Veterinary hospital management in tough economic times (Proceedings)

The financial commentaries in recent times have signaled a gloomy outlook on a global basis. While the need for veterinary services will assist the profession in insulating itself much better than some other sectors, if recessionary times grow longer it may be necessary for practice owners and hospital managers to implement some strategies to reduce overhead costs. Prior to introducing some economic changes though one should be aware of the legal consequences associated with some of these plans.

Lowering Staff Costs

One of the most significant expenses in the clinic are those related to personnel; as such, if you can reduce some of those costs through a reduction in staff hours, lowering of wages or terminating some employees, those savings will result in more sustainability. Recognize though that any arbitrary change in the fundamental terms of the employment relationship by the employer could result in claims for constructive dismissal. A significant reduction is pay rates or the number of hours scheduled for work could permit the employee to resign from employment and seek legal redress for wrongful dismissal on the principle that the employer actually breached the employment contract by introducing unacceptable changes. In jurisdictions where the employment "at will" doctrine applied, then the termination of the employment of staff members may be initiated at any time.

One of the simplest means of planning for some unfortunate economic times is to ensure that employees have written employment contracts setting out the specific length of notice to which they would be entitled.

Lease Arrangements

Another significant expense facing many practice owners relates to the costs of leasing premises. In difficult times it is important for tenants to stay in close contact with their landlords if shortfalls in revenues are on the horizon. Generally speaking, most landlords would happily enter into amended rental arrangements rather than pursue lease remedies and having an empty space with no existing tenancy.

Outstanding Loan Indebtedness

Similarly, bank credit officers are often very willing to co-operate with borrowers to temporarily suspend loan principle payments if new challenges are presented. Term loans can often be converted to interest-only payments for a number of months in order to weather the economic storm. Similar to landlords, the banks would, in most cases, prefer to retain a professional client and extend some accommodations in financing than to pursue collection remedies.

Watch the Receivables

As times may be difficult for practitioners, they will, no doubt, become more difficult of your clients as well. You may be asked to extend credit more regularly to clients. Establishing a strict policy on the terms of such credit and ensuring that your receivables are regularly monitored will serve both you and your clients well. Insisting on payment of at least a portion of your professional fees at the time of the delivery of services and financing only a portion of the bill will be better than carrying the entire debt. For large animal practitioners, it may be prudent to take collateral security (similar to a bank) so as to have additional remedies; a general security agreement or chattel mortgage on a herd of cattle represents a means of ensuring that the receivable will be paid on a timely basis.

Hopefully any challenges to the North American economy will not be as deeply felt as in other countries and will be short-lived. Implementing some simple strategies within the proper legal context will make for a smoother ride through tough times.