The cost of expanding

The cost of expanding

Apr 01, 2006

Q. My group practice is thinking of adding a doctor, but we're worried that it could cost more in additional overhead than he or she will produce. What should we do?

Understanding the relationship between revenue produced and the compensation and benefits paid for each doctor is critical to expanding wisely, says Lorraine Monheiser List, CPA, Summit Veterinary Advisors, LLC, in Littleton, Colo. "Hiring a full-time associate at $65,000, for example, requires that this new doctor ultimately produce somewhere between $260,000 and $325,000 per year, without reducing the other doctors' combined production." While that likely won't happen the first year, she says you should plan on covering at least your direct costs: the new doctor's salary, benefits, payroll taxes, and the incremental costs for drugs and supplies. "If you need additional support staff members, you should be able to cover those costs as well," she says.

Lorraine Monheiser List
If all that doesn't seem possible in the first 12 months, List suggests considering alternatives such as hiring a part-time associate or additional technicians and veterinary assistants to allow your existing doctors to work more efficiently. If you'd still like to hire an associate, consider taking these steps to increase practice revenue and support the addition:
  • Improve client compliance with better follow-up.
  • Generate more senior care programs or dentals.
  • Do a better job of charging for all work done.
  • Step up your marketing program in anticipation of hiring a new associate.
  • Institute a reward program for existing clients who refer friends and neighbors to your practice, preferably without offering discounts.

Hot topics on dvm360

Follow dvm360 on Twitter, Facebook, and Pinterest

For quick updates and to touch base with the editors of dvm360, Veterinary Economics, Veterinary Medicine, and Firstline, and check us out on Twitter, Facebook, and Pinterest.

Sell veterinary clients on your service

But you don't have to have butler-style service to win new clients and keep existing clients happy.

Why veterinarians should be more like a Louisiana shoeshiner

If my veterinary clients feel half as good as I did after visiting the 'Michael Jordan of shoeshines,' I'll be thrilled.

Texts from your veterinary clinic cat

If your clinic cat had a cell phone and opposable thumbs, what would he or she text you?

Learning goodbye: Veterinarians fill a void by focusing on end of life care

Veterinarians dedicating their careers to hospice and euthansia medicine may be pioneering the profession's next specialty—at clients' request.