NAVC economic sessions offer predictions, advice
Half of veterinarians participating in a survey this week said they expect to cut staff hours in an effort to save jobs during 2009.
The survey was conducted during a symposium on economic issues and the recession at the North American Veterinary Conference in Orlando, Fla.
Student debt, economic forecasts, and lessons from a multi-practice owner weathering the recession in the long-struggling Midwest were also front-and-center at the conference.
An impromptu survey of the session attendees – using electronic voting devices – showed that 45 percent expected flat gross revenue in 2009, while only 28 percent expected a good year. Twenty-two percent said they would see a slight decline, and 6 percent expected serious declines in revenue.
Half of those surveyed said they would likely cut employee hours this year, but not jobs. Only 6 percent said they would cut both hours and jobs, while 44 percent said they did anticipate any staff reductions to control costs.
Economist David Denslow, PhD, of the University of Florida’s Bureau of Economic and Business Research painted a grim picture of the new year in terms of the economy.
“This recession is going to be worse than the one in 2001,” he said.
He predicted three ways in which the recession could play out, from a quick recovery to a prolonged, worsening recession. The most likely scenario, he said, is that the economy will continue to drop for two more quarters, and then remain flat until the third quarter of 2010 before beginning a long, slow recovery.
Credit is due
Three brokers offered a slightly more optimistic view. Veterinary practice broker Dick Goebel, DVM, of Simmons & Associates; Chip Mahan of Live Oak Bank; and Gavin Shea of commercial real estate brokerage and financing company Matsco discussed the state of credit for the veterinary profession.
All three said that despite the recession, veterinarians are low-risk clients with whom creditors are generally glad to work. Shea said that although many banks are tightening credit, 99.5 percent of Matsco’s dentist and veterinarian clients pay back their loans as agreed.
Goebel said that practice sales were up 19.7 percent in 2008 over the previous year. He also said that the notion that a recent graduate must pay down student debt in order to buy a practice is a myth.
“In 11 years I have never encountered a situation where educational debt was a barrier to a loan for a practice,” Goebel said. The trick is to do your homework and buy the right practice, he added.
Lessons from the trenches
Jeff Rothstein, DVM, MBA, is owner of several practices in Michigan, one of the hardest hit states in terms of the economy. While his practices were down about 2 percent in 2008, he said, good business practices can go a long way toward blunting the effects of recession.
Rothstein urged practice owners and managers to be diligent about budgeting, estimating, adjusting staff schedules to current needs, and negotiating for best prices.
In addition, Rothstein participates in a management group, tracks his numbers closely, shares them with staff regularly, and focuses on operating effectively without cutting costs to the bone.
Rothsteins practices also target missed charges, including hospitalization exams, surgery packs, pre-anesthesia medications, additional restraint, technician assists and ophthalmologic exams.
When a chart review reveals that charges were missed, Rothsteins staff calls the client to inform him or her the charge was missed and will be added to the cost of the next office visit. Calls are made within one to two days by a receptionist or the person who missed the charge, and few clients object, Rothstein said.
Key to success in weathering a recession, Rothstein said, is to keep a positive attitude and keep your practice’s momentum going.
It is vital to keep your staff involved in problem solving, he said, and to “keep things in perspective and celebrate.”
“By being upbeat and positive it makes a huge difference,” Rothstein said. “If [your staff] think you’re being down and out it is going to rub off on them and affect clients.”