Questions for Vets:

[Squiggy]

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Here's something that I've been wondering about for a while. I've looked at veterinary practices for sale and they have a ton of cashflow. I've seen solo SA practices gross $300k-$700k and significantly more for practices with more DVMs.

What is the overhead for a typical veterinary practice? It seems that with the income for GP veterinarians people on this forum quote, expenses must be insane. What are typical expenses for practices?

Starting salaries for veterinarians seems insultingly low but it seems that unless you're all working with razor thin profit margins, the profession could be very lucrative.

Furthermore, why don't vets consolidate their practices if their overhead is too high? Primary care physicians are doing this. Anyone in private practice/practice owners want to give their input?

 

[Bill59]

What is the overhead for a typical veterinary practice?

85% is good. 80% is great but privately owned practices rarely reach this.

This means 15% is a good profit for the owner after ALL operating costs, including veterinarians' salaries.

Realize the owner is often also a veterinarian, so it's easy to manipulate the practice profit, depending on how much the owner pays his or herself. Consider a practice with $500k gross. If the practice nets 30% ($150K) before the owner pays herself a salary of 75K, the practice has a 75K profit -- 15%.

But if she pays herself 105K (21% is average doctor compensation), the practice only has a 45K profit (9%).

You should also have a 2-3% management fee in there, which I left out.

There are a lot of practices out there where the practice is making 0% profit after the owner takes a salary for veterinary production and management, so called NO-LO practices. The problem comes when you try to sell such a practice, say for retirement.

The basic problem is that overhead is going up more than veterinarians are raising their fees.

Furthermore, why don't vets consolidate their practices if their overhead is too high?

That's a really good question. In general, I think it's a combination of veterinarians tend to be very independent and they tend to be fairly poor businessmen. After all, if they were strongly motivated to make a lot of money, they wouldn't have become veterinarians.