Editor's Note: Want to add an associate? This information was presented at the 2016 AAEP Convention and is brought to you by Zoetis. Don't miss the article on AAEP's business sessions in the March/April issue of EquiManagement magazine and additional articles from the 2016 AAEP Convention found on EquiManagement.com under Resources>Downloads. This is the fourth in the series of online articles.
Dr. Jorge Colon presented a comprehensive financial analysis of the costs of adding an associate to one’s practice at the 2016 AAEP Convention in Orlando. He utilized results from an informal survey conducted among AAEP Business Rounds discussion group members to forecast hiring expenses.
As an introduction, Colon cited the current conditions in the equine veterinary field: high levels of educational debt, untenable debt-to-income ratios and an equine industry with little to no growth. He suggested that this created a quandary—a new workforce that will demand a higher salary than it is initially worth, at a time when there is reduced revenue available in the industry.
Because veterinary practice owners continue to seek associates to assist with the workload and emergency coverage, veterinary business owners need tools to properly forecast the actual expenses associated with employing new associates for their specific practices, he said.
“When you consider the expenses for adding an associate, you must realize that it is much more than just salary and benefits,” Colon stressed.
The associate’s revenue production will be offset by a 25-30% COPS (cost of professional services), which includes drugs, medical supplies, laboratory costs and radiology costs, he reminded the audience. This is in addition to costs for a practice vehicle stocked with equipment. Moreover, the cost of an associate will also include portions of fixed expenses such as salaries, benefits, insurance, rent and the systems that include lay personnel, such as office help and veterinary technicians. Practice owners must decide whether to divide these fixed costs evenly among veterinarians, or by usage.
To read the full article, brought to you by Zoetis, click here.