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Know the demographics before you buy a veterinary practice
The location of your veterinary practice means your business could sink or swim.
A white elephant is a valuable but burdensome possession that its owner can't dispose of—the cost of which, particularly the cost of upkeep, is out of proportion to its usefulness or worth.
In the veterinary world, the birth rate of white elephants is soaring, as each new practice owner strives to better his or her self-image. Many years ago someone asked me, "Why buy the cow if all you want is some milk?" Today, overhead is king. Practices with lower overhead have higher profits, and could sell for an average of 60 percent to 70 percent of annual revenues. Meanwhile, the practices with higher overhead are probably selling for closer to 30 percent to 40 percent of annual revenues.
Gerald Snyder, VMD
Follow the crowd
We have two scenarios today. There are clinics located in prosperous areas that are growing their client base by at least 1 percent to 2 percent per year, and then there are those clinics located in less fortunate states that are leaking clients by the bucketful. This has nothing to do with the financial fiasco of 2008. Population migrations have been in high gear with nine million people relocating in the last 15 years.
So here's my advice to underemployed new graduates: visit census.gov/compendia/statab/2012/tables/12s0015.pdf, and follow the crowd. Get licensed in growing states and make life a whole lot easier. For those in states with populations declining at a rapid rate, merge client populations with small, low-overhead, minimally equipped satellites that surround a superbly equipped and cooperatively owned central facility. Yes, the client may have to drive another five to 10 minutes, but you may just save your retirement from extinction. The key word here is "cooperative."
Change is the only constant
Changing to a central hospital plan not only spells success for everyone involved, it also creates easy exit plans where few are possible today. The next decade may be marked by empty veterinary hospitals wasting away while young veterinarians drive school busses to earn enough to get by (meanwhile, interest on school loans continues to compound).
But don't fret. If you're willing to relocate, there are still practices to buy in prime areas that the demographics show are ready to grow. Just stop and think before you buy any existing practice. And really, all of this worry is unnecessary when we realize change is the only constant in life. We must be open to change, especially in declining states. Ask your accountant or consultant what direction your practice is heading and make the adjustments you need to survive.
Dr. Snyder, a well-known consultant, publishes Veterinary Productivity. He can be reached at 112 Harmon Cove Towers Secaucus, NJ 07094; (800) 292-7995; Vethelp@comcast.net; fax: (866) 908-6986.