Whether you're a veterinary associate or owner—paid on salary or on production—it's important to review how much you're making
and why. Veterinary Economics Editorial Advisory Board member Gary Glassman, CPA, shares his insights and formulas on how
to understand your income.
1. If you're an associate, you may not have much control over personal income. That is, unless you're paid on production. Once on production, your compensation is tied to the amount of veterinary income
you produce and you typically have a better chance to optimize your earnings based on the amount of hours you work. If you
spend time studying your patients and educating your clients on appropriate care, you're more likely to produce a better revenue
base. This revenue base translates to even more income for you.
2. If you're paid on salary, it's good to know that your wages are in the correct range for your market. Calculate your wages as if you were paid on production even if you're not. In order to do this, ask your owner to share your
production numbers. Once you have that number, multiply that production by 20 percent to determine what your market pay should
be. The range of percentages used in production pay is based on how much a practice owner provides in benefits. The more benefits
you have, the lower your production pay percentage. Total compensation including benefits should not exceed 25 percent of
veterinary production for a practitioner working in a small animal hospital.
3. If you're an owner, your personal earnings depend on many factors. Forexample, you may get paid for your veterinary services and management time, along with a return on investment (ROI) dividend
for the privilege of ownership. If you can distinguish these components, then compute what portion of your pay represents
production and management to determine the true profitability of your hospital. Pay for veterinary services should be around
21 percent of your production and not much different than what an associate doctor would earn. Management pay can be anywhere
from 1 percent to 4 percent of hospital sales, depending on how much other management assistance you have. If your hospital
employs a full-time hospital manager paid approximately 3 percent of the gross income of the practice, then your management
pay would be 1 percent of the gross revenue. Earnings beyond these two components are considered an ROI, and that amount is
an integral part of determining the value of your clinic.