Can this veterinary practice be saved? - Veterinary Economics
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Can this veterinary practice be saved?
A few months ago, this husband-and-wife practice owner team was at a crossroads. Not sure whether to persevere or give up on their recently purchased veterinary practice—and completely out of ideas—they called Veterinary Economics for help. This is their story.


VETERINARY ECONOMICS

Dec. 29, 2009, was a day of hope for Dr. Curtis Baughman and his wife, Derrika (pictured right). After about two years of searching, they’d closed on the purchase of Applebrook Veterinary Practice. Derrika Baughman, mother of five, felt a sense of relief. The previous months had been filled with stress and work, including endless phone calls and consulting with lawyers. Now the sale was complete. When she looked to the year ahead, she knew it would bring lots of hard work and transitions. But she and her husband trusted that their new business was in the hands of an experienced practice manager who’d worked there for 15 years.

Only weeks later, new challenges strained that hope. After meeting the practice manager for the first time after the sale, the new owners soon realized the relationship wasn’t going to work out. So they parted ways with the manager an hour after meeting. The problems only mounted from there, and before long the Baughmans were overwhelmed, exhausted, and wondering if they’d made a huge mistake.

Three businesses, one buy

Applebrook Veterinary Clinic consists of three buildings located on a scenic piece of land in Oxford, Pa. The buildings house three practice entities: a small animal business, a large animal business, and a boarding, grooming, and daycare facility called Applebrook Bed and Biscuit. Before Dr. Baughman purchased Applebrook in 2009, he worked as a solo large animal practitioner serving mostly dairy clients, with his wife scheduling appointments from a home ­office. But as the dairy market began to dry up, Dr. Baughman decided he needed to expand.

Located a little over an hour from the Baughmans’ home in eastern Maryland, Applebrook looked like a good buy, with its attractive facilities and mixed animal services. Upon purchase, Dr. Baughman folded his existing clientele into the six-doctor practice and began working out of Applebrook, counting on the practice manager to keep the business rolling while he hit the road to serve large animal clients.

The loss of that practice manager meant Derrika had to run the business. At the time she was caring for 1-year-old twins along with three older children, so she juggled school pickups and various sports activities with the hourlong drive to and from the practice four days a week. It didn’t take long for her to become overwhelmed. But what choice did she have? “I had to protect our investment,” ­Derrika says. “It’s our livelihood. We lose our practice and we lose everything.”

A few times Derrika tried to hire a manager, but none of those attempts worked out. In addition, she was uncovering morale issues and problems with the clinic’s finances, business practices, and medical protocols. Derrika had considerable practice management experience, but these challenges were like nothing she’d faced before. So she spent late nights researching online how to fix the problems. But when she presented ideas for changes to the team, they balked. Some employees would agree to do what she asked—then do the opposite. Others would openly complain about the new policies and ignore them.

Despite the pushback, Derrika made progress. She purchased new equipment, tightened up the schedule, and zapped inefficiencies. However, it often seemed that Derrika would fix one problem only to discover five more in its place. For example, when she asked team members why they hand-wrote appointments instead of using the practice management software, she discovered that the computers were improperly wired and shut down several times a day. The practice didn’t have a policy manual, team members didn’t balance the cash drawers at night, and some employees didn’t know how to use the management software even when the computers did work. She felt stonewalled every time she suggested change, and her efforts began to take a toll.

“I honestly thought I was going to have a nervous breakdown,” Derrika says. “I would run from the clinic, drive all the way back home to get my kids from school, and get them all to sports. My husband was out on the road most of the time. I would stay up late at night working, answering e-mails, doing payroll, and checking over time clocks.” Needless to say, Derrika’s family life, health, and marriage began to suffer from the strain.

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A question of leadership

During this frantic time, Dr. Baughman stumbled onto an article in Veterinary Economics about the benefits of outside consultants. Derrika, however, was skeptical. “I said, ‘We can’t afford it,’” Derrika says. “I sit with our accountant every week. I know the bills coming through and the taxes we’re getting hit with.” But she was desperate, and the idea of a consultant began to take root. So Derrika called Veterinary Economics and spoke with one of the editors. “I said I have no idea where to look, but please tell me who can come in and help us, because we’re drowning,” she says. “We’ll be bankrupt before we have the time to fix this.”

Veterinary Economics provided information on practice management, including a link to the VetPartners consultants organization, to help guide Derrika’s search. She eventually hired Mark Opperman, CVPM, of VMC Inc. in Evergreen, Colo. And she and her husband agreed to open their doors to the magazine and allow readers to follow her as she, her husband, and the consultant team spend the next year attempting to transform Applebrook Veterinary Clinic.

A nose-to-tail exam

It’s easy to picture a practice management consultant swaggering into a practice with a six-shooter and blasting away problems with a spin of the revolver. The reality is much more subtle. It starts with a process not unlike a veterinarian’s physical exam, with every element of the practice’s health carefully examined. And like most physical exams, the findings highlight areas of concern.

