How profitable are specialty practices?
"There is an expectation that specialty practices will be more profitable because they charge higher fees and have a larger average transaction charge, but that's not necessarily true," says Dr. Karen Felsted, CVPM, CPA, a consultant with Gatto McFerson in Santa Monica, Calif. "Some are unbelievably profitable, and others only break even or are marginally profitable. They're all over the board."
Dr. Felsted says profit margins in both specialty and small animal practices fluctuate, with the average ceiling for the top-rated practices in either category hovering around 20 percent. However, she says nothing is certain when trying to predict profit margin, especially in specialty practices. "There's no guarantee of reaching any particular level," she says. "It's going to come down to the same factors that it always has. You have to bring in a lot of revenue and control costs. In a specialty practice, labor tends to cost more, so it's harder to control."
The challenge of bringing in enough revenue to cover costs and turn a profit is one all specialty practices face. Dr. Felsted says key components in tipping the cost-revenue scale in your favor are setting fees correctly, capturing 100 percent of your charges, making yourself available to handle as many cases as possible, offering services that are in demand, utilizing your specialists, and monitoring productivity.