Editor's note: Last in a four-part series
You can't save your way into profit. Beef and dairy veterinarians have found many ways to cut costs at their practices, but they have also continuously been on the lookout for ways to increase revenues during these trying financial times.
A 2009 Bovine Veterinarian survey indicated that the No. 1 way in which bovine veterinarians who responded were increasing revenues was by seeking new clients (75%). Following that was charging more for mileage or trip charges (66%) and adding new services for food-animal clients (62%). Many veterinarians indicated that a popular service to add was ultrasound.
Veterinarians in mixed practices increased charges on small-animal and equine services (49%) and about a third of them increased their small-animal services such as boarding and grooming.
Finding new ways to increase revenues has changed the way a lot of food-animal veterinarians are practicing. In August of 2008, Lisa Willis, DVM, opened her practice, Mid-Texas Veterinary Associates, PC, in Gustine, Texas. The beef cattle practice (which also includes some deer and small ruminants) was opened during the height of the economic crisis when fuel was pushing $5 a gallon.
"I work with some expensive cows for bucking stock and purebred seed stock producers, and haven't noticed them decreasing costs much, despite being in a horrible drought right now," Willis says. "I still charge a pretty substantial price for my hourly fee and I am driving all over the place." Willis says working with cervid ranches involves consulting work very much like large herd production.
At the Animal Medical Center in Great Bend, Kan., Nels Lindberg, DVM, says acquisition of new clients has had a big impact. "The stage was set appropriately, homework was done, and we had positive growth with good word-of-mouth. Our practice's model is to always seek out new services for our clients to help them and us stay cutting edge, as well as efficiently profitable to survive this negative environment."
In Okotoks, Alberta, Canada, Calvin Booker, DVM, MS, Feedlot Health Management Services (FHMS) says, "The biggest revenue generators in our business model have always been the addition of new clients and the expansion of services that we can provide for both existing and new clients. Our approach has always been to wait for prospective clients to approach us and then make sure that we do a very thorough and professional job of presenting our business service and philosophy."
Mark Thomas, DVM, Dipl. ABVP, Countryside Veterinary Clinic, LLP, Lowville, N.Y., says his dairy practice is offering an overall increase in production medicine/consulting services. Likewise, dairy veterinarian Greg Goodell, DVM, The Dairy Authority, Greeley, Colo., says adding new or improved services influences clients the most and helps to passively create new clientele as well.
Across the country in California, large-herd dairy veterinarian Pete Kistler, DVM, Valley Veterinarians Inc., says he's fortunate to work in the Tulare County area. "We are blessed with well-capitalized clients who are excellent businessmen," he says. "These dairymen realize that milk prices cycle and that there may be times when everyone loses money. Over the years these producers have gotten into the habit of deferring 2–3 months of milk checks into the next fiscal year. Most of our clients prepay feed and some even prepay veterinary services."
At the edge of the Flint Hills in Marion, Kan., Jessica Laurin, DVM, The Animal Center of Marion County, notes that her cattle services have increased in the past two years. "One of the changes in our area is the retirement of older veterinarians," she explains. "We are also charging more for trips and adding new services. In rural areas, there will be new clients, but at some point the business can only service so many clients without adding another veterinarian and more overhead."
In Kamuela, Hawaii, Tim Richards, DVM, Veterinary Associates Inc., says he is charging more for outcall travel and has offered to take on new clients. "I have also worked with local animal health suppliers to do more producer meetings to promote the value of my services," he says.
At the Mountain View Veterinary Services in Shippensburg, Penn., Trent Lartz, DVM, continues to seek and/or accept new clients. "We work very hard on customer service to retain old and new clients. The practice strives to increase profitability for each producer."
In many businesses the clientele is only so large, so instead of adding clients, finding new services to offer is key for revenue streams. One of the most popular new services for bovine veterinarians to add or expand upon has been the use of ultrasound, especially in beef cattle practice. Willis uses it for pregnancy and fertility issues and says clients now request it.
Laurin added ultrasounding for pregnancy for cow-calf clients and targets the 30–75 day pregnancy for embryo transfer clients to identify if the embryos took, or uses ultrasound for those clients who want an advantage for sorting groups for feeding, especially in the fall calving groups. (See Practice Tips)
At Rock-N-Country Vet Services, College Grove, Tenn., Jennifer Hatcher, DVM, has actually added new clients because her practice has incorporated reproductive ultrasound as a new service. "Our clients want the ultrasound and like what it provides," Hatcher says. "I have acquired at least five new clients just because I use ultrasound."
