When tragedy strikes, does the practice die?

It's a terrible time for any veterinary practice when its owner-especially a solo practice owner-dies unexpectedly or becomes suddenly incapacitated, ill or disabled. In these moments of crisis, employees can pull together to emotionally cope and can sometimes keep the clinic intact. But it's not easy.

If the practice lacked a succession plan, a practice manager involved in the finances or an associate or relief doctors who can lend a hand to keep the doors open, the practice might simply close. If there's hope to keep the practice open and the team members employed, then Veterinary Economics Editorial Advisory Board member Jeff Rothstein, DVM, MBA, owner of Progressive Pet Animal Hospitals in Michigan, says there are four things that need to be done immediately by remaining management folks or in conjunction with an inheriting or responsible spouse of the practice owner.

1. Fill the void

Rothstein says doctor coverage and availability is most significant. Spread extra appointments between associates if possible or enlist more coverage from relief veterinarians in order to avoid sending clients elsewhere. “As soon as you start sending clients to other hospitals, you start losing them,” Rothstein says.

2. Keep the lights on

If the owner was largely involved in paying bills, payroll, ordering inventory or scheduling, those essential tasks must be delegated immediately. If the absence is short term, delegation may suffice, but a long-term or permanent absence may require someone taking over certain tasks on an ongoing basis. Rothstein says this may require expanding job titles or increased compensation.

No revenue, no practice

During a crisis of any kind, it's important to maintain the business, not only to sustain paychecks and the excellent care patients and clients come for, but also if the practice must be sold.

Rothstein says after the family of a deceased or incapacitated doctor hires an experienced practice broker to appraise the practice to determine values. The broker then gives advice on the best ways to maintain the value of the practice.

“The most important goal for family members is for the clinic to run as smoothly as possible so that revenue remains consistent,” Rothstein says. “Once potential owners see a drop off in business, they'll be looking for a discount.”

Rothstein also warns that with solo or smaller practices, the longer a practice is run by relief doctors, the more revenue and practice value drop.

If you're an associate who has graciously stepped in to manage during this difficult time-and have done it well-you may want to consider ownership. The family and the team may look to you as an ideal candidate to take over.

3. Watch the till

Cash management is critical. “I've seen the death of the owner be the start of embezzlement, so someone in ownership should be tracking the till," Rothstein says.

Smaller clinics may face a bigger challenge with this than larger clinics where the owner may not have been as involved with the day-to-day cash flow, but renewed oversight is never a bad idea. Checking in with the existing cash manager consistently or naming more than one person to manage the practice's cash may help maintain transparency.

4. Talk about it

Communication with staff is key, Rothstein says. “Depending on how close the practice owner was with the staff, some may take it harder than others,” he says. “Some may just find it stressful if leadership is missing and if uncertainty exists in terms of whether someone new will be taking the helm.” 

Rothstein says a manager, associate or spouse should be up front and communicate the near-term plan of action with the team. “Be open and let them know what your goals are and ask everyone to pitch in on the owner's behalf so you can still provide premium care to your patients and the pet parents,” he says.