The Sequel: The World is Watching!

In the mid-1990s, Iowa State University Press published our three-volume series of veterinary leadership, management, and training texts, titled Building the Successful Veterinary Practice. Volume 2, Program & Procedures, was actually written first as a team-based operations guide. After review, the team convinced me that we needed to discuss leadership first, so Volume 1, Leadership Tools was written.

When you apply leadership to operations and empower the team, you must concurrently build a "learning organization" within the practice culture. As a result of these concepts, Volume 3, Innovation & Creativity was born. Subsequently, six veterinary leadership/management/facility design texts were published by Iowa State University Press. Blackwell Press later absorbed Iowa State University Press, and we became international authors. It was in Chapter 1 of Building the Successful Veterinary Practice: Programs & Procedures, where I first wrote "The New American Veterinary Practice".

We introduced income-based budgeting and seven "key result areas" (KRAs), which compared and contrasted the old practice paradigms with the new emerging demands for practice success. We discussed the demand for change: reinvent, rethink, and rebuild. We introduced the seven areas of management concern:

 Clinical skills, now being termed "diagnostic Intensity".

 Executive skills, now being flaunted as "Leadership Development".

 Personnel Management, now being discussed as "Human Resource assets".

 Client Enrollment, now being termed "client bonding and referral".

 Fiscal Concerns, now being called "income-based budgeting".

 Quality Control, which is slowly being accepted as a continuously improving process.

 Internal Promotional Skills now being called "client-centered patient advocacy".

We also explored the "Eight Ms of Management":

 Medicine and Surgery: always first, excellence and quality required.

 Money: must be tracked, income must be compared to costs.

 Mission Focus: must be used to align delivery commitments.

 Method: team-based and client-centered.

 Marketing: patient's "needs" internally promoted, value, and how to access it.

 Manpower: usually woman power, and the staff as an appreciating asset.

 Minutes: staff maintains schedules, doctors respect staff and schedule.

 Morale: team fit equals harmony, and pride perceived as quality by clients.

We introduced an overview of change management, attributes of high achievers, and initiated a discussion of core values. As I look back at the last ten years, I am pleased to report that the profession now embraces most of these aspects. Yet, in just the past few years since the three-volume series was published, the efforts of our national associations, with the survey and production data provided, have provided the profession with breakthrough insights, which need to be reviewed for the Veterinary Practice of the New Millennium.

Big Picture Veterinary Impacts of the New Millenium

In 1999, the American Veterinary Medical Association (AVMA), the American Animal Hospital Association, (AAHA), and the Association of American Veterinary Medical Colleges (AAVMC) released the KPMG International's¹ Mega Study, with six major findings:

 Veterinary income lags behind other healthcare providers.

 Economic impact of increased number of women in profession may decrease income levels.

 Global demand for veterinary services is high, especially in non-traditional roles.

 Inefficiency of the existing delivery system(s).

 Excess supply of veterinarians in the future.

 Skills, Knowledge, Aptitude, and Attitude (SKAs): self-perceptions are self-limiting.

Following the KPMG Mega Study, the National Commission on Veterinary Economic Indicators (NCVEI) was born (go to www.ncvei.org). The NCVEI mission is to improve the economic base of the veterinary profession, ensuring that the delivery of veterinary care and service meets the needs of society.

¹KPMG is a global network of professional firms providing audit, tax, and advisory services. They operate in one hundred forty-eight countries and have more than one hundred thirteen thousand professionals working in member firms around the world.

The Brakke Study was also released in 1999 (go to www.ncvei.org/brakke.aspx). It found that veterinarians' incomes are negatively impacted by failure to use standard management practices, poor service environment at the clinic, low financial acumen of clinic owners, and other business-related factors.

Interestingly, following the 1999 KPMG Mega Study, the solution appeared to be centered on tracking numbers, while the American practitioner was concerned about delivering quality healthcare. Dollars are ONLY the outcome of more effective team-based healthcare delivery models. Yet, that seemed to be the association focus as our profession left the last millennium.

In 2003, two breakthrough events occurred in AAHA:

 The new AAHA Standards of Accreditation were published, taking the traditional three hundred forty "brick and mortar" standards to a new eight hundred fifty standards. These mostly centered on quality healthcare delivery, client satisfaction, and increased staff utilization. In 2005, an additional fifty mandatory standards were added.

 The 2003 AAHA Compliance Study was published, which showed potential lost income opportunity of over $630,000 per veterinarian per year in preventative and wellness healthcare. The amazing aspect of this was AAHA funded a "road show", using a respected consultant to share the findings study, as well as provide alternatives for resolving the shortfall(s).

