How veterinary practices rise up after the recession

With the real estate market recovering, the unemployment rate decreasing and the stock market on a nice tear, economists are declaring the Great Recession over. The economy may still be years from reaching its prior peaks, but it isn't in danger of reverting to recent lows either.

Having weathered this colossal financial storm, veterinary practice owners are now trying to pick up the pieces and are asking themselves tough questions: How do they get their practices back to inflated, pre-recession levels? How do they return to that golden era of profitability and value?

We asked several general and referral practice owners and managers for ideas, and they offered up their strategies for financial recovery. Some of these concepts have worked and others have yet to bear fruit, but here are four tips from practices like yours to increase value and profit in today's economic environment.

Stand out from the crowd

If we've learned one thing over the past five years, it's that resting on your laurels is no longer an option. To succeed, practice owners must get creative and stand out from competitors. One large multispecialty practice has aggressively started to market their services in their area—a process that's proven to be successful.

"We've targeted the referring veterinary community and the general pet-owning community," the practice manager says. "Both marketing plans have been successful. Our gross is now up about 12 percent over pre-recession levels."

The practice reached out to the pet-owning public and got their name into the community through different types of media channels and efforts, including sponsoring community events, doing television spots, creating special interest news stories about the practice and their patients, and writing guest columns and blogs.

For local referring veterinarians, the practice tried more direct approaches, such as hosting dinners and taking trips to sporting events, all designed to establish a personal connection with the doctors. The manager made a point of stressing that the more intimate marketing efforts, while time-consuming, were by far the most effective.

Another example of standing out from the crowd is a two-doctor general practice that increased weekday hours. Three nights a week, the practice now remains open until 9 p.m. At first, according to the owner, this move seemed to cause more trouble than it was worth—they were barely breaking even. But now, it's beginning to pay off.

"We've noticed a definite pick-up in our practice's business from these later hours during the week," she says. "It's definitely paying for itself. But more than that, it's sending the message that we've taken the extra step toward helping people and their pets."

Another general practice instituted a house-call service about three years ago when business was suffering. The hope was that this added service would allow the practice to reach clients living in the far corners of their community while also keeping the doctors busy. But now that business is picking up, the practice is boxed in by this service and wonders how to discourage it.

"It's become almost a nuisance," the practice manager says. "When times were slow, this on-the-road service was worth the effort. Now there's too much time out of the office for key people and not enough revenue to make it worthwhile."

So in an effort to make the service beneficial for the practice while still keeping the clients who use it happy, the owners plan to increase the fees and travel costs for house calls and encourage these clients to come into the practice.

Keep the team intact

In an attempt to keep their financial heads above water, many practices cut their staff back to barebones levels. At the time, most of these practices felt they had no choice. Now these owners are regretting the decision, feeling it might have been a knee-jerk reaction.

As the economy recovers and clients return, reassembling and retraining a solid team is proving to be both time-consuming and costly.

One four-doctor general practice made every effort to hold onto key staff members during the rough economic times. Rather than letting staff members go, as was initially recommended to the owners, they made the decision to take less money so they could continue to pay their team and keep them as employees. It was a financially painful decision at first, but one owners are happy with.

"We considered it a long-term investment and now it's paying off," one of the owners says. "These people are all still with us, they're grateful we made the sacrifice and we have a core team that's well-trained and that the clients love. This helps us pull those missing clients back into the fold."

Go to the wellness (plan) well

Annual wellness plans have gained popularity among pet owners in recent years, but they also hold great appeal with veterinarians. The reason? One of the most beneficial aspects of these plans is the steady cash flow at the start of the month.

Two different practice owners I spoke to have instituted wellness programs over the past two years. One has seen a nice bump in income, while the other is still waiting.

The first practice owner told me it took some effort and education to get the plans off the ground, but now they're working. The team has done a nice job packaging the service to appeal to clients, and the plans are a good fit for the practice's demographics.

"Now 30 percent of our monthly deposits come from this program, and it continues to grow," the owner says.

The other practice has hit some speed bumps with wellness plans, though. The owner says clients aren't totally receptive to the idea. However, he admits that may be due to the fact that the practice hasn't done a good job selling the concept.

"We stumbled out of the gate and are still trying to get it on track," he says.

Still wondering if wellness plans are right for you? Head over to http://dvm360.com/WPanswers for answers to some common questions about this potential revenue-booster in practice.

Make sure new services make sense

Adding additional services can be a mixed bag. In fact, restaurants often face the same dilemma. Does adding a new entree enhance the menu or distract from it? Three of the practices I spoke to had experimented with adding new revenue sources.

One practice owner decided to use open space in the clinic for overnight boarding and doggie day care. But after 18 months, the experiment's a bust. The problem? The practice's kennels and boarding area can't compete with other fancier facilities around town—or the new ones that keep popping up.

"Some of our existing clients use us, but we're not getting the new dogs we'd hoped for," the owner says.

Another general practice decided to bring in a board-certified surgeon twice a week on a regular basis, which has added to the bottom line. Now, instead of referring surgeries out of the practice, they're handling them internally.

"This has become a nice additional revenue source," the owner states. "We've also noticed a few neighboring practices trusting us and sending some cases over."

The key to the whole thing, the owner says, is a consistent schedule that everyone—from clients to other neighboring practices—can count on. Although it's tempting to only bring in a surgeon when a practice has surgeries lined up, it's tough to line them up if you don't have a regular surgeon.

Another referral practice toyed with the idea of adding two new specialties—not hiring specialists full-time, but gradually introducing them into the practice. But since that process can be expensive with no real guarantee of success, they opted to hold off and instead work to improve the quality of services they already offered. Their philosophy was to stick with what they did best.

"We're up about 6 percent over 2012," the owner says. "We're known around town for good medicine and that's what we're trying to stick to."

So if you're ready to start your practice's recovery and rebuilding process, take a good look at what you've got to offer and let your team and clients know you're back in business—and looking to keep it up.

Tom McFerson, CPA, ABV, is a partner at the veterinary accounting firm Gatto McFerson in Santa Monica, Calif.