2018 AAEP Convention: The Business of Practice

There were valuable business presentations for equine practices of all sizes and types at the 2018 AAEP Convention.
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Creating a culture that improves practice performance was the focus of the business sessions at the 2018 AAEP Convention in San Francisco.

Creating a culture that improves practice performance was the focus of the business sessions at the 2018 AAEP Convention in San Francisco. The sessions began with an excellent presentation by Dr. Tracy Sheffield, who outlined the importance of a positive work environment.

Working from a nine-question survey distributed to veterinarians primarily in Texas, Sheffield said respondents reported that when issues were brought to their attention, more than 50% of the time, practice owners or managers took no action. This management failure markedly reduced veterinarians’ job satisfaction and contributed to associates leaving their positions.

Sheffield suggested that clearly and consistently communicating behavior expectations for all team members and creating a collegial, professional work environment are the keys to improvement in the workplace. Uniform operations and procedures, she said, will also create a consistent client experience.

Because a toxic work environment is hard for everyone—practice owners, employees and clients—the speaker discussed how such a “big mess” creates inefficiency and is very costly to a practice. She urged practice owners to tell those who are acting out that “You may not behave like that here” and “You need to find a way to leave those issues at the door and come here ready to work.”

She relayed that 37% of the stressors reported by survey respondents arose from poor or non-existent management and that communication, appropriate boundaries, training, action and civility were important in the creation of a good work environment.

Sheffield advised against yelling at or belittling any staff member. If correction or discipline is needed, she said that it should be undertaken privately. audience

In conclusion, she reminded the audience that what matters is how you are perceived, not how and what you think you communicated.

Employee Engagement

The use of an employment engagement survey to improve practice performance metrics was presented by Mike Pownall, DVM, MBA. After a particularly stressful, busy season, the speaker noted that “there was no longer any laughter” in his practice. Associates were teetering on burnout and lay staff were turning over regularly, he added. Pownall explained how, after reading an article in the MIT Sloan Management Review, he developed a 34-question survey with five categories by utilizing the article’s framework. The categories included career development, work engagement, compensation and benefits, relationship to management and work environment.

The speaker detailed the results of the employee engagement survey utilized at his practice and indicated that the open-ended comments that were received were particularly helpful in understanding the concerns of his staff. By acting to mitigate areas of stress for the practice’s employees, particularly the associate veterinarians, employee engagement metrics improved on subsequent surveys given in the next two years.

In summary, Pownall stated that employee engagement has a significant effect on business productivity, profitability, morale and culture. Companies can improve engagement by improving employee orientation, training, career advancement opportunities, performance evaluations and compensation, he said. Using an employee engagement survey can be a powerful tool to assess areas of needed improvement for a practice, he concluded.

Employee Handbook

Amy Grice, VMD, MBA, shared the steps for creating an employee handbook and opined on the importance of such a document. An employee manual describes all of a business’s policies and procedures while setting expectations for employees, she said. It describes compliance and legal obligations as an employer, but most importantly it forces a practice owner to think through and create policies that he or she might never have considered before.

Because practice owners typically spend most of their time working as veterinarians to produce revenue rather than focusing on business, managing practice issues often only occurs when a situation requires it, meaning the response is reactive rather than proactive.

Once an employee manual is created, the practice owner can more easily manage employees by addressing potentially disruptive issues before they occur.

In addition, Grice said that by providing a document that clearly spells out expectations for employees, legal trouble can often be avoided. Written policies allow the practice team to understand in advance how different situations will be managed, what the boundaries are and what the consequences are when the boundaries are breached. An employee handbook also provides an opportunity to showcase how the practice values its staff members. Using positive language to describe the business can help create employee pride and motivation.

The essential sections of an employee manual include an introduction and welcome, workplace compliance, company policies and procedures, employment classification, attendance policies, leave policies, work performance, discipline policy, employee benefits and termination policies. She emphasized the importance of having a signed acknowledgement of receipt from each employee.

An employee handbook diminishes the stress and risks of practice ownership, Grice stated. If uncertainty about any part of the employee handbook should arise as it is created, she recommended researching state laws, contacting the proper state or federal agency and/or consulting an attorney. After completion of a draft, all employee handbooks should be reviewed by an attorney to ensure compliance with federal and state laws and regulations, she concluded.

Maternity Leave

Three consecutive maternity leaves by veterinarians at a five-doctor equine practice were described in a presentation by practice owner Miranda Gosselin, DVM. By investing in proactive paid parental leave policies, communicating transparently, utilizing creative on-call scheduling and adopting non-traditional scheduling, the practice grew stronger during this period, she reported.

Strategies used to weather this upheaval included hiring a vet assistant, and budgeting carefully for the year ahead. While all the solutions that worked in this multi-doctor practice might not be possible for smaller practices, Gosselin said, being flexible and working as a team is available to all.

Continuing with the topic of maternity leaves, Grice discussed creating maternity leave policies. She emphasized that maternity is considered a temporary disability, and policies for maternity must be materially equivalent to those for any other temporary disability. Employers must provide the same benefits to all employees, whether or not they are pregnant. In other words, employers must treat all workers that are disabled equivalently. This means that if an employer adjusts the workload for a worker who is not pregnant but who has some other disability or mitigating circumstance, the employer cannot refuse to do so for a pregnant employee.