In 2004, two additional and unique client-centered events occurred in the national associations:

 The AVMA initiated a client outreach program, "Think Twice for Life", in partnership with Fort Dodge Animal Health (FDAH), which was another association first (go to www.npwm.com). The program stressed wellness surveillance with two veterinary consultations a year, since one dog year was equal to five to seven people years. A free training program was offered to veterinary practices, but only eleven thousand of the twenty-five-plus companion animal practices enrolled during the first year. As the initial national spokesperson for the practice level roll-out of this "2xFL" initiative, I added team-based aspects, as well as genetic predispositions. For example, www.upei.ca/cidd/intro.htm is my preferred site in North America, while www.vetsci.usyd.edu.au/lida is my preferred site when working in Australia. In 2005, AVMA and FDAH added the genetic predisposition aspects to the web site and expanded the FREE training kit being offered to veterinary practices to include the "predisposition wheel", as well as the "age" wheel.

 AAHA enhanced its client outreach program with overt sponsorship of radio programs and used other visual media to differentiate the AAHA Certified Practice. Please note that only fourteen percent of the companion animal practices have accepted this peer review process for excellence and quality healthcare delivery review.

It is not hard to see that the aspects of the 1999 KPMG Mega Study, which were initially ignored, included the facts that demand for veterinary services is high, the existing delivery system(s) are inefficient, and self-perceptions are self-limiting.

Skills, Knowledge, Aptitude and Attitude (SKAs) are now raising to the surface of practice improvement programs. It is interesting to note that the economic link-pin, the 2003 AAHA Compliance Study, was actually initiated with the "new" 1989 AAHA Standards for Accreditation, when the medical record sufficiency was expanded to include continuity of care issues. For example, during his post-fire, turn-around consultation, our consulting firm implemented the new 1989 AAHA Medical Record Standards into Dr. Ross Clark's practice in Tulsa, Oklahoma. The implementation caused a nineteen percent increase in net income every month for the next year. Not bad for impacting the guru of modern veterinary practice management.

I have taught leadership courses for over twenty years, and have written the course syllabus and faculty development guide for three separate cultures/groups. Only one course was written and presented in veterinary medicine, which was a week-long course conducted in 1995. One of the underlying core premises of leadership development is Never Play the Blame Game. In short, to blame another, whether a person, the government, your community, the spirits, etc., is to abdicate accountability for resolution. With that said, there are still environmental challenges and long-standing paradigms within our practice cultures, and they need to be recognized. We often describe the syndrome as a formula to get people's attention:

A²=G²
If you Always do what you have Always done,
You're gonna Get what you always Got!

There is comfort in routine. About sixty-five percent of all Americans prefer the status quo. In surgery, we want the routine. Anatomy is not supposed to have many variables. There is a danger of entering uncharted waters. Fear of failure in case management threatens life or licensure, while as a business decision, most decisions can be adjusted en route and generally mediated.

Many times, it is not a fear of failure, just complacency about what has been. Most veterinarians seldom get out and compare delivery modalities. They hire people from within their own paradigms, causing inbreeding of sameness. And it goes beyond the practice level, since associations have elected officers and boards composed of practitioners without "board training". If we really are critical about where we are going as a profession, we can look at the environment around us and see the shortfalls, including:

 University programs that center on curative medicine. While only twenty to thirty percent of a practice access is for curative medicine, it is virtually one hundred percent of the veterinary training program. The SKAs needs identified by the 1999 KPMG Mega Study have not yet made it into the curriculum, nor have the wellness surveillance programs, introduced by the AVMA in 2004, been embraced in developing the graduate veterinarian.

 Preventive medicine has driven about seventy percent of a traditional general companion animal practice's client access. Yet, these professional skills are only hinted at during the formal veterinary teaching hospital (VTH) education, so the application knowledge is usually learned at the first practice, where a new graduate is employed. Hence the old adage, "The first practice a veterinarian works at establishes the career practice habits."

 The diagnostic intensity capabilities that are emerging for better wellness surveillance hold an adventure of early diagnostics, often extending the patient's life and enhancing the quality of life for the patient and the family. This also builds pride and satisfaction within the progressive practice's healthcare delivery team. This new approach has been highlighted by the AVMA's new initiative, "Think Twice for Life". It is also reflected in the current trends in veterinary media news releases (go to www.myvnn.com/).

 There is a lack of licensure reciprocity between U.S. states, and even similarly trained graduates from other countries. In most countries, university graduation means you can practice within your profession. Yet, in the USA, there are both national boards and state boards. Generation X graduates generally desire mobility, as do the corporate consolidators. However, while the United Kingdom, New Zealand, Australia, and South Africa veterinarians can laterally move between countries without licensure hassles, movement even between the U.S. states is severely limited.

