Veterinarians are a unique niche. They are doctors with the added layer of taking care of pets and their owners. They juggle what is best for the animals they treat with the needs of the people who love those same animals. It is a specialty that comes with physical, emotional, and mental labor. When you add in the fact that veterinary care is generally cash based, practice owners are confronted with business models that are hard to maintain and sustain.
Veterinary is a relatively new niche for our firm, and we decided to focus our efforts in this niche for a few reasons. Veterinarians tend to be entrepreneurial; their backgrounds are usually in family businesses of some type. They are taught that business ownership is their best path to freedom. Woman are the largest demographic of graduating classes and practice ownership. These women are changing the game in the industry to fit their desires for thriving practices, as well as work-life synergy. This fits perfectly with our firm’s core competencies of advanced tax planning, compliance, and advisory services designed to help push business owners forward in their business and personal goals.
COVID-19 has provided some unique challenges and opportunities for this industry. Here are a few we are seeing and helping our clients navigate:
Challenge #1: restrictions on in-person services
Many states have shut either down clinics or implemented restrictions that have limited the ability for practices to have pet parents in the clinics.
Opportunity #1: shifting patient care models and service delivery
There are many potential solutions that can be mixed and matched for this challenge. Some of our favorites include:
- Telemedicine: This can include platforms such as BabelBark, providing video call consults, and taking pictures and/or recording video of in-office patient visits while the pet parent waits in their car. All of these solutions can help a practice shift to more asynchronous communication with their patients.
- Online pharmacy: This has been something most practices have thought of but have not yet implemented. Online pharmacies help practices reduce inventories, reduce time needed to do fulfillment, free up staff from pickups, and help increase patient satisfaction. Who doesn’t love delivery?
- Mobile pet services: These include surgery/procedure follow-ups, vaccines, weight checks, euthanasia, and other services. Some can be done by veterinary nurses, which helps use their skills, while freeing up in-clinic doctors.
Challenge #2 – resource reallocations
Many practices do not have a good grip on their inventory or understand what products they sell the most. Also, many practices underutilize their support staff, including nurses, techs and office staff, while overutilizing their doctors.
Opportunity #2 – Get lean and mean
Product inventories: This is a great time to look at inventories and get them organized. Practices can get really clear on what the highest margin products are and only reorder those.
Support staff utilization: Sit down with the practice team, and have them come up with solutions and ways they can step in and step up to help things run smoother during this time. Note what works and doesn’t work, and then keep iterating. Most importantly, keep the positive changes when things go back to normal.
Services: Examine the practice’s service offerings:
- Which services are the most profitable?
- Which services are the least profitable?
- Could any services be more profitable?
- Are their services the practice does not need, or want, to provide that take a ton of time and resources?
Challenge #3 – Loans and leases
Many practices rely on large loans to provide the owners with their initial practice purchase or startup costs. Additional liabilities include equipment and practice space leases.
Opportunity #3 – Renegotiate
Loans: Talk to the bank or equipment lease vendors. Can they reduce interest rates, add some time, defer payments, and/or get rid of some payments?
Practice space: If the lease is up soon, find a good broker and renegotiate the terms as soon as possible. If the lease is not due to expire soon, talk to the landlord or management company. What can they offer so the practice can stay in business? A rent deferment or rent abatement?
Challenge #4 – FFRCA and CARES Act legislation
COVID-19 has been a challenge for all business owners. For many veterinary clinics, the added concern of meeting the Paycheck Protection Program loan forgiveness requirements due to loss of staff or reduced hours of hourly staff has also been in the forefront of their minds. In addition, the lack of information about other offerings, including the Economic Injury Disaster Loan, payroll tax credits, and other law changes can put practices at risk for not taking advantage of the optimal options for that particular practice.
Opportunity #4 – The proper advisor
Working with an advisor who has a relationship with the practice, and the knowledge and understanding of the new provisions can help practice owners understand the pro and cons of each option, as well as pick the optimal offerings to help the practice survive and thrive.
This time has been challenging for all types of businesses, but we are seeing that owners who are seeking the opportunity in each challenge are building more resilient veterinary practices that will come out of COVID-19 running – instead of limping.