Mitigating Risk in Equine Veterinary Practice

Running a veterinary business involves many decisions beyond those associated with veterinary medicine.

Professional Liability Insurance form on a table. Liability insurance helps veterinary practice owners mitigate risk.
Risk can be managed by accepting it, insuring against it and/or eliminating it. Getty Images

Risk mitigation is important to protect your equine veterinary practice and the practice owners’ assets. You can manage risk in several ways. One way is to accept the risk and plan for it. Another is to transfer the risk by insuring against it. A third way is by eliminating the risk by removing items that might generate it.

Accepting Risk in Veterinary Practice and Planning for It

There is risk simply in running a business. Consequently, you should minimize all known risks through effective management. Risk management of business can be accomplished by implementing good policies and procedures at your practice. These include human resources and employment procedures, OSHA training, DEA-controlled substance protocols and other areas of regulatory compliance.

Best practices for human resources are not difficult but can require effort. Human resource challenges for veterinary clinics include hiring the right team, creating and maintaining a positive company culture, and complying with ever-changing laws and regulations. From the very first day you interview a candidate or hire an employee, you must follow HR laws and regulations. These cover everything from payroll to employee discrimination and harassment to termination. Fortunately, this information is widely available.

OSHA Compliance

Occupational Safety & Health Administration (OSHA) compliance is not an option; it’s a necessity. Each violation could cost you dearly. The average fine per violation by OSHA is around $1,000. Few veterinary practices are fully OSHA compliant. One of the important aspects is the Globally Harmonized System of Classification and Labeling of Chemicals, also known as the GHS protocols. These protocols make the hazards associated with chemicals more understandable and uniformly recognized nationally. OSHA wants all employees to not just be told about hazardous chemicals, but to fully understand their dangers and how to be safe around them.

Each practice should have a hazard communication plan and an annual safety review, as well as OSHA safety training meetings. Documents should certify that employees have been trained and understand risks, and that they know the proper use of hazardous chemicals and protective equipment.

All new employees should receive safety training and be trained in OSHA compliance, and refresher training should be provided for all employees once a year. Other necessary documents required by OSHA are health records and emergency contact information for each employee. Protection of employees is the responsibility of the practice.

Resources that can assist in becoming compliant include www.avmaplit.com/education/safety-manual and www.safetyvet.com. Compliance with Drug Enforcement Administration (DEA) Controlled Substance regulations is especially important because loss of DEA licensure can make practicing very difficult. Fines can be high, especially for practices clearly and grossly out of compliance. A previous article on EquiManagement.com (search for “Controlled Drugs and Compliance for Equine Veterinarians” and a paper in the 2019 AAEP Annual Convention Proceedings that outlined many of the necessary steps. Other resources include:

  • Title 21 Code of Federal Regulations, PART 1300-END, found at https://www.deadiversion.usdoj.gov/21cfr/cfr/ index.html
  • Practitioners Guide: https://www.deadiversion.usdoj.gov/pubs/manuals/pract/index.html
  • Security Guide: https://www.deadiversion.usdoj.gov/pubs/manuals/sec/index.html.

Risks Specific to Equine Veterinary Practice

There are other risks specific to equine veterinary practice. Because horses—especially when they are frightened
or uncomfortable—can cause serious injuries to handlers, you should train your staff thoroughly in safe handling methods. Institute policies that address safety measures in the workplace, minimize client restraint of their own horses during examination and treatment whenever possible, and never allow minors to assist you. In your absence, there need to be written protocols in place so all of your staff members know how to proceed in case of an adverse event.

Remember that as the professional in charge, you are liable for all injuries associated with a veterinary visit, even on other people’s property. You should be proactive rather than reactive.

Keeping Good Medical Records

Keeping good medical records is a simple way to minimize the risk associated with threats of malpractice. Because clients unfortunately might seek legal redress when they are dissatisfied with clinical outcome or the amount of an outstanding bill, having clear medical records can be one of your strongest defenses. In addition, equine practices should be sure to have signed documents from all owners of patients authorizing care and agreeing to pay for it. These statements can be readily added to the forms that new clients fill out when engaging your services.

