Time right for central hospital concept


While veterinary central hospitals have been around for some years, they exist in a limited format.

While veterinary central hospitals have been around for some years, they exist in a limited format.

The current format has multiple practices owning the central hospital or the central hospital owning the outlying feeder clinics.

A central facility, historically, has been the jump-off point to expand into the next emerging suburb.

Yet the concept of a "true human model" central hospital has met obstacles that are a challenge to overcome.

Standards released

Recently, after years of study, the American Animal Hospital Association (AAHA) has announced and released standards on how a human model veterinary central hospital will interact with the veterinary community.

As the chair of the central hospital workgroup within the AAHA task force, it is a delight for this author to see the substance of the central hospital interworking guidelines and regulations that AAHA has generated.

My hospital, Northwest Animal Clinic & Hospital in Albuquerque N.M., having begun developing the human model central hospital concept in 1976, can present the opinion that the legal, moral, ethical and financial challenges can prove to be quite difficult to overcome.

With the AAHA Central Hospital Requirements now in place, anyone can figure out how to run a central hospital. Combine that with the chapter in my book, More Management for Results on central hospitals, add a bunch of hard work, then presto, a human model central hospital will emerge.

Time is right

The time is right for the central hospital in Anywhere, USA, to become part of the business paradigm in your community. Recent studies have shown a dilution of veterinary resources in our little clinics. This is not a new trend, but only recognition of an issue that has plagued the profession for some two decades.

Over a decade ago I published the concept that in a typical veterinary hospital, 30 percent of the overhead was the outpatient services, 70 percent of the overhead was inpatient services while 70 percent of the income was from the outpatient zone and 30 percent of the income was from the inpatient zone. This means that the outpatient zone is subsidizing the inpatient zone.

Central hospitals share the inpatient zone, thus veterinary fees in the inpatient zone must be adjusted to become a self-supporting zone before "sharing" space with the credentialed (a.k.a. visiting) veterinarians.

Failure to make this adjustment to fees has euthanized many a fledgling human model central hospital.

The concept of one, 15ma X-ray machine in each veterinary clinic to be replaced by one, 600 machine servicing 10 hospitals is a good one, but difficult to achieve in this era.

Even with this overview, it is that one omnipresent looming issue continues to be the backbreaker of human model central hospitals: money.

Solve the money riddle and the central hospital concept will flourish for those so inclined to develop a central hospital.

So we began more than two decades ago with this concept and nurtured, struggled, screamed (at times) with the moral, ethical, legal, practical and money issues.

With no viable model to pattern ourselves after, we looked outside the profession. The big breakthrough came with a visit to assorted human health care services and providers. Visits with human hospital credentialed medical doctors, with hospital administrators, with the credential boards at human hospitals, with the ethical review boards of the hospitals, with insurance company representatives, with focus groups with registered nurses and with psychology professionals who deal with the emotional stresses of hospital staff and patients.

And now for a testimonial on a personal and professional level from Northwest Animal Clinic & Hospital in Albuquerque.

The time, money, anger, frustration, dedication, persistence and dream to develop a human model central hospitals is one of the most rewarding aspects of my career. In retrospect, it was worth it, even though the lessons were many, setbacks plenty and the journey expensive.

Still comes down to money

Now this sounds wonderful, but money issues are still the Achilles tendon that continues to plague those striving to open a central hospital, so it is money we will discuss.

Taking a basic traditional budget/expense worksheet from my text, Management for Results, Chapter 9, page 9-16, Financial Management, comes these figures.

Within this chapter, and historically in this column, we have discussed hands-on labor (actually doing things) soft labor (cleaning windows, making appointments) and profits (the ability to retire debt.)

The profession is approaching the reality that drugs and supplies are joined in the variable expense group by support labor costs. The fixed costs are standard in rent and other general expenses.

Veterinarians and the practice must receive a fair salary relative to income generated and the ability to retire debt. Profit is essential to keep a practice prosperous and on the road to adding new services and technology to the practice.

To illustrate how a traditional practice expenses each dollar, see Table 1, p. 28. The second column is what those raw numbers become when the veterinary salary is removed - the fee from the visiting or credentialed veterinarian. Ethics and legal parameters forbid fee splitting, so a new budget standard exists for the central hospital. The central hospital and the visiting doctor each present fee tickets to the client.

The central hospital does not collect the fee from the veterinarian. The visiting or credentialed veterinarian takes his or her specific fee, and the raw expense numbers for the central hospital do not change. Thus the budget/expense percentages change.

Review Table 2 to see the two invoices presented to the client

My conclusion is that to survive the central hospital must use different budget numbers, and in general must collect 75 percent of a fee to remain solvent. Do these things, and the central hospital will prosper.

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