 Veterinary "Practice Management Software", within which the basic business success formula has always been "income - expense = profit", profit is a positive number. Yet, at this point in time, there is no veterinary-specific software that integrates all phases of bookkeeping to allow the required financial reports to be produced in a timely manner. Compounding this shortfall are the tax accountants, who prepare financial reports with one item in Income (sales or revenue) and fifty-eight-plus variable expense line items. Unless businesses can compare the expense to the income by line item, they will never know how to change profitability in daily operations.

 Compounding the software shortfalls, and supporting the old paradigms, is the journals and associations that publish gross sales, average client transaction rates, and expense percentages. These metrics are out of date, as well as misleading. The difference between income and expense on a specific line item is NET income, but very few ever quote this number. Average client transaction is meaningless, unless you now how many visits per year per pet occur in the practice, as well as how many doctor minutes and staff minutes are committed to each transaction. Sales per full-time equivalent (FTE) staff member and sales per FTE doctor are much more significant trend indicators, as well as the "diagnostic ratio" for each doctor and the practice.

 "Diagnostic Ratio" is defined as "pharmacy sales: diagnostic sales", where a ratio of one-to-one is expected in a well-balanced companion animal practice.

 Practices with a forty percent exotic case load may reflect a one-to-two ratio, due to lighter animals that need more husbandry and surveillance than drugs.

 A mixed animal practice with substantial producer drug sales have maybe a four-to-one diagnostic ratio, which is normal, until the case load starts to shift toward companion animal emphasis.

 Life styles and life balances have never been high priorities on the veterinary practice model achievement scale. Staff members are underpaid, employed veterinarians are underpaid, benefit/investment programs are minimal, work hours are long and emotionally demanding, yet the 1999 KPMG Mega Study finding of "inefficiency of the existing delivery system(s)" has not been taken to task. In other healthcare professions, paraprofessionals are the managers and administrators. Trained staff, who is committed to augment and extend the impact of the providers' knowledge and skill, allow the primary provider to concurrently manage multiple cases. This produces multiples of income over the linear delivery systems encountered in veterinary medicine. When a provider can produce more income in a shorter period of time, compensation can be increased for all, while providing more available time for discretionary activities that can recharge the emotional bank account.

 Practice scheduling software should allow a practice to schedule work stations and multi-task providers. However, many programs are linked to doctor names and single-column scheduling. Scheduling should embrace the concept that nursing staff can follow any unresolved issue on the problem list. Yet, most programs do not have a problem list, much less a linkage between atypical findings and who is specifically accountable for follow-up surveillance.

 Entrepreneurship and economies of scale are not yet bedfellows in veterinary medicine. Most practice owners like to believe they are their own boss and entrepreneurs for a better tomorrow. Yet, most also want to know thirty other practices that are already doing "it", so they can copy what those practices are doing. Technology breakthroughs have provided us with ever-escalating diagnostic and treatment equipment costs, but the private practitioner seldom enters into an affiliation for joint-use of the expensive diagnostic toys.

 Striving for mediocrity is still the norm in the business of veterinary healthcare delivery. Periodicals and surveys may show us a range of services, outcomes, or results, but what is usually compared is the national averages. An average, be that "mean", "medium", etc., is ONLY "the best of the worst", or "the worst of the best". When confronted, very few practice owners want to be either of those definitions. A "benchmark" is to compare your set of outcomes to the top ten or fifteen percent of the best in similar environments. It is a matter of looking at what the line-item variances are between where you are versus where the best of the best are. With all of our veterinary-specific software, you would think someone could write this type of performance comparison program.

Veterinary practices have traditionally addressed their liquidity potentials from a gross sales standpoint, rather than embracing a net income approach to determine value and resale cost. When you look at gross sales, there are three simple alternatives: more clients, higher fees, or more services, hence our flirting efforts with resale, boarding, and grooming.

 In most communities, there are a limited number of free-ranging clients, and those without a preferred veterinary practice are not the best candidates to make anyone successful.

 Since most practices feel preventive medicine is a commodity-based set of resale services and products, they do not feel free to increase those prices, resulting in some clients procuring products elsewhere via the Internet and catalogs.

 The curative medicine and surgery services are most profitable, but are limited by the demand. For example, the number of hit-by-car patients have been reduced, as pets have become family members and are walked on leashes.

Many consultants have taken to offering ways to convince practices to increase their fees. Sometimes with computer programs based on the community transaction fee, sometimes based on full-cost accounting of each service, and other times using "blue smoke and mirrors" for specific services and/or line items. The answer does not lie in our past, but rather in our future.