Before he bought it, Lindberg's practice did not offer ultrasound services for cow-calf clients. An ultrasound was then purchased immediately and that service was added. Artificial insemination services have also been added since then. "For the feedyard side, we have added a plethora of services that our clients have the opportunity to take advantage of to aid in profitability," Lindberg notes.
Lindberg's practice is constantly adding new services for both small animal and equine as well. "New services and advanced diagnostics are key," he says. "This is the part of business that has to be capitalized upon if you have it, as this segment of clients typically does not always make decisions based on economics. But, you must offer great service from the time they walk in the door, to the time they leave."
Thomas adds that the small animal and equine aspect of his practice, "Has helped with cash flow during the difficult dairy economy. Our small animal and equine has remained strong." Lartz's practice is similar and he says the small animal portion of the practice has helped to hold or increase revenue for the entire practice.
Hatcher adds that in her area, adding serv-ices for small ruminants and camelids has expanded the practice as well. "We have a large camelid clientele and have found that no other veterinarians in the our area are treating them," she says. "It has increased our revenue. Since tapping into that market we have made a name for ourselves in our area as the small ruminant/camelid guys."
For FHMS in Canada, in the past year they have expanded their nutrition, data analysis and research capabilities by adding both professionals to lead these initiatives, as well as trained personnel for the necessary support services.
Goodell's dairy practice created more services that are lab-oriented and do not necessarily require veterinary interaction such as using technician services for total protein evaluations, somatic cell count services, etc. "In today's economic environment, the dairy vet is viewed as a ‘high-price"," explains Goodell. "That may be incorrect, but that's how some producers feel."
Transition-cow management has been a hot topic for a couple of years in Kistler's California practice. "While veterinarians in our practice area are in no position to compete with the top-notch nutritionists who serve our clients, I do believe we have something unique to offer that integrates nutrition, health and economics," he says.
"For the next few months, my partners and I will focus on strengthening our client relationships, offering more consultative services and trying to integrate management inputs," Kistler adds. "I think the Mid Maryland Dairy Veterinarians referred to this as the ‘one team approach"," he says. "While each veterinarian in our practice may specialize in a certain discipline such as milk quality, calf management, records analysis, etc., we are still generalists who can problem solve on the run."
Lartz has also added nutritional work and consulting to dairy clients. "We marketed this with door-to-door visits and discussing this with current clients." His associates have also added camelid and cervidae services to the practice.
Tom Reece, DVM, MS, Food Animal Veterinary Consulting &; Services, Tipton, Okla., felt that more education would increase revenues, and he wants to use his newly-acquired master's degree in veterinary epidemiology to more effectively compete for consulting assignments among large-scale producers and contract-type assignments with corporate organizations. "I have already had small success in this area," he says.
Reece not only believes in furthering his own education, but also that of his staff. He has one part time veterinary technician in training for a distance learning degree from Purdue University who will become a registered veterinary technician in about a year. "We are currently planning to expand to services he enjoys and feels is under served in my area," explains Reece. These include reproduction such as AI in bovines, equines and small ruminants; small ruminant production with an emphasis on meat goats, a species that has greatly increased in number and that Reece believes is not a fad; and equine dentistry using powered equipment. "We're already experiencing an increase in calls for these services," Reece says.
Hiring more staff
About 19% of the survey respondents indicated that adding staff was a revenue-generating strategy. Richard Doak, DVM, Mid Maryland Dairy Veterinarians (MMDV), Hagerstown, Md., agrees. "We chose to add a practice manager to our practice this year," Doak says. "We believe that she will more than pay for herself by helping us in the areas that practitioners often neglect like inventory control, real-time price adjustments on drugs and supplies, controlling cost on supplies, improving office staff efficiency, marketing of practice services and decreasing accounts receivables."
Doak's colleague Matt Iager, DVM, adds that the practice also hired a new associate to continue providing service that clients have come to appreciate and expect. "Our new employees have helped create new opportunities from our milk quality lab and records evaluation programs in addition to increased frequency of client education services, such as small group sessions in the evenings on current and important interactive topics."
