Equine veterinary practices will need to make adjustments to their schedules and fees to attract and retain veterinarians.
I recently turned 71. My 46 years in and around equine practice have given me a powerful perspective on its business model. What I am seeing today bothers me. I believe that equine veterinary medicine is heading for severely troubled times.
Equine practice is at a critical inflection point. Fewer veterinary school applicants are interested in equine practice when they enter veterinary school. Fewer graduates choose equine practice. Too many equine practitioners leave equine practice early in their careers. Equine practices have a high turnover in technical staff, who often leave equine veterinary medicine. Is this a new, emergent problem, or an old issue that is finally commanding some attention? Either way it must be corrected.
Why Is This Happening?
Simply put, supply and demand are driving the shift of professionals and staff away from equine practice. Even though new colleges of veterinary medicine are opening, there is a limited supply of equine veterinarians graduating relative to the demand for equine veterinary services. The demand for equine veterinarians is greater than the limited supply. There is a very competitive marketplace for veterinarians in companion animal, equine, specialty, industry and government practice, plus veterinary business and research positions.
To attract and retain veterinarians, all of these positions must consider work life integration, job satisfaction, culture, compensation, benefits, flexibility and schedule. These are basic principles of competing for talent in any labor market.
Unfortunately, other segments are simply out-competing equine practice in most of those categories. There is a message being delivered by veterinarians and college of veterinary medicine professors who warn students to not go into equine practice. The warnings are framed around two issues: 1) you won’t make enough money, and 2) you won’t have enough personal time. As equine practice is now conducted, both arguments have merit.
What is Wrong with the Equine Practice Business Model?
At the most fundamental level, the equine practice brand tag line “it’s a lifestyle” is code for “it’s not a real business and you must be willing to accept challenging work life integration, job satisfaction, culture, compensation, benefits, flexibility and schedule.”
Focusing on companion animal practice as the main competitor with equine practice for veterinary talent, let’s consider why they are winning the competition. They operate using business principles, not “commitment shaming” to attract veterinarians. Equine practice veterinary jobs often start below $100,000 per year while companion animal practice jobs often start significantly above $100,000. Companion animal working hours are set. In most communities there is no night emergency work. Work-life integration is a reality. Flexibility and four-day work weeks are common. Having said that, job satisfaction, benefits and culture are generally not dominated by companion animal practice.
What Can Equine Practices Do?
It takes money, lots of money, to pay veterinarians enough to consider equine practice, give them four-day work weeks, and eliminate night and weekend emergency duty.
Envision an equine practice that starts associate veterinarians at $125,000, gives them four-day work weeks and no emergency calls. There would be day veterinarians and night veterinarians whose sole responsibility would be seeing emergency cases. Those veterinarians would have no routine calls scheduled before or after their emergency shifts. They would make $175,000-plus per year.
Every part of that vision is impossible in the business model equine practice currently uses. The current model has historically focused on keeping the cost low to the client. This is done by keeping product and service prices low. Since prices have historically been kept too low to generate enough revenue to pay veterinarians and staff adequately to incentivize them to work in equine practice, they are not entering equine practice and many of the ones who start in equine practice leave within a few years.
The beginning of implementing the financially sustainable business model is to start with your past year income statement as a beginning for next year’s budget. Plug in $125,000 for each associate. Add $200,000 for a daytime emergency veterinarian(s). Add $200,000+ for a night emergency veterinarian(s). Add the cost of benefits for the additional emergency veterinarians and thorough training for all staff members. This will make a big dent if not eliminate your profit. Brace yourself, because the only source of revenue to offset those new expenses and win the talent war is clients.
For generations, veterinary admissions committees have managed to consistently admit students who are uncomfortable discussing money. Accepting that handicap, the next step in creating a financially sustainable equine practice is emotionally very difficult, will frighten many and anger others. The first step is to raise fees significantly! The plug-in exercise above will tell you the deficit you need to offset to have a financially sustainable practice. Achieve what companion practices are currently achieving by charging and collecting fees adequate to pay your veterinarians and staff what is required to attract and retain them. Create an equine practice that pays very well and has fixed hours. Even the emergency doctors have fixed hours!
An equine veterinarian’s knee jerk response will be, “Where are we going to get all those vets, we can’t find any now!” I believe we will attract and retain them by addressing the key disparities that companion animal practices use in their recruiting efforts—compensation and time.
For equine practice to become financially sustainable, we must learn to charge and collect like companion animal practices do. They generate enough revenue to attract and retain the veterinarians that are lost from equine practice with appropriate compensation and time off.
Why will this be difficult to achieve?
Change only happens when the pain of changing is greater than the pain of not changing.
Equine veterinarians all took the veterinary oath and are kind, generous, compassionate, and terrified to change what we must change in order to attract and retain veterinarians and staff. I believe equine practice has arrived at a critical inflection point.
The facts are that horses are a very expensive hobby, and the horse business is a very expensive business. At the expense of the financial sustainability of their own businesses, equine practitioners have made fear-based decisions to “keep the bill low,” effectively subsidizing hobbies and donating goods and services to other businesses. Somehow equine practitioners have accepted the responsibility to subsidize horse hobbies and horse businesses that horse owners can not afford.
With fewer equine practitioners in the pipeline, equine practices have too much work to do per veterinarian. Supply and demand tell us that when something is in short supply, the price goes up. Equine practice is not an exception.
The Answer is Simple
Equine practices must understand what revenue is necessary to pay veterinarians and staff adequately to compete with companion animal practices.
Since equine practices are generally frugal in managing their expenses, there are only a few strategies left to increase revenue adequately to become sustainable.
- Increase revenue by asking associates to work more hours for less money than they would be paid in companion animal practices (unlikely to be successful)
- Increase cost of professional services as well as markup on drugs, supplies and lab work adequately to pay competitively compensation the veterinarians and staff
- Provide a daily shift rather than a 24/7/365 shift.
Now that we have envisioned a financially sustainable business model, fearful equine practitioners might say, “We won’t have a single client.” Remember, supply and demand are on your side in this case. Our model must be to charge enough to win the talent war. Yes, some clients will leave, and some of our colleagues will dive on the race to the bottom, trying to price themselves lower than their competitors … until they are no longer in business.
We can achieve this financially sustainable business model! Equine practice has historically made some tough financial policy changes. The most significant was a shift toward payment at time of service. In the last century, it was almost unheard of for an equine practitioner to collect at time of service. I know of several iconic practices that carried accounts receivable so high that their “days to collection” metric was over 150 days. In 2023, there are practices with a “days to collection” metric of less than 10 days! That is a hugechange and was challenging to accomplish.
The business model change equine practice needs to make now will be difficult. In order to become financially sustainable, equine practice must charge and collect enough to pay well and provide an adequate amount of scheduled time off to win the talent war.
Compensation and time commitment for veterinarians will determine the financial sustainability of equine practice. You CAN do it.