The exam actually starts before the consultant arrives at the practice. Like many advisors, Opperman and his VMC team ask clients to send data beforehand. The list includes practice revenue by source (how much comes from vaccinations, radiology, laboratory, and so on), the average client transaction amount, comparisons of staff and inventory costs to gross revenue, and much more. But even with all this information, the consultant still enters a practice with the eyes of a detective. The goal is to learn and understand.

During the three-day visit, the consultant team meets with every doctor and staff member. They examine reports and look for inefficiencies and growth opportunities. Strengths and weaknesses are recorded in a business plan to use as a blueprint for improvement in the following year. Applebrook was not a typical consult. In fact, Opperman says there is no such thing. In his 30 years in the veterinary industry, he’s worked with roughly 1,500 practices. And while elements of some practices may be similar, he says the consulting experience is always singular.

In Applebrook’s case, the practice had previously measured revenue only by large animal, small animal, and boarding and grooming income. And because their software wasn’t fully functional, they couldn’t provide much of the data requested. “We went in a little bit blind,” Opperman says. But three days before the VMC consultants arrived, in early December of 2011, Derrika viewed the prospect of their visit with a spark of hope—a spark that had managed to survive nearly two years of upheaval and change. “I had this enormous sense of relief,” Derrika says. “I knew it would be hard work, but after speaking with Mr. Opperman, I felt like he was the cavalry coming in.”

In their early phone conversations, Opperman warned Derrika that compliance would be key. For her and Dr. Baughman to change their practice, they had to be ready to change themselves. “Anything he told us we were doing wrong, I was ready to say, ‘I know. I’m with you. Whatever you say,’” Derrika says.

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Scratching and the flea

“A dog may come into a veterinary practice scratching, and doctors can give him a cortisone or prednisone injection to stop the scratching, but that won’t solve the problem,” Opperman says. “As soon as the medication wears off, the dog’s going to start scratching again. You’ve got to find out what’s causing the problem. A consultation is the same way. You’ve got to find the causative problems and deal with them, not just the symptoms.”

The three days of a consult are jam-packed, and many evenings end the same way—dinner with the practice owners to review what the consultants have learned and discuss strategy. Afterward, the consultants write up their notes, whittling down their to-do list to the most critical elements that will end up in the business plan presented on day three of the consult. These late-night sessions can last till 2 or 3 a.m. Then the day begins again the next morning with breakfast meetings.

Like most consultations, Applebrook began with a breakfast meeting with the owners. Because the owners’ list of concerns was long, the meeting took close to four hours. But when they finished, Opperman and partner Sheila Grosdidier, RVT, had a better idea of the strengths and weaknesses the owners perceived in the hospital.

Next, they moved into the practice, Opperman tackling the front ­office, Grosdidier the back. They moved through the whole operation, following a protocol designed to check Applebrook’s wellness level. During their operational audit and employee interviews, Opperman and Grosdidier noted opportunities for growth and improvement that would need to be implemented. They met and pared down that list to 32 items they would focus on in the next year, then divided those tasks between them, along with deadlines to keep everyone on schedule as they tackled the huge task of transforming the culture and momentum of the practice.

The plan

Here are some of the most critical areas that Opperman and Grosdidier will help Applebrook address in the coming year:

1. Hire an experienced practice manager. Applebrook Veterinary Clinic has very specific needs in a practice manager. Because neither owner can be at the practice full-time, a seasoned manager—either a CVPM or an MBA with veterinary experience—is critical, Opperman says. This manager will need to supervise the veterinarians, so one possibility is to identify a doctor who could be promoted to medical director. Opperman says the team identified two top-notch candidates, and at press time the Baughmans had made a hire. VMC will train and supervise the new manager.

2. Build relationships between Dr. Baughman and his associates. Opperman says he’d like associate veterinarians to ride along with Dr. Baughman on calls so they can get to know him and his working style. This also offers Dr. Baughman an opportunity to introduce his associates to his dairy clients and start forging practice-wide relationships.

3. Improve team morale. Poor morale, Opperman says, is a symptom of a deeper problem. “The cause is lack of management in the practice,” he says. “That’s why we need a manager, and we need to establish a management structure.”

4. Improve the practice’s internal controls. One of the first priorities Opperman has focused on is making sure practice owners have access to proper reports to safeguard against embezzlement. He has also improved password protection.

5. Improve the reputation of the practice through the team’s actions. Another primary focus is on offering high-quality service to both small and large animal clients as well as improving communication with large animal clients.

6. Make stronger connections with the Amish. The doctors will reach out to the local Amish community to forge stronger veterinian-client relationships. To begin, they plan to hold seminars on how to increase milk production, deal with emergency situations or mastitis, and other topics that may interest these clients.

In the next year, the practice also will tackle these tasks and more:

> Develop an incentive program for team members.

> Improve the reminder system.

> Build a new website.

> Track revenue and expenses by category, including vaccinations, radiology, laboratory, and so on.