Thomas says that continuing to add new veterinarians to keep work load to a reasonable level has helped his practice. "We can continue to provide excellent and timely service to our clients."
Lindberg also believes adding another veterinarian who is split among all aspects of the practice was a strategic move. "We are currently looking at adding another technician, but due to the current economy, we are looking at this decision under the microscope," he says. "But, it will happen."
The staff at Lindberg's practice is encouraged to participate in the business. "We have monthly staff meetings to educate employees, to go over practice fundamentals, and to brainstorm on just about anything," Lindberg explains. "I give the entire staff the opportunity to give their thoughts and ideas. I empower them to have thoughts and help make decisions to aid in the success of the practice. In doing so, they take great pride in what they do for the practice."
Goodell also sees value in getting his current staff involved. "I ask my staff specifically to watch for things that may help impact the bottom line," he says. "I think it also shows the staff how important they are to a successful practice.
Laurin's mixed practice has found it cost-effective to bring in more staff. "We are utilizing graduates of four-year colleges with animal science backgrounds as technicians, and are very pleased with the results," she says. Laurin also taps into her existing staff to become more engaged. "Our staff is willing to help by performing routine processing procedures for clients such as vaccinating, implanting and branding when the veterinarians are too busy. Smaller clients appreciate utilizing trained people, bringing cattle into the clinic with well-maintained facilities, and are happy to have our staff perform routine processing procedures."
Laurin has also included one technician or staff member along on farm visits, especially for processing or pregnancy checking. "In the last 10 years, many producers find it harder to have help available, except on weekends. We will at times bring a third person along, and producers have willingly paid for the additional person. Just by bringing extra help that has made us more valuable."
Reece believes a registered veterinary technician will allow him to expand services with a disproportionately low expenditure of resources.
Close to half of the survey respondents indicated they were charging more for services or emergency calls. Laurin's practice tries to raise fees once a year for services and her computer system marks up inventory based on a markup percentage. Richards" practice in Hawaii also adjusts annually.
Goodell's dairy practice last raised prices in January 2008, and he says he has raised prices 3–5% every year until January 2009.
Hatcher's Tennessee practice has expanded its radius of ambulatory calls. "We now travel to surrounding counties to accommodate people there," Hatcher says. "We have also gone up on our mileage cost and our emergency fees, and, if needed, we add a tech fee to cover the expense of our accompanying technician."
Because of the economy, some practices are hesitant to raise fees. "We generally review and raise prices each year in January, but this year we decided to forgo any price increases given the dairy economy," notes Thomas.
Lartz's Pennsylvania practice is in the process of raising some prices. "We have not raised large animal prices for about 1½ years and our clinic decided to lower our prescription and non-prescription drug prices for our direct ship program earlier this year," he notes. "This new program has increased sales, recruited new clients, and increased the practice's cash flow."
"Based upon assessment of the value that each service module brings to our clients, we set our prices accordingly," Booker explains. "However, we have to remind ourselves that we should be reviewing the prices we charge on an ongoing basis so that they continue to represent fair value for the services rendered. Further, this means that prices should be increased or decreased accordingly over time."
Lindberg typically reviews charges yearly, and most charges are increased 3% each year to account for inflation. "We also try and grow product sales each year. We work very close with all sales reps to maximize all potential profit streams. We also monitor product costs to ensure appropriate pricing so that we can pass that cost savings on to the producer."
Outreach to clients
Adding new services or increasing charges won't be profitable unless you get clients paying for them. Bovine veterinarians have become very adept at finding ways to market their services to new and existing clients.
Lartz did it the old-fashioned way. "We sought new clients by going door-to-door with a pamphlet describing our dairy services and by talking with the producer about our practice philosophy," he says.
Because she has a fairly new practice, Willis has become involved in some local organizations involving cattle which has given her and her services more exposure. As they develop additional service modules, the veterinarians at Feedlot Health Management Services meet with their existing clients to present and explain what each module is comprised of.
Richards takes advantage of opportunities by WALCO and Pfizer to host producer "traveling road shows". He likes to get in front of current and potential clients with producer meetings and speaking to groups. Thomas" dairy practice also hosts/sponsors continuing education meetings for their dairy clients. Lartz hosted the first annual producer meeting in January of this year, and says another meeting is in the works for the beginning of next year.
