Share and Share Alike

Trading for convenience, quality of life and (maybe) increased profitability–at what price independence?

Although the percentage of equine practitioners who practice alone is shrinking, a decided majority still elect to fly solo. According to the AVMA Biennial Economic Survey, the percentage of equine veterinarians in solo practice declined from 62.6 percent in 1999 to 56.7 percent as reported in the 2009 survey.

The rewards of absolute independence can be high, but the price may also be substantial. In an effort to retain the best of both worlds, veterinarians often seek creative alliances with their colleagues–some of which may ultimately evolve into more formal contractual arrangements, while others simply provide a basic skeleton of relief from the continuous barrage of 24/7 emergency calls.

Veterinarians have different motivations for opening their own practices. Some select solo practice by choice, others by default. Although a new graduate may not seem at first glance the ideal candidate to set out on his or her own, competition for the few existing equine practice positions as well as a cultural clash between the expectations of practice owners and their employees may force some younger veterinarians to elect to work for themselves. Low starting salaries offered in comparison to other segments of veterinary medicine may simply seal the deal.

Changing the Mindset
Maryland equine practitioner and recent veterinary school graduate Dr. Moira Nusbaum is a good example. Family considerations placed geographic boundaries on the area that she was interested in considering. “I knew I always wanted to own my own practice, and when I was finishing my internship (at Piedmont Equine Practice in The Plains, Virginia) there were not really any good jobs in the area,” she explains. “The jobs that were available were not really good paying jobs. I was offered a position at $45,000 per year and another at $50,000, when my classmates in small animal practice were offered $80,000 right out of vet school.”

The same factors that limited Nusbaum’s search also gave her a bit of flexibility to open her PenMar Equine practice. Because her husband was tied to secure employment in the area, Nusbaum was able to forego paying herself a salary for the first 12 months of operation, diverting those resources to pay off some of her accumulated debt–student loans as well as funds borrowed to pay for equipment. “It is really a big challenge opening your own practice, with lots and lots of loans. Equipment is extremely expensive,” she says.

Six months into her new practice, Nusbaum would make the same choices again. She is able to practice to the standard of care that she wishes to provide, and finds it “easier to get out of bed at 2:00 AM when I am running my own business.”

She provides most of her own emergency coverage, although on the occasions when she travels she makes arrangements for another local solo practitioner to cover her emergencies. Likewise, she will cover that veterinarian’s clients when he is unavailable.

Nusbaum has a network of colleagues that she calls upon on a regular basis for consultations and referrals as needed, from the specialists she worked with at Piedmont Equine to multiple veterinary school hospitals accessible to her practice area. There are also traveling specialists who will visit her clients as needed to provide on-site specialty services and consultations.

Looking to the future, she can see the need to develop a more formal on-call sharing schedule, especially in the event that she and her husband decide to add children to the mix. She also envisions growing her practice to accommodate a second veterinarian within the next five years, although she is emphatic that the service will remain strictly ambulatory.

“I think I have a good understanding of quality of life, and if I bring on an associate I know that I need to provide time off, and need to provide the pay that they are worth.” She says that the traditional vision of the equine practitioner toward new graduates needs to change–the mindset that “I went through it, so now you need to”–and hopes that her changed perspective will enable the practice to attract a quality associate when growth demands the addition.

Creative arrangements between individual solo practitioners may help veterinarians preserve their independence, while also permitting a modicum of predictability in a hectic life, not to mention a few precious moments of time off. Sharing emergency calls or occasional coverage for days off is among the least complicated of arrangements that individual practitioners may make without sacrificing any autonomy.

Veterinarian and attorney Dr. Charlotte Lacroix, CEO of Veterinary Business Advisors, Inc. in New Jersey, points out that the potential array of possible relationships and arrangements must almost be considered on an individual basis because each scenario imposes a different level of risk and obligation on the parties, depending on the particular structure under discussion. Lacroix characterizes equine practice as a “very interesting culture–so much more ego-driven and traditionally based compared to small animal practices’ business environments.”

Independence seems to be the consistent trade-off, with the structure of the arrangement directly correlated to the degree of independence retained by the participants. Lacroix uses the example of a traditional partnership to define one end of the spectrum, with “a loss of independence between partners. Everything owned by the business is owned in common … the ultimate synergy. The opposite extreme is the single practitioner on his or her own in an ambulatory environment, the ultimate independence,” she continues. “All of the other associations fall in between.”

Lacroix’ best advice to veterinarians looking to explore a cooperative arrangement is to understand how much independence they want to retain. She adds, “The other components to consider in these arrangements are not so much legal as they are operational issues that the parties should be thinking about, resolving and communicating about before they get into these relationships.” Lacroix recommends that veterinarians seek assistance in diagnosing and working through potential issues and consequences of disagreements that may arise from sharing relationships, hopefully before those disagreements surface. According to Lacroix there is no standard structure that assures successful cooperation. She says, “Any sharing arrangement can work, provided you have worked out the issues.”

From Independence to Interdependence
Sharing emergency call offers minimal overlap. Each veterinarian bills his or her own individual charges and retains liability for the care provided. The only fundamental understanding between the participating veterinarians is that they don’t poach clients from one another. Cautions Lacroix, “The professional’s loyalty must remain with the other professionals, and the veterinarian should decline to service the client unless it is in the context of covering emergencies or providing a service that the other veterinarian does not provide.” She continues, “Once a client begins to drive a wedge into that professional loyalty, then the relationship is done.”

If veterinarians are successful in building trust in one another by successfully sharing emergency calls, they may consider consolidating their drug purchases to take advantage of potential discounts for buying in larger quantities. Another incremental step might be a joint purchase of a piece of equipment. Ultimately, multiple veterinarians might decide to share more substantial expenses such as a clinic facility, and may share certain equipment and even some staff members, depending upon the degree of interdependence they are able to tolerate. A central management company owned by the group or a subset of the group may provide some of these services and function as a landlord, while the individual veterinarians may retain their own staff or infrastructure.

