Giving away services has far-reaching consequences

Lucy Fosse was proud of her little veterinary clinic. She had pulled this little practice together over the past two years from out of nowhere in the shadow of her old employer.

At her very first job Lucy had argued with her former boss about thepractice of charging for "every little thing" and thought thather boss had worried more about his daily receipts than his patients.

Lucy also remembered that her boss had been an excellent veterinarian,but she felt that real compassion included discounting the fees when possibleto those "in need." She remembered that Dr. Jones had to sit herdown from time to time to warn her that she should not be giving away herservices. Lucy resented this.

In spite of Lucy's penchant to play the Wal-Mart bandit, Dr. Jones hadallowed her to continue until the day she quit. Lucy had quit in a huffover having to charge a small fee to reinsert a drain that a patient hadpulled out. She herself had decided not to put an Elizabethan collar onthe patient-so it really had been her fault. This logic meant that the hospitalwould have to pay for the second procedure.

Moral high ground

Lucy rationalized that she indeed held the moral high ground on thisissue, and therefore her contract and her non-compete clause were essentiallyvoid.

In effect, she could not continue to practice in a place which violatedher own set of ethics grounded in what she had been taught in a specialclass during veterinary school on ethics taught by a professor in the departmentof philosophy.

What made Lucy happiest was to shower her patients and clients with love,attention and little gifts. Lucy was always giving away bottles of vitamins,free exams and toenail trims, and in almost all cases any and all chargesrelated to rechecks and complications. This was her primary marketing strategy,and it seemed to have worked wonders. Her clients seemed to love her.

Lucy had misinterpreted this as the "They Love Lucy Show."She was noticing that these clients had other friends in need and the wordsoon spread. Lucy played to a packed house almost every day. She happilyworked 24/7, and her trusty employee, Sally, worked long hours into theevening with no complaint. Her not-so-secret motto was: "Take that,Dr. Jones."

Trouble looming

She was now one year into her new practice and very happy with her approachto medicine and management.

One major thing loomed over her head-now she was trying to seek answersto the financial dilemma she was facing. Already deeply in debt from veterinaryschool, Lucy had borrowed and depleted the resources from friends and familyin order to start her little practice in a small shopping mall. She hadquickly added some nifty new equipment on lease.

In spite of being her own boss, Lucy just last month had once again approachedher father to lend her a bit more in order for her to meet some personalexpenses that had come up. Her dad had once again given her a portion ofhis fixed income.

In addition, another vet erinarian had just opened a small clinic abouta mile away. She had noticed that some of those fans from the "TheyLove Lucy Show" had somehow slipped away to the new clinic. She hadlearned from Sally that they had been lured away because the new veterinarianwas letting new people charge "at will"-something that Lucy hadbeen forced to abandon a few months ago.

Unraveling

Lucy was two weeks behind paying Sally. Her trusted sidekick, for thefirst time in two years, had complained a bit. She thought to herself, "Thatis so unlike Sally." Lucy knew that the big problem was the drug bills.Sally had left numerous notes to Lucy from various companies asking forpayment. Lucy became furious. She thought to herself, "These big companiesput on huge spreads at the veterinary meetings and lure you into these hugebuying opportunities, and then pull the rug out from under you." Lucywas beginning to hate the drug companies.

In fact, she was buying from new companies all the time in order to establishnew sources for her clinic. Lucy had been issued various credit cards onbehalf of her credentials as a doctor and for several months had startedto pay drug bills with them. Sally also had left a note that she was behindon her lease payment for the new X-ray machine.

Emperor with no clothes

Sally, for her part, loved animals and had been on her own and workingand paying bills since she was 16. Her parents early on had helped some,but she had been on her own for eight years, owned an old truck and wasdebt-free and had a small savings account. She balanced her own checkbookas well as that of the practice.

Just then Mrs. Elliot appeared at the front door with Franklin, an intactblack Labrador. Franklin was having complications. Three days ago Lucy andSally had worked into the night on Franklin. Sally had even spent the nightwith Franklin because Mrs. Elliot had insisted on continuous oversight.

Mrs. Elliot hadn't paid her bill when she had picked Franklin up frombeing hospitalized for a dogfight, and, as usual, Sally had authorized thecharge. Unknown to Mrs. Elliot, Lucy had already heavily discounted thebill for Franklin, because Mrs. Elliot was an influential member of a localkennel club and Franklin had been picked up as a stray.

Hoisting Franklin onto the exam table the problem was obvious. Mrs. Elliothad felt sorry for Franklin, removed his E-collar and he had torn out allhis drains.

The only person not seeing the irony in all of this is Lucy. Lucy isa bit like the emperor with no clothes. She is somehow incapable of seeingthe obvious. She is disconnected.

Expectations gone awry

Lucy has misdirected her anger at Dr. Jones and at the drug industry.She is unable to comprehend her new world in the private sector. Lucy isusing friends and family in a way that is sure to create problems down theline. If the underlying disconnect continues, it will surely affect thelocal practices directly and all practices in this country indirectly.

Veterinary school

The attitudes and backgrounds of veterinary students have changed overthe years.

Students are less likely to be independent and some are more likely toharbor self-doubt. Many have been in school without pause since kindergarten.

Because these students are very bright, most have fast-tracked theirway through high school and college without any coursework in personal orhome finance. Match that with enormous debt load being amassed, and youhave problems.

Here are some suggestions to the veterinary schools if anyone is listening:

Veterinary schools need to require coursework in personal finance, businessor even accounting at the pre-vet level and as a part of the primary trackin veterinary school. Personal and financial counselors should be availableto veterinary students.