Lindberg also likes producer meetings, and his practice holds a yearly producer meeting for all food-animal clients, be it cow-calf, stocker, starter yard or feedyard. "They are broad-based meetings, but we try and bring in intriguing and well-known speakers to ensure great attendance." Lindberg says producers evaluate meetings just like veterinarians do. "If the meeting looks poor, we do not attend. But if the agenda looks good, we are more likely to attend."
On the equine side of Lindberg's practice, they now hold an annual meeting and bring in regionally known trainers for training sessions. "We held another equine meeting focusing on nutrition, the foot and chiropractics. And yes, we do such things to showcase new services, such as equine chiropractics."
Laurin held a Spring open house to get the word out about new services and tools. "We put ads in the paper and sent an invitation postcard to our producers, so that if they were too busy for the open house, they still were informed of the new services," she says. "The mailers really helped. Learning new skills brings in more clients."
Planning for the future
If you haven't already, now is the time to plan what you intend the future to bring. Because Willis is opening a new practice, she has a business plan for next 10 years. Richards has discussed succession planning and attracting young veterinarians. "We are also considering getting them as partners earlier in the process," he says.
Due to the demographics of practitioners in his area, Reece expects to acquire new clients as more of his colleagues reduce their large animal activities due to age and health issues.
Iager notes that at Mid Maryland Dairy Veterinarians, "We strive to create new opportunities for business success, such as marketing new clients, planning a more efficient daily work schedule, or introducing additional services not currently offered. However, the current economic setting has made us look at a more detailed plan for the business," he says. "Each management decision has to be efficient and productive or it may not be the best for the practice.
In addition to weekly partners" meetings, Thomas has twice yearly, day-long meetings to discuss strategic long-range plans for the practice. "This has proven to be an excellent tool to plan for the future and brainstorm about future opportunities," he says.
Booker's practice sets a business plan for 12 months out and reviews and updates it every 3–6 months as required. "We do this more as an ad hoc process than a pre-planned exercise, but we find that it works well for us," he says. "One of the important concepts that we have embraced is that we should continually review our strategies to make sure that they are still the best approach for the next 12 months and if not, we should quickly identify and adopt what will be."
Goodell has planning meetings with staff primarily to see what the demands will be on the practice and the people in it. "This also keeps staff posted on changes and makes them feel more like a part of the practice as opposed to someone hired to just mop the floor or run errands," he explains. "It makes the practice more efficient."
Laurin looks frequently at the profit for the year in comparison to the last year, and then twice a year compares it to the last three years. Her highest budget item is for personnel expense. "I try to keep it within the same percentage of income on a yearly basis, but have seen it increase 10–12% per year, in trying to keep up with inflation," she explains. "We do struggle with trying to pay employees comparable to manufacturing jobs in the area. It is the one thing that forces us to expand prices and services."
Laurin notes that inventory is another large cost. "We try to maintain a similar dollar inventory on hand as compared to the same time the last year. With more employees in the practice and increased inventory sales, that dollar figure tends to creep up, so that in May and June I have to try to push down inventory numbers to prevent a large carryover during the summertime." She also looks at what building repairs and expansions she wants in the next few years and tries to budget to accommodate that.
Short-term planning is also essential to keep up with long-term goals. Lindberg says this is a daily, nightly and non-stop process for himself. "My mind runs non-stop thinking about what else we could be doing on all fronts," he says. "With two other associates, we hold weekly Monday morning meetings to review such things as this. These meetings allow us to review cases, current practice happenings, goals, ideas and the week ahead. At the same time, it gives me an opportunity to mentor and groom them into future practice owners. My goal for them is to be extremely successful and profitable. If they remain with the practice, that is for them to determine based on their performance, and if they don't, I always hope for them to have success."
Longer term, Lindberg says if the practice develops into a multi-owner practice, which is his goal, than he will have to have more formal meetings to discuss strategic planning for short-, mid- and long-term goals, as well as business plans. "One of my mottos is, ‘Vision without action is no vision at all"."
Bovine Veterinarian economics series
The first article, "Riding out the storm," (May, 2009) outlined some of the survey results, with subsequent articles exploring the information in more depth.
The second article, "Helping clients in a bear market", (July-August, 2009) uncovers what beef and dairy clients are doing to cut costs, and what their veterinarians are doing to help.
The third article, "Edge of the Blade" (September, 2009) discusses what beef and dairy veterinarians are doing to cut costs in their practices.