The black horse

Dr. Bennett had been called to the phone. Janet Billings, DVM, was now alone in the pharmacy.

She knew that Dr. Bennett was eager to have a new associate, and he had spent the morning showing her around the practice. She could hear Dr. Bennett's voice muted behind the door to his office. She was a little relieved to have some time to digest what was going on in her life.

Janet thought back to her graduation from vet school just a year ago and about the emergency clinic she had worked in for the past several months. This was her first interview with a real life practice. She thought to herself that Dr. Bennett seemed to be a very nice person. Things were a little old-fashioned here, which she thought seemed natural since Dr. Bennett was in his early 60s.

The center of the clinic now seemed eerily quiet as she absentmindedly reached for a few bottles of drugs on the shelf.

As she pulled the bottles from the cabinet she noticed that the bottles were marked with indelible lettering. One bottle was labeled in big black letters: "ALSE". Another bottle was labeled: "BKLKE". She now looked at some of the flea medicines.

Many were marked with the same cryptic black lettering and what appeared to be a selling price. She now looked at the bottles once more on the countertop-one of the bottles had an expiration date of January 1997. She looked carefully at the bottle, and it read: dipyrone. She thought to herself, "Never heard of it."

She looked back at the shelf with the flea medications. The rack was stacked with boxes of flea medications three high and four deep. There was at least a gross of individual packages of this particular type of medication. Many other types of flea and tick medications were evident-some with a fair amount of dust clinging to their packages. Janet was in a deep muse about all this as Dr. Bennett emerged from his office with a bright smile on his face. Janet was jerked from her deep thought and smiled back.

Tom Bennett was a wiry and muscular Midwesterner with a slight paunch. In spite of the fact that the practice was now exclusively a small animal practice, his worn and weathered skin belied earlier years spent with cattle and hogs. Tom wanted to be called Dr. B and most people did except his wife. She insisted on calling him "TB" in front of clients. She was clueless as to why this brought snickers from some of the oldtimers. Tom had briefly had a few associates over the years but was now needing to phase out and let the "youngsters" take over.

Janet was so taken by the lettering that she had to ask him what it all meant. He smiled and explained that is part of the "Black Horse" inventory control system that he has used all his practice life. He explained that it is really quite ingenious and has many advantages. He went on to explain that each letter represents a number from one through 10. (The 10 is really a zero.) He then grabbed a napkin and scrawled it all out:

Explanation

1 2 3 4 5 6 7 8 9 0

B L A C K H O R S E

He explained, "When something comes in from Acme Drug company, I just look at the invoice and mark on the bottle in black horse code what the price is and then I double the cost and that is the selling price. When I mark everything up and put it on the shelf, I am done and I don't even have to keep the shipping invoice. The most important advantage is that the client cannot for the life of them figure out what that item cost me."

"Isn't that grand?" he added.

She handed him the bottle of dipyrone and asked Dr. B a series of questions. She wanted to know what it was used for and what it had cost. She then added that she would like to know what she would need to charge the client for it. The bottle read: BKRC in bold letters. He looked at it. The code says he paid $15.84 for this bottle.

"I charge $8 for every injection no matter what. That is what you would charge when you start working here," he said hopefully.

"This bottle is expired-would you still give it and charge for it?" Janet inquired.

"Sometimes I don't, but I would for this drug. Each drop of dipyrone is precious because they don't make it anymore, and it is one of my best drugs ever for fever. The FDA is basically stupid."

Janet grabbed the other bottle marked-BKLKE. With a bit of brain torture she figured hesitantly that using the Black Horse system the bottle had cost $152.50. When the bottle was brand new, it had only contained 20 ml of drug.

She asked, "Would you charge $8 for any size dog or cat for an injection of this medication?"

Tom nodded that indeed he would.

"The injection fee in the computer on the front desk invoices each injection at $8," he said proudly.

He noted that he can "up the charge" if he ever needs to.

They both looked at each other in a strange, quizzical trance. It was if the divergent generations from which each had been born were locked in some sort of time warp that confused both parties. It was time to drop the dialogue and move on.

Time warp

"You got any other questions, I'll try to answer," he said.

"I have a whole bunch. I really don't know where to begin."

"Well, what do you think? Do you want to come to work?"

"Let me think about it. I will need some time. Let me call you," she said.

As she left, Dr. B looked at his watch. It was time for lunch. He raised his eyes and thought to himself, "That is the third interview this year and none of 'em have ever called back."

He thought some more.

"Instead of paying for a new associate this year, maybe I'll just an buy an X-ray machine."

This article is not only about inventory but also about mismanagement or non-existent management in a large number of smaller practices.

Management dilemma

There are many Dr. B's out in practice and many are very happy solo practitioners. They have resigned themselves to a certain way of practice life. However, this fly-by-the-seat-of-your-pants approach will soon fade into a distant memory. All progressive practices have to have some level of management system in place in order to survive and grow.

All veterinarians who start practices will grow to the point where more involved management is necessary. Many find this an unwelcome development. After all, management is work and the career work desired is veterinary medicine not business management. However, in order to effect the changes necessary to react to the needs of any business some form of growth and expansion are necessary.

Improving patient care means improving the systems that control the process-that is the delivery model. Veterinarians have been so individualistic and inflexible that when these changes create stress in the practice they fall back to "tried and true" methods that pull them backward toward mediocrity.

The solo practitioner reaches a point of growth that necessitates another veterinarian.

The solo dilemma

However, the veterinarian is unprepared or unwilling to make the effort to put new systems and management structure in place that will take his or her practice to the two-person level.

Many are not prepared to delegate and let go of certain decisions. Some solo practitioners are threatened by the prospect that they may lose control of what they have built through the years. Even though they interview for associates, non-management leads to an inevitable and gradual slide back to the solo structure. Eventually interviews are stopped, and the practitioner rationalizes that there is better value in remaining solo until he or she wants to retire and sell. As the practice ages, this slide continues while diminished owner effort allows the practice to reach each new and lower level of profitability. As debt is retired, the relative income appears to remain the same. This stabilizing of apparent income (draw) fools the practitioner into thinking the practice value is stable. Some have called this buying your own practice. This ultimately means that the practice value evaporates to zero (or worse) over this period. The owner never sees it coming.

Some level of growth and change is necessary to keep up with our rapidly changing society.

The growth necessity

Management of that process is vital. Therefore, as growth proceeds, systems must change in order to accommodate the complexities of the growth process. Many veterinarians resist this with all their might because this means a lot of extra work. It also requires skills that were never taught in veterinary school. Another way of looking at this is that you must grow to prevent eventual business death. That means effective management.

What usually happens is that growth proceeds to a point where the inherent disorder in the process either prevents movement to the next level (the Peter Principle) or enough effort is expended to change current management and systems so that the business can reach the next level of performance and profitability.

Actually, if a practitioner wants to use the old black horse inventory system and use it to complement a computerized system, it will probably work out just fine. However, the black horse approach to inventory control by itself is unsuitable in today's environment. Otherwise, good luck, Dr. B, as you watch your practice fade into the sunset riding a dying and very black horse.

The wrap-up