Tips for Managing Your Team When Acquiring a Veterinary Practice
When you purchase a veterinary practice, you aren’t just responsible for the building and equipment, but you also have a big role to play in making sure that new and existing team members come together smoothly. This can be a delicate process and quite difficult to navigate on your own, but there are a few tips you can follow to make everyone’s lives a lot easier.
Value Your Acquired Team Members
It should never be a case of “out with the old, in with the new” when it comes to putting together a veterinary team for your newly bought practice. The acquired team members have a lot of value and are an integral part of the relationship the practice has with the patient base. They may also be a big reason that many patients decide to stick with the practice. It’s essential to let existing team members know that they are important and take the time to communicate any changes on how the office will be run. Try to be patient if the transition seems slow because this will make things much more seamless compared to trying to implement whole new systems right off the bat.
Prepare for Bumps
Some of the team members at your newly purchased practice may have been there for decades or done things very differently under the previous owner. Any big changes you make will almost inevitably lead to some dissatisfaction and conflict, so it’s important to be mentally prepared that not everyone is going to like your decisions, even if you know they are in the best interest of the practice. Make it apparent that the lines of communication are always open so that team members can express grievances through the right channels. It’s also important to let your incoming staff know that they may need to help the acquired team acclimate to any shifts in day-to-day operations (they should be instructed on productive ways to do this).
How a Veterinary Consultant Can Help
Before you find yourself dealing with a mixed veterinary team, it’s important to work with an experienced consultant when buying a practice so that the transition can be as quick and harmonious as possible. They can help you choose a practice that aligns with your business and personal goals, show you how to train and retrain team members, and help you find the right people so the practice starts on the right foot. Contact us today and we will help get you started!
Read MoreThe Business Side of Veterinary Medicine – Theft & Embezzlement
Experts estimate that more than 70 percent of veterinarians are embezzled with an average loss of $200,000. But, because the embezzlers often steal small amounts of money over many years, the thief is never noticed. The US chamber of commerce estimated that 75 percent of employees steal from their workplace and that most do so repeatedly.
A majority of people, if given an opportunity, will take advantage of a situation to steal from their employer on the following frequency:
-3 percent will steal daily
-7 percent will steal weekly
-20 percent will steal 4-12 times a year
-70 percent will steal 1-2 times a year
-4 in 10 doctors experience theft in some form from the practice. 1 in 3 veterinary practices experiences monetary theft from their practice.
The significant types of theft in veterinary practices are:
-Time
-Office supplies
-Veterinary supplies
-Goods and services in Kind
-Money
All types of theft can hurt the bottom line of the practice. The Monetary thief, in most cases, has the most negative effect on the practice bottom line. Most veterinarians find it hard to believe that their handpicked, trusted, longer-term staff would steal from the practice.
Here is an unfortunate, and real-life, example. A veterinarian had a highly successful practice with five employees. One was a long-term office manager who came to work early and left late every day. She managed all the financial transactions daily along with the insurance and statement billing. The office manager took an extended vacation. While she was gone, the office sent out statements and received numerous calls from patients that their statement was incorrect and that either their insurance had paid the bill, or they paid on the day of service by check or credit card. The doctor had the staff investigate all the disputes and found out that the office manager had embezzled more than one hundred thousand dollars over the years. He was devasted and could not believe that the long-term, most trusted employee had done this to him.
Methods that have been used by staff to steal from the practice:
Zero Charge- Patient comes in for services, and the office staff member posts a zero-balance charge and pockets the money. At the end of the day, the computer collections balance to the deposit slip. No one notices.
Falsify Deposit Slip– Employee brings the doctor a deposit slip to sign for the day matching all the collections taken in for the day but then takes out all the cash from the deposit bag or envelope and changes the deposit slip when depositing the money.
Multiple Adjustments to Accounts- Courtesy discounts like cash discounts or senior discounts are used. Employee charges the full amount to the patients and keeps the cash discounts and pockets it.
