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Thursday, December 13, 2012

Owning A Practice No Longer The Dream

I've never wanted to be a veterinary practice owner.  That may be a shock to some people, and I've even argued with some of my staff who think I should go out and open my own clinic.  When I was in veterinary school in the mid-90s it was an unspoken almost certainty that any of us becoming small animal general practitioners would eventually open their own practice.  That was just what veterinarians did!  And historically this has been the case.  Owning a practice has never appealed to me because I don't enjoy the stress of the business side of things.  In my current practice I do manage the location and am partially responsible for profitability and performance, but I also don't have the specter of failure hanging over my head.  They way I've always looked at it is if my practice went bankrupt I have the skills that I could find a new job in a few weeks.  But if it was my own personal practice that went bankrupt it would affect my mental health and personal finances in a more serious and deep way.  I also have some flexibility in being able to move and leave my current job, which I wouldn't have as a practice owner.  Sorry, just not for me.

It appears that I'm not alone and perhaps was ahead of my time in vet school.  In the most recent issue of DVM Newsmagazine there is an interesting article on practice ownership.  Over the last six years there has been a very dramatic move away from owning a practice.  In 2006 53% of those surveyed said that owning a practice was one of their aspirations.  That decreased to 43% in 2009 and to 30% in 2012.  So 70% of practicing veterinarians have no desire to open or buy into a practice!  Before you say "Well, that's because there are more women as vets and they aren't as interested in business," let me share another statistic from the study.  Thirty-two percent of women and only 27% of men said that they wanted to own a clinic.  So there is no real difference between genders.  This is an overall trend across demographics.

The article points to several reasons for the change, and I would agree with them.  It's mostly about work-life balance, where vets no longer want to spend 60+ hours per week building and running their clinic.  They also don't want to have the hassles of doing a job (business manager) for which they were never adequately trained.  More and more vets simply want to be a doctor and enjoy that aspect, yet don't want to do anything outside of that job.  In fact, when asked what their greatest professional fear is, respondents overwhelmingly indicated "lack of balance in career/personal life", with 43% of people chosing it as their top concern.

High costs of doing business is also a big worry.  US and global economies aren't very good, and that makes it difficult to have a successful business in any field.  The article says that to open a successful stand-alone practice can cost around $3 million.  With burdensome debt loads fewer vets will find themselves in a position to build or even buy into a practice.  Newer vets are finding it hard to simply make ends meet, let alone have the finances to invest in their own clinic.

So what does this mean for the future of the profession?

First of all, this is a serious problem for existing veterinarian practice owners who expected to sell their clinic to fund retirement.  In just six years we've gone from over half of veterinarians wanting to own a practice to under a third.  There simply aren't people who are in a financial position to buy a practice or even want to.  I feel bad for those older vets because their "investment" in the practice likely won't pay off as much as they had hoped.

Like always happens, I firmly believe that veterinary medicine will adapt.  We are already seeing growth in large corporate practices such as VCA and Banfield Pet Hospitals.  But smaller corporate practices are also becoming more frequent and larger. Rather than being national, such vet clinics can be regional over an area, state or a few states.  This model of practice allows the business to be managed centrally by those with the skills and desire to do so, taking the risks and burdens off of individual veterinarians who can then concentrate in being doctors.  I don't think that we'll ever get away from single-owner clinics, but the numbers clearly indicate a very strong shift away from this idea.  And I predict that the trend will continue and will be the "new normal" in the profession.  It makes me glad that I decided long ago not to go the route of ownership.