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A solid exit plan can soothe veterinary practice burnout
When you feel like you're constantly trudging through your day, a change in careers might be a refreshing solution. But if you decide to get out of veterinary practice ownership and sell – be prepared.
Most of us know that it isn't payroll, taxes or inventory control that eventually drives a veterinary practice owner to the brink. It's the people: the clients, the staff members and the colleagues. If you're a practice owner, you deal with your fair share of employees who gossip and compare paychecks, no-show clients or clients who get a second opinions via the Internet, associates who quit without notice and throw tantrums in the doctors' lounge—sometimes it just feels like too much.
With all the stress you deal with on a daily basis, it's important to distinguish between the occasional bout of frustration and a larger sense of looming, nagging frustration. The latter is pernicious and calls for more than leaving an hour early on Fridays to attend Zumba classes and blow off steam.
When that feeling of "enough is enough" becomes habitual, it may be time to plan for the possibility that things aren't going to get better this time. An exit plan may be the key to accommodating those feelings, even if it seems like it's too soon to be thinking in those terms. Having a well-considered plan for leaving the ownership role can be soothing. It can also keep you from losing control of the reins when burnout becomes so intense that you're ready to close the doors and walk away at any cost. Moving into a non-ownership role may be a more realistic route to sanity.
Most practice owners don't prepare for the eventuality that genuine burnout might strike suddenly. Consequently, they have not developed a departure scenario. For these practice owners, when a discouraging day turns into a discouraging month (or six), they find themselves in a tough spot. These practitioners may find themselves stuck simultaneously in a bleak financial situation and poor psychological position. The dilemma: They can't stand the idea of continuing to operate their own hospital for much longer, yet they haven't prepared for the practice to go on the market. The consequences of this situation can be dire: clinical depression, substance abuse, or a decision to escape in a hurry and sacrifice financially.
What burnout looks like
Here's an example of what can happen when a practice owner ignores the onset of career dissatisfaction and continues to deny those feelings as they reappear, often more dramatically with the passage of time.
Dr. Smith bought a small practice 15 years ago, and through long hours of work and more tolerance on the part of his wife and kids than he cares to admit, he has grown it into a fairly large operation. He has a few associates, a burgeoning payroll obligation and monthly bills that would seem unbearable if clients weren't clamoring for his services. But over the last few years, Dr. Smith has grown tired. He's losing patience with the daily dramas of the staff, he feels like clients and employees underappreciate him and he's experiencing increasing guilt over the many band concerts, track meets and dance recitals he's missed.
When he realizes he only sees his children in the mornings because they're in bed by the time he gets home, he feels emotional, anxious and trapped. And these emotions aren't necessarily new. In fact, one of the reasons he's accumulated so many doctors and staff members over the years is so that he could take some time off to reacquaint himself with his family—and to try to stave off the burnout that's been creeping in. Plus, Dr. Smith has purchased some expensive new equipment with the hope that it would generate more income to support the ever-growing payroll and throw a little novelty into mundane daily practice life. But it's not working.
Finally, Dr. Smith realizes that the only thing that will genuinely salvage his psyche is simply to get into another role in the field of veterinary medicine: one where he's not putting out fires 24/7 and a day off is not a monumental logistical undertaking. He wants to sell his practice—the sooner the better.
Dr. Smith makes a phone call to get a practice appraisal. The Smith family is excited about the possibility of dad being home more. Everybody understands that his new career might not be as lucrative, but it will be worth it—as long as he can get at a reasonable price for the business he worked so hard to build. He submits several years' worth of business financials to the practice appraiser, and shortly thereafter he gets a phone call. The appraiser is concerned about whether the practice will sell. Its financials reflect that after Dr. Smith takes his reasonable salary every year, the business shows a negative cash flow and declining gross revenue.
Dr. Smith has explanations, naturally. The economy has been bad for a while, so gross is down a little—for four straight years. But over that slow period, payroll has still increased substantially. And nobody seems cognizant of the fact that drug, supply and equipment costs have been rising by double-digit annual percentages, even as revenue is dropping. To the appraiser, the picture is becoming clear. Dr. Smith has been so busy trying to institute short-term fixes for his burnout—more helpers means less work for him, and abdicating drug ordering authority to others means getting home earlier sometimes—that he has left his practice in a virtually unmarketable condition.
How can a practice that's grossing seven or eight figures and has multiple associates be impossible to sell? Here's a hint: ask any stockbroker about the price of public companies that have years of falling top-line revenue but are burning through cash. The result is inevitable: the stock price tanks. Veterinary hospitals are capitalist enterprises too, and value lives and dies by growth and profitability. Nobody wants a business, no matter how big or how pretty, if in the final analysis it amounts to nothing more than a not-for-profit.
When Dr. Smith puts down the phone, he is paralyzed by the sudden reality: on an emotional level he needs to leave, but financially he isn't even close to being able to do so. What should he have done differently? Here are some things to keep in mind.
It's OK if the economy is bad
You can successfully sell a practice in a bad economy and after several years of declining gross. The question is, what measures did you take to accommodate for the faltering economy? Did you adopt more aggressive marketing tactics? Did you consider a move to a new location? Sometimes opening a satellite location can boost revenue and referrals without you having to leave the neighborhood where your practice traditionally draws its clientele.
Someone must steer the ship
If Dr. Smith wanted more time off, he needed to delegate, not abdicate. There's no reason why he couldn't give another staff member the responsibility of ordering—or even hiring and firing, for that matter. But you can't delegate to someone else without proper training and setting clear parameters for the team member to use in carrying out the tasks. That sort of transfer of responsibility must also be made clear to the entire staff. Everyone needs to know who's responsible for selecting and buying supplies or reprimanding staff members. The team must know that the designee has the support and authority necessary to function.
Numbers must control the practice
A depressed or overworked practice owner needs to become more focused on the bottom line, not less. As mentioned above, buyers can understand and live with a temporary or even protracted drop in gross revenue, but not a drop in profitability.
Business is about the returns
Veterinary practices will not sell for a palatable price if profitability is not demonstrable. Folks just don't want to buy a private business for the purpose of providing paychecks to employees and healing ill animals. There must be a pecuniary return, it must be predictable and it must be worth the effort and headaches involved or there won't be a sale.
If a disenchanted practice owner has neglected business management, profitability will begin to suffer immediately. If employees need to be furloughed and are not, costs begin to run ahead of inflation. If drug inventory is left to run itself, the shelves will spill over with every pill from every obscure manufacturer any of the associates has ever heard about in a CE meeting.
While there may be enough left to pay the practice owner a salary, there will not be enough left to satisfy a buyer. Especially not when there are so many other practices and alternative investments out there for a seller to compete against. And, it bears mentioning—being desperate while also being detached is a sure recipe for a practice owner to receive disappointing offers for his business.
Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians. Call (607) 754-1510 or visit firstname.lastname@example.org.