Fictitious Vendor- Employee sets up a fake business with an account and has doctor sign supply order checks for supplies. The employee deposits these checks into an account and keeps the money.
Internal Controls
Make sure that even your closest friend in the veterinary practice is being watched. Here are some suggested internal controls to help prevent thief and embezzlement:
Segregation of Duties– Make sure one person does not control all cash flow processes.
Daily Audit Trail– Review daily transactions to catch zero balance postings.
Rotate Duties– This will help to reduce the chance for embezzlement.
Verify the End-day Report to Deposit Slip– Ensure that you see the end-of-day report and it balances with cash deposits. The doctor should be responsible for depositing funds in the bank.
Review Bank Statement– Take time to review the statements monthly.
Require Vacations– All employees must take vacation days that they have earned.
Performance Plans– If the practice meets specific goals and the practice is increasing its revenue, give incentives to employees in monetary form.
Background Checks- Make sure you follow through on background checks before hiring new employees.
Verify References- Check all references.
Having internal controls will help protect the practice and staff that are honest and want to do a good job. It will also help everyone stay focused on their tasks and goals at hand and take away the opportunity for someone to embezzle. You don’t want to have good employees turn into liabilities.
Omni Practice Group has been helping veterinarians for over 15 years developing plans to transition their practice. Our goal is to help you find the right buyer and make a smooth transition of your practice when the time is right. Contact us today for a free no-obligation consultation with one of our Practice Transition Advisors.
Read MoreWhat You Need to Know Before Signing a Covenant Not to Compete
You’ve graduated from veterinary school so naturally, you’re ready to get your feet wet and start practicing. Nearly every veterinarian will be an associate at the beginning of their career and with that comes the dreaded associate contract. You found a great associate opportunity and you’re eager to start collecting paychecks. But before signing that contract, particularly the noncompete clause, be aware of the details that could prevent your opportunity to start your own practice in the areas/neighborhoods you desire.
A covenant not to compete, otherwise known as a non-compete agreement, or restrictive covenant, is a clause in the contract that prohibits the restricted party from engaging in services similar to those of a non-restricted party. Non-compete agreements may restrict a veterinarian’s actions by time, location, and clients.
Here are some valuable tips before signing a non-compete agreement for veterinarians who plan on owning their own practice in the near future.
Be sure you understand every detail: Associate contracts are designed to protect the owner more so than the associate. OMNI Practice Group highly recommends you have an attorney who specializes in veterinary Associates contracts review all legal documents before signing. If you don’t already have an attorney, we will be more than happy to recommend one.
Advocate for the minimal non-compete radius: A standard non-compete radius should be between 3 to 5 miles. Keep in mind the radius is “as the crow flies.” In more rural areas, we have seen up to 15 to 20 miles, but of course try to negotiate for less, especially if you plan to stay in the area.
The shorter the better: We’ve seen unfavorable terms of up to five years. Typically, your non-compete clause should only be enforceable for 1 to 2 years. Try to negotiate to a shorter period, that will work in your favor when you’re ready to own your own practice.
Be sure your non-compete only covers the location in which you are employed: If your employer owns multiple locations, but you’re only seeing patients at one specific office, make sure your non-compete only applies to that location.
Notice of resignation: Keep in mind that when you’ve found the ideal practice to purchase or if you decide to do a start-up, the process can move rather quickly. We’ve seen contracts that require the associate to give up to 6 months’ notice before leaving their position – a fair amount of notice is typically 30 days. Be sure to negotiate the least amount.
My rule of thumb when it comes to associate contracts is “Less is Best” …well, with the exception of wages!
When you’re ready to purchase a practice or just want to discuss the process in preparation please feel free to give us a call at 877-866-6053 for a free, no-obligation consultation. We’re here to help you!