Disagreements may surface anywhere along the way, even when there is only minimal overlap joining practitioners: a veterinarian dissatisfied because the “new” drug product she ordered in conjunction with her colleague is not exactly the product she is comfortable with and trusts, for example. Or perhaps the new, expensive piece of equipment begins to look scratched and worn, and one practitioner fears that the other is not taking proper care when carting it between farms.

Potential for conflict escalates exponentially as finances constrict and contributions to the shared whole depend upon the individual practitioner’s business success and ability to pay bills. Written agreements and open communications are essential for any arrangement to function effectively and not degenerate into conflict. “An agreement works out an interest that is worth protecting” is Lacroix’s rule of thumb to signal where a formal discussion might be required. And although she doesn’t like to sound pessimistic, Lacroix also warns, “Independence eventually leads to conflicts of interest,” and veterinarians need to keep communications open as they move forward in any of these sharing arrangements. Some function effectively for years and years, while others may implode with significant financial consequences for the participating clinicians.

The more disparate the professional focus of each participating practitioner, the more complicated sharing arrangements become, because the veterinarians’ individual practice needs may not mesh well, with each having different requirements for inventory, equipment and facilities.

On the other hand, the more similar the practices, the greater the likelihood of potential competition and associated tension. Tension might build in the form of competition through fees; however, anti-trust considerations preclude independent veterinarians from setting fees in a collaborative manner. This stands in stark contrast to the practice of 1920, as illustrated by the Weld County (Colorado) Veterinary Medical Association, who effected “an organization for the purpose of stabilizing prices and eliminating unnecessary and unpleasant competition due to misunderstanding, not easy without systematized co-operation.”

The Umbrella Practice
Another group of Maryland veterinarians has taken a few baby steps toward organizing its individual practices under a collective umbrella. Explains Dr. Javier Donatelli, “Four of us have decided to work together so that we have a main veterinarian and a secondary veterinarian on call at all times. This enables us to schedule actual time off so that I am able to do things like travel to Haiti to work with equine victims of the earthquake.”

They share some advertising in local equine publications and refer to each other for their areas of strength and special interest. Donatelli, for example, prefers to focus on sports medicine, lameness and dentistry, while another veterinarian offers chiropractic and acupuncture services. Two in the group handle reproduction, and Donatelli is happy to refer any of his clients for those services.

Although most of the veterinarians in the group have practiced in the area for at least 10 years, and two have worked as employed veterinarians together in a prior practice, they are only in their second year working together. Donatelli finds meeting once a month to schedule and work through any issues a successful strategy. One unusual practice is that if an on-call veterinarian sees one of Donatelli’s regular clients, and that client is tardy in paying his or her bill, Donatelli will reimburse his colleague and then collect from his client himself. “I am a horse person first, and a veterinarian second, so I understand my clients’ situations,” he notes.

Nonetheless, although he would like to eventually formalize their arrangement, Donatelli is satisfied to progress cautiously. Different long-term professional and personal goals may give each participant starkly different ideas of how he or she might like a collective practice to look 10 years down the road. Donatelli also recognizes that each of his colleagues carries individual strengths and weaknesses, and knows that there may be larger issues that will surface if and when they attempt greater integration. “So far, no conflicts,” he optimistically reports.

According to the AVMA 2009 Biennial Survey, increasing numbers of veterinarians are joining larger practice organizations, reflecting forces similar to those influencing Donatelli’s nascent group. The report states that “the proportion of equine practices with four or more veterinarians increased from 11 percent in 1999 to 20 percent in 2009. The mean number of veterinarians per practice for equine practices increased from 2.07 in 1999 to 2.47 in 2009.” Clearly, more veterinarians are finding professional advantage in the context of larger group settings.

From the standpoint of the practice’s financial health, Lacroix points out that the partnership presents the strongest model. She concludes, “The best model is to work under one legal entity for the greater good of all.” If each individual practitioner directs his or her energies toward the good of the collective, collaborating with others and sharing fixed costs, he or she will lose a degree of independence, but all are likely to have the most financially productive practice.

Looking back to veterinary medicine and equine practice in 1920 provides some interesting perspectives on today. The US horse population equaled some 21 million horses in post-World War I America, with many of them in cities for commercial use. Today’s population stands at around the 9.5 million mark. In 1920, the last fire horse was sold in New York City, and the 1920 American Journal of Veterinary Medicine cites a 17 percent decline in Chicago’s horse population in one year alone. Commentator Dr. L.A. Merillat, in his column “Remarkable Changes Noted in Veterinary Profession” in that journal reflects:

“In a recent visit to Chicago and other cities, it would have made a champion of animal surgery weep to see the abandoned and dust-ridden operating tables everywhere, indicating silently but certainly that great changes have been wrought … Horses are cheap (computed at the present price of the dollar) and care is entirely too costly to maintain a horse hospital with profit. This is a condition, not a speculation … In fact, it is evident at every turn that we are passing through a period that recurs at more or less regular intervals in veterinary history. There is nothing that plays such havoc with veterinary practice as low cost of animals combined with high cost of maintenance.”

Equine practitioners face similar challenges today, with economic constriction and a surplus of unwanted horses. Creative sharing arrangements, carefully constructed and nurtured with open communications, clear expectations, a dash of business acumen, may provide an avenue to control practice expenses and provide some flexibility for quality of life, while still providing latitude for individual, independent practice. We harken back to Merillat for an optimistic assessment, as true today as it was 90 years ago:

“But let us not deceive ourselves … The horse is not permanently dethroned by any means.”

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