A good medical record answers the questions Who, What, Where, When and How. Any professional should be able to read the medical record and reconstruct what occurred during the visit. If you administer a medication, the record should state the amount given (preferably in mg or g rather than in ml) and the route of administration. If you give instructions to the owner for further care, or make recommendations that the owner declines, you should memorialize these in the medical record. Remember that in a court of law, if it isn’t in writing, it essentially never happened.

For a practice owner, regular medical records auditing is a good practice. Ultimately, you are responsible for the quality of care your associates provide and the documentation of that care. Start a conversation with your staff about the importance of complete medical records and enlist them in brainstorming ideas on how to do this most efficiently.

Transferring Risk by Insuring Against It

Insuring against risk is prudent, and there are many separate risks that veterinary practice owners need to consider. Business ownership liability insurance, building and contents insurance, life insurance and disability insurance are essential for practice owners. A personal umbrella policy is indicated for any owner with significant net worth. This will typically cover liabilities that exceed the coverage on existing business and personal liability policies. In cases of attempted legal recovery of damages, generally the deepest pockets are eyed as the primary recovery source. Typically, that is the pracrice owner.

Professional liability insurance is very important for equine practitioners, as a patient’s worth can run to millions of dollars. It is not uncommon for horse owners to authorize treament but decline to pay their bills in the event of a poor outcome. A claim of malpractice often follows. Having adequate insurance is essential.

Life and Disability Insurance

Life insurance and disability insurance are appropriate for all equine veterinarians. Equine practice is inherently dangerous. Protecting your family in the event of your injury or death is essential, even if it’s difficult to think about that possibility. Disability insurance is income protection for a veterinarian who is a primary breadwinner for his or her family. Banks or lenders might also require this insurance.

The need for income protection might phase out over time as owners acquire more net worth and the ability to self-insure. However, due to the high risk of injury in equine practice, it is a good idea to maintain this insurance throughout your career.

Life insurance generally comes into play under two different circumstances. The first is for family protection in the event of untimely death. Term insurance is routinely recommended until you pay off bank loans. It is necessary unless you have enough net worth to self-insure. Second, it is useful for buyout insurance between partners in the event of one partner’s untimely death. You can structure this in several ways, with either the practice and/or individuals as beneficiaries. You should memorialize the plan, pricing and use of the proceeds in writing. This eliminates uncertainty as to the insurance uses in the event of a death.

Eliminating Risk in Veterinary Practice by Removing Items That Might Generate It

The last portion of risk mitigation involves eliminating items, services or people that might generate unacceptable risk. The choices you make related to products you use, employees you elect to keep and services you offer will all affect the amount of risk you bear.

Minimizing the use of compounded medications can reduce the risk of uninsured adverse events. If certain employees see themselves as expert horse handlers but repeatedly fail to follow your safety protocols, they might need to seek other employment opportunities.

Some practices decide the liability of performing prepurchase examinations is not worth the income. Others choose not to collect stallions due to the physical risks it can pose to themselves and their staffs. Most practices do not allow staff members to ride client horses for veterinary evaluation, but a few unwisely do. Discussing tolerance for risk among the practice owners will help the group make the best decisions for the business.

Compliance with Regulatory and Tax Reporting Requirements

Minimizing risk also requires compliance with all regulatory and tax reporting requirements. Remove risk by hiring professionals (such as accountants and attorneys) to assist the practice in meeting its regulatory obligations. Compliance with all mandatory governmental and professional directives is your best defense against unnecessary risk. Keeping current with changing regulations is mandatory to stay in compliance.

As an example, business owners who offer 401(k) plans are charged with significant responsibilities. Department of Labor 401(k) regulations require significant reporting to employees by plan fiduciaries, including annual benchmarking of both fees and returns as well as fiduciary requirements by the administrator to utilize this information in their decision-making related to the plan.

In many veterinary 401(k) plans, the practice owner is the plan fiduciary. That person is personally liable if he or she does not uphold his or her fiduciary duty. Therefore, it is recommended that business owners employ 401(k) plan sponsors who will assume the plan fiduciary responsibility.

Take-Home Message About Risks of Veterinary Practice

Running an equine veterinary business involves many decisions beyond those associated with veterinary medicine. Creating appropriate policies and procedures, and working with a team of knowledgeable professionals, will help you grow your business and prevent avoidable losses.

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