Read MoreChoosing Between Buying an Existing Practice or Doing a New Build
By Corey Young, Practice Transition Advisor
Choosing between buying an existing practice and doing a start-up practice can be one of the biggest decisions of your life. Here are four considerations and two suggestions for when you are contemplating.
The four considerations:
Market Saturation – How many veterinarians are practicing in the area you are considering? Hardly any? One on every corner? Somewhere in between? Establishing traction in a high competition area will require a much higher marketing budget. Do you know your marketing budget? Do you have a marketing plan?
Available Practices for Sale – How many practices are for sale in the area you are considering? Do those practices have a broker representing them? Broker representation usually equates to well-substantiated pricing and a defined plan for acquisition. For-sale-by-owner practices can be more of a wild card.
Population Demographics – If you are considering an area for a new build, will the demographics of the area you are considering support your business plan?
Personal Financial Situation – Do you have the financial reserves to weather a start-up? While there are pros and cons to both routes, buying an established practice certainly generates more initial cash flow.
The two suggestions:
Get Help – This will be one of the biggest decisions of your life, whichever route you take. There are some truly skilled and experienced professionals out there that will help guide you through this process in an efficient manner and allow you to minimize risk while seizing the opportunity.
If You Can Produce, Get Moving – Are you a high producer? Can you manage and lead? Can you practice great veterinary medicine without someone looking over your shoulder? If you answered yes to these questions, what are you waiting for?
Read More7 Questions to Ask When Forming a Partnership
By Jim Vander Mey, CPA, ABI, Practice Transition Advisor
You and your friend from school want to purchase a practice together. Here are just a few questions to ask.
A sole owner is often an easier path to ownership, but partnerships can certainly be successful. But like any healthy relationship, it requires work. To help prepare consider getting together with your business partner, turn off the cell phones, meet in a closed room, and ask the following questions to each other.
How much debt do you have?
Does your business partner have a bankruptcy in their past? Do they secretly owe their parents money for school? Do they drive a BMW 7 series, and you drive a Yugo? (google it!) Pre-existing debt could limit your financial flexibility for emergencies and growth. Will their spending and saving style affect how they run the practice?
How updated does the practice need to be?
We have seen state-of-the-art practices that have been remodeled every 5 years and converted 50-year-old homes. Both can be profitable. We have seen many practices that do not follow textbook expense percentages, but still have excellent reputations, and are extremely profitable.
Number of staff?
You want a Licensed Tech with you at all times, and your partner doesn’t. You want to hire a cleaning service, but your partner wants to come in on Sunday afternoons and clean the practice to save money.
Equipment purchases?
You want a fully digital x-ray and a new surgical laser, and your partner is fine with a CR x-ray and a used ultrasound. Now what?
Vacation? Sick?
You want to take 6 weeks off every year to coincide with your spouse’s vacation and your partner only wants a couple of weeks off. Does your compensation arrangement cover this? Even if you compensate for the difference, will you feel comfortable with this?
Skeletons in the closet?
Yes, you got along famously in school… Studied together, got along socially, have a similar philosophy regarding practicing, etc. Do you both need to agree to a full background check, as in searching for bankruptcy and criminal activity?
How will you solve disagreements?
You probably won’t see eye to eye on everything. Assume you will be diametrically opposed to your partner on an issue – how will this be resolved? What if disaster strikes? Or what if you need to move out of state to take care of a family member? Or what if your spouse has an out-of-state opportunity, or a permanent debilitating health issue arises. What if it ultimately leads to the point that you no longer want to be co-owners and you get to the point where you have the ultimate disagreement and just cannot get along? What is the break-up formula?
Answer Key to above questions
The answer to the above of course is – there are no set answers. It will vary from partnership to partnership, person to person what will work. Long before you make an offer on a practice, set some time aside to discuss the above questions – at the very least discuss the last paragraph. And of course, we recommend meeting with a veterinary attorney to form your partnership agreement.
Read More