to establish and oversee the new service.

There are big benefits, though, to adding emergency hours. Both gross revenue and the number of new clients will increase dramatically, and the risk of an after-hours "mishap" because of inadequate patient monitoring will be reduced. In a community without an emergency facility, your clinic could become a valuable resource to clients and fellow veterinarians.