Students should be warned about borrowing the maximum, and then turningaround and using excess proceeds for personal items like stereos and automobiles.

Scholarships are preferable to debt. All veterinary students are scholarlyby definition. Therefore scholarships should always be awarded based onfinancial need not based on politics or "whom they know" or eventheir grade point average.

Debt load of new grads

Other authors have adequately defined these problems. However, the usualsolution given for the financial problems of recent grads is to pay themmore; in other words, some backseat quarterbacks (i.e. non-practice ownersand most veterinary school deans) imply that all practice owners are "fatcats" and need to cough up enough money to solve the new grad's andthe profession's financial problems.

All data available in the last few years indicate that new grads' incomeshave risen faster than those of practice owners. This indicates that practiceowners are in fact heeding the call, but at their own expense. Sometimes,in order to have a little time off for themselves, they are paying younggraduates out of proportion to the income they generate in comparison tothe owner. In some cases if you apportion the return on investment alongwith management and risk returns appropriately and subtract them from whatthe owner draws from the practice, the remaining income assigned for thereturn of owner professional activity is less than the amount paid to theassociate. This is sure to discourage the ownership and the sale of veterinarypractices in the long term. In fact, a growing number of associates neverwant to own a practice.

At this time economies of scale do not exist in this profession; in otherwords, expenses as a percentage rise at a faster pace than growth in overallincome as the practice expands. Technology seems to be adding more expensethan it generates. This is good for our clients and bad for us. It alsomeans we do not charge enough. Part of the reason we don't charge enoughis that we let the Lucy's of this world impact the fee schedules of allpractices.

Solutions

Debt load solutions start with the student and they start early.

The profession needs to understand that debt load problems have financialresponsibility of the student as part of the overall equation-(studentshave divulged to me that they have used loan money to buy personal itemsincluding stereos and cars. This starts in pre-vet and extends into veterinaryschool.)

Veterinarians need to encourage parents of high school students interestedin veterinary school to include work at summer jobs and the establishmentand monitoring of their own independent checking and savings accounts asviable preparation for owning a veterinary business. Parents should encouragecoursework in business at the high school level if possible.

Veterinarians need to realize that veterinary clinics are conveniencestores and not Wal-Mart. You will never compete with the Internet, the feedstore or anyone else including other veterinary clinics based on pricingalone. Price your services in order to provide a good income for you, yourstaff and associates and eventually a rising tide will raise all boats.

Young veterinarians, as associates or as new owners, owe not only a schooldebt but also a debt of financial responsibility to the profession. Yourprofession needs you to charge appropriate professional fees in order foryou and the profession to move to the next level of care.

The free clinic snare

People know a sale whenever they see it. Most clients who find theirway to your door because of freebies and low fees can be very fickle, indeed.

These same clients can be the most demanding and are likely to exhaustboth your emotional and your financial resources. When they perceive a lowerprice or a more convenient location somewhere else, they will be gone. Thereis only one place a freebie can be accounted for-it comes directly fromprofit (your back pocket) and nowhere else.

Can Lucy be reconnected?

Yes, but she will have to work her way through on her own. Up to thispoint, she has been sheltered by a system that requires long and arduousschooling prior to exposure to economic reality. Lucy has up to this pointspent her whole life getting things for free - supported by friends, familyand government, and to certain a degree, by her first employer. She, ofcourse, worked hard during her education and at her first job. Yet she wasable to pursue her dream independently without a real financial barometerto measure or balance her life. She got it in spades when she started herown practice.

In addition, Lucy is likely dealing with problems of self-image. Attractingclients with freebies and showering them with attention and service beyondwhat is necessary for any professional to give is a product of poor self-esteem.Self-esteem problems are based on an inordinate fear of rejection and everyoneon planet Earth wants to be liked. This often leads people to give awaytime and money in order to establish a connection with a client. This connectionwill often fail to be permanent. Down the line, lack of self-esteem leadsto poor financial performance that drags the whole profession down withit.

Lucy (or Louie), if you are listening, the ball is in your court. Thesetup

There are Lucy's (and Louie's) everywhere in America-not just in veterinarymedicine.

It seems everybody loves Lucy, except maybe Lucy herself. The long journeythrough college and veterinary school has left many, like Lucy, a financialcripple in the process. Unlike other professions available to Lucy, veterinarymedicine can be especially unforgiving with respect to financial constraintsinnate to this profession. In fact, many young veterinarians have neverhad to deal with the financial consequences of life. The norm today is forparents, so enamored by their young child's obvious intellect and interestin any field of medicine, to try to fund all the education and personalliving expenses from point A to point B. After all, isn't that a parent's"responsibility?" Unfortunately Point B is a long way off. Inthe process, the child is never exposed to the financial consequences ofthe relentless "expense and income" equation of life.

On the other hand, if the parents are unable to "pony up" thefull fare, Uncle Sam is willing to lend a half a generation's worth of debtto our young students. To the student this is a little like Monopoly money.Unlike the Monopoly game, you just can't hide it in the closet until nextwinter-this debt is real.

Idealistic pendulum

Most students, if offered a course in practice or financial management,will forego that for a chance to take some exotic course that is of greatinterest, but of little practical use after veterinary school. Many cannotor will not balance a checkbook properly. At this point in their life theworld of veterinary medicine hangs tantalizingly on the brink and the pendulumof idealism seems to swing freely with no prospect of swinging the otherway.

Don't get me wrong. I was the same way. However, the long educationalprocess, which focuses on classical educational content with little practicalbalance lays a foundation for the inevitable hard lessons, lessons thatlife finally offers up; lessons that impact the entire profession.

-Dr. David Lane