> Compare expenses to established industry benchmarks.

> Create consistency in charging and begin to eliminate skipped or ­reduced charges.

> Improve scheduling so the right employees are always at the practice at the right time to meet the veterinarians’ and clients’ needs.

> Reduce the cash flow that’s currently tied up in inventory.

> Consolidate the three separate Applebrook LLCs into one.

Some tasks have already been accomplished. The owners hired veterinary accountant Gary Glassman, CPA, to help develop a new employee manual and write job descriptions. They are also working with a software expert to start learning to use the practice management software more completely and efficiently.

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The path to change

The interviews Opperman and Grosdidier conducted with team members helped the consultants understand the employees’ perspective, and they also accomplished a goal that could help change the face of the practice. “After interviewing a couple of employees, we have a pretty good handle on what’s going on from their perspective and what they’re feeling,” Opperman says. “But the other reason we interview everybody is that we need to align them with us. We’re relationship-building in those interviews.”

When Opperman, Grosdidier, and the practice owners begin to implement changes, Applebrook’s team members will more likely be on board if they’ve had input and feel like they share the practice’s goals. In these situations, team members either choose to embrace the changes and the new management, or they decide to leave the practice.

After three days of consulting, Opperman and Grosdidier met with the entire team to review the business plan. “At the end of that meeting, everyone was beaming ear to ear,” Opperman says. “They saw what we’re doing and why we’re doing it. And I’d say Derrika and her husband were probably smiling more than anyone else because finally they saw some light at the end of the tunnel.”

Derrika agrees that the meeting was uplifting and practical. For example, at one point Opperman shared a video of a doctor conducting an exam room visit, then asked for the team’s feedback on what they thought was happening. “It was completely relatable,” Derrika says. “This wasn’t a board meeting where you set out documents and say, ‘Read this; this is what we’re going to do.’ This is real life, relating to what our team members do every day.”

Opperman also shared a “Mission Possible” packet with the team—what he calls a “cookbook” to help the team implement the business plan, including appropriate forms and documents. “The veterinarians gathered around Mark when he was trying to leave,” Derrika says. “They were shaking his hand, saying, ‘Thank you.’”

Saying goodbye

The three-day intensive consult was energizing for the practice owners, but when it came time for the consultants to leave, fear began to creep in. What would happen when they left? When would the owners hear from them again? Would the newfound energy begin to wane as soon as Opperman and Grosdidier stepped out the door? “I was very nervous about them leaving because the momentum was so great,” Derrika says. “I didn’t want to lose it.” These anxieties faded with the first follow-up e-mails and phone calls. A picture of how the next year would work—and how the business plan would be accomplished—began to form as Derrika and Dr. Baughman realized they would be in constant contact with their consultants, despite the geographic distance.

“We’ll go back into the practice a year from now to see where they are, perform an operational audit, and develop a plan for the year ahead,” Opperman says. “It’s going to be a night-and-day difference, I guarantee it.” While the practice will have accomplished the goals set during the first visit, it will face new challenges and opportunities. “There are issues we’ll need to address if they want to bring the practice to another level,” Opperman says. “And where they go with that is totally up to them.”

The next few months will be critical. Now that the manager has been hired, he or she will try to bring structure to the practice and implement portions of the business plan under the guidance and supervision of VMC. But the changes are already beginning to reap benefits. Derrika has sensed a shift in the team’s perspective. She credits the consultants with helping her see the employees’ side as well as gifting her with a sense of empowerment.

“Mark actually would role-play with me when I brought up a specific issue,” she says. “He would put himself in the role of the practice manager and ask me to play the employee. It was phenomenal and offered such a unique perspective.”

This story isn’t over. The clock is ticking, and the team has 10 months to finish the list of 32 tasks with VMC’s help and assistance. We’ll check back in later this year to see how they’re doing, discuss their challenges and strengths, and see what’s new.

Click here to read more about Dr. Curtis Baughman and Derrika.

Dear future self: A letter of hope

When Veterinary Economics first spoke with Derrika Baughman, we could hear the anxiety, frustration, disappointment, and weariness in her voice. “This has caused an enormous stress on our marriage, an enormous stress on our family life, and a stress on me physically,” Derrika told us. “I was actually having chest pains. The doctor told me the problem was the stress.” Dr. Curtis Baughman told his wife, “Fine. We’ll just sell the practice.” But that wasn’t an option in such a soft market. Plus, Derrika was resolute. “The thing is, I’ve worked really hard,” she said in our initial conversations. “Even though I’m really tired, I’m determined to see this through. This place is going to be turned around.”

Just a month later, Derrika’s voice was different: Relaxed. Energized. Confident. She spoke about her new point of view and how she plans to tackle the challenges of the coming months.

“When you’re making decisions, you have to think in terms of what your practice will be,” she says. “You have to train yourself to look forward to everything you want to achieve in your vision. It gives you a boost of energy because you feel so positive about it.”

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