Employers may not forbid a pregnant employee to continue work if she wants to and is physically capable of doing the tasks associated with the position. If a practice allows unpaid leave for other types of short-term disabilities, by law the same policy must be extended to pregnant employees.

Grice recommended writing a general policy for unpaid leave—under what circumstances it is granted, how long a leave is permitted, whether the practice will continue to pay for employee benefits during the period of leave and what amount of lead time is required to request a leave.

Theft and Embezzlement

Tera Nance, an accountant with Summit Veterinary Advisors, gave a chilling presentation about theft and embezzlement. She cited a 2011 survey indicating that more than two-thirds of a group of 183 practices reported being a victim of fraud, theft or embezzlement by an employee.

Using an actual case, Nance reviewed the characteristics and motives of employees that steal and early warning signs that might be noted. She said that 10% of employees will never steal, 10% will steal at any opportunity and 80% will go either way, depending on how they rationalize a particular opportunity.

Employee fraud continues for an average of 18 months before detection, she reported, and about 33% of veterinary practices will be victimized this year.

In almost all cases, the guilty party will display signs such as living beyond their means, forming excessively close relationships with vendors or clients, having financial problems, being controlling and/or failing to take vacations or time away from the office, she said. More than half of these people are female, between the ages of 31 and 45 years, and are long-term, trusted employees in management or financial positions.

In order to prevent embezzlement, Nance recommended strong internal controls with a separation of duties and the limitation of some functions to practice owners. If fraud is suspected, she cautioned, quiet investigation utilizing a forensic accountant is warranted.

Practice Vehicles

Many practice owners struggle with whether to furnish practice vehicles or have practice veterinarians furnish their own vehicles and get paid standard mileage rates. Jorge Colon, DVM, gave a comprehensive presentation outlining the calculations and steps to determine the most financially efficient decision regarding vehicles.

Because of the new tax laws of 2018, the calculations have changed from those published in the written AAEP Proceedings, but they are available in an updated form on the AAEP website.

Colon emphasized that associates furnishing their own vehicles could be inadequately compensated for their costs if they choose to drive large SUVs with high purchase prices and relatively low gas mileage. He suggested that, under most scenarios, practice ownership of the vehicles is generally more financially favorable than paying reimbursed mileage for associate-owned vehicles. Also, it is important to ensure that the vehicle is purchased in the name of the business and recognize that insurance for business vehicles commonly exceeds that of personally owned vehicles, he said.

He concluded that every practice has individual differences that might alter what is most advantageous, so making a careful analysis is important.

Associate Buy-In

Ky Mortensen, an attorney and business advisor, outlined a program for associate buy-ins during his presentation. He stated that having an advance plan for transition of ownership is important for a practice owner to successfully implement an exit at retirement. Unfortunately, he said, for many practices, the idea of offering an ownership percentage to an associate often is not considered until that veterinarian has become disgruntled, is considering joining another practice or has determined to strike out on his or her own.

An ownership transition is much more than a financial transaction, Mortensen stated, emphasizing that the process requires time, mentorship and trust.

He spoke about the importance of helping the next generation of veterinarians achieve greatness by giving back generously. Along the way, the speaker said, practice owners need to shift their focus from personal production to developing the skills of the next generation. Because the associates that a practice recruits, selects, hires and promotes have a tremendous impact on process should be keen. Mortensen cautioned that “unsuccessful people make decisions based on current circumstances, while successful people make decisions based on where they desire to be.” He suggested following Stephen Covey’s advice to “begin with the end in mind.”

In order to succeed, the speaker noted that associates must know expectations. This means that practice owners must determine their objectives, communicate their expectations clearly and begin conversations about ownership early in the associate relationship. He recommended providing future owners with opportunities for business education to increase their financial literacy and business skills. At the same time, current practice owners must be wellversed in the financial pictures of their practices and manage for profitability. This will make discussions about practice value much more fruitful.

Mortensen noted that the partnership agreement and buy-sell agreements must be reviewed and updated in anticipation of an ownership transfer.

In summary, the speaker cautioned that the decisions an owner makes today will shape the prospects that he or she will enjoy later. Planning an ownership transition with intention is essential.

Founders’ Syndrome

Kirk Eddleman, MS, MHA, practice manager and business advisor with Inova Partners, gave a presentation on a condition of leadership known as “Founders’ Syndrome.” He explained that this condition is characterized by a disregard for formal organizational systems, with a reliance instead on the founders’ strong personalities, quick decisions and personal motivation of staff.

As these practices experience growth, the speaker said, they frequently careen from one reactive decision to another in response to crises. The founders are generally very resistant to change, involve themselves in routine operational decisions, often suffer from high staff turnover and are suspicious of business management practices that are standard in most other industries. Because of these characteristics, they are generally critical of those who suggest new strategies. Meanwhile, these practices’ performances begin to suffer.

In order to mitigate these challenges, Eddleman recommended that practices like this get help to recognize and change their leadership and management styles, develop a board of directors, create a strategic plan and develop comprehensive systems. Failure to grow in these areas will otherwise severely limit the success and profitability of the practice, he concluded.

Take-Home Message

The Business of Practice sessions at the 64th AAEP Convention provided a strong overview of topics important to practice prosperity. The presentations brought value to equine practices of all sizes and types. 

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