Is Veterinary Practice Ownership Financially Worth It?

Welcome to another episode of Questions With Crocker! This week Dr. Crocker and Shane discuss the financial difference between a single doctor practice vs a multiple doctor practice, the financial sense of shame veterinarians feel, Shane's passion within the veterinary clinic, and more.

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TIMESTAMPS
Intro 00:00
Is Practice Ownership Financially Worth It? (@jmswift92) 06:19
Your Personality Dictates A Lot 09:18
Single Doctor Practice vs Multiple Doctor Practice 10:41
Do Personal Finances Play Into It? 13:20
The Financial Sense Of Shame Veterinarians Feel 15:10
The Perception Of Veterinarians Working Hard vs Veterinarians Making Money 17:02
What Is Shane's Passion In Owning The Vet Clinic? 20:58
Outro 22:25

Transcript

0:00

[MUSIC] Welcome back to another episode of Questions with Crocker with me, Dr. Crocker and my husband, Shane.>> Hey.>> Hey, it is after the holidays. It is officially 2024 and this is our first podcast of the year. We are doing it the night before the podcast is supposed to be out.>> Very efficient.>> We are struggling at the start of the year. If you're watching on YouTube, the five people that do that, you will see that I am in a scrub, no, not a scrub set. I am in a, what is it called, a leisure suit? I don't even know.>> It's a hoodie.>> A hoodie, but it's got matching pants.>> There's too much for our kids wear every day.>> I'm in a hoodie. It is from a scrub company I love, Garden Malod. They send it to me.>> Yes, they say that.>> Yes.>> Garden Malod?>> Yes. I actually checked with my stepdad, his French and he confirmed.>> He had a said, "Guardé Maldé.">> That is definitely not how he say it. It's a good thing they didn't send you the clothing. But I am comfortable because I've been sick and it has not been fun. Pretty much we came back from our vacation over the holiday with sickness that has spread through the family except for you.>> And now I'm confined to this office of yours, which is guaranteed to get me sick.>> I am on the mend because I'm not coughing my lungs out anymore. So I think you'll be fine.>> Stay tuned for next episode where Shane is sick.>> And you're whining about it?>> Yeah.>> Oh, yeah.>> So I'm feeling a little rough, looking a little rough, but we appreciate you guys being here. So just a reminder on this podcast, I am an emergency veterinarian and a general practice hospital owner, along with you, my husband. And you are an entrepreneur and you bring the business sense, the common sense, the humor to these episodes, I would say. And so we're back at it in 2024. I feel like you're giving me a look.>> I'm gonna say something very, yeah.>> I was waiting. I felt like I was, I was teaming you up for that.>> No, yeah.>> I was teaming you up for something. So we have people submit questions. You can follow us on social media,@questionswithprogress.>> I saw the numbers you posted.>> There's actually some one impressive.>> I know. We have, I think it said 1600 downloads or so, an episode which is amazing. And then a lot of different countries listening. So shout out to anyone who is-->> Of Japanese.>> Not-- don't get us in trouble again. Shout out to anyone who is not in the states and is listening. We appreciate it. I want to do an episode on some point on like international veterinary medicine, because it's interesting from people I've interacted with online, like how different it is in other countries. And so I think that would be a very cool episode. People weren't even aware there was vet schools.>> I think we need to take the show on the road.>> Oh, there you go.>> And hit all the continents.>> Actually, if funny, you should say that.>> We'll write that off.>> There's a couple big conferences coming up that I will be at. And I actually plan to podcast it, some of them. And so it's going to be a great opportunity to podcast with people that are specialists in their field or just fun personalities, but do it in person. You will be at some of those events. You will not be at some of those events. The travel season is starting again. So keep an eye out and listen to us on social media, because I'll be posting where I'm going to be and when I'll be podcasting. And maybe I can interview you, or you can be a part of things in asking questions. So that should be exciting. But I did want to talk a little bit first just about the holidays. It was exhausting. We travel a lot because our in-laws, your parents are in Louisiana. So as go there, do, I don't know, three Christmas events or so and then come back Christmas evening night and do Christmas morning here and then do all the Christmas events with my family. So it's a lot. But we got some good gifts. So I want to know, what is your favorite present that you got this Christmas?>> My favorite?>> Yeah.>> My golf bag.>> Which I got you, yes.>> Good, good, good.>> I mean, it's pretty simple. You golf so much I just get you a new bag and shoes every single year. But at least I was able to get you one that was pretty cool this year and you liked it. But you also got to get from her daughter. What did she give you?>> My chair that I'm sitting in.>> Yes. So it was very sweet and she actually came up with that idea on her own and she said, "Dad always has to borrow brother's chair for the podcast." So I want to get him a chair.>> This is our plug for sponsorships.>> I can't afford chairs.>> We bought a chair from Wayfar.>> I know, if you're listening.>> We buy a fair amount of things from Wayfar. So Wayfar, if you want to hit us up, you can. But it was very sweet and the leather chair actually goes well in my office. So she did a great job and I just thought she was like->> You were going to podcast from my office.>> Upstairs? No.>> Like my chair upstairs?>> In the attic upstairs?>> So that's a nice one.>> There's not enough room. Okay, we'll talk about that later. Definitely not podcasting up there. I'm just glad you didn't make it big enough to do a golf simulator up there.>> I did actually.>> Once the kids leave that in their space. You cannot take a full swing in there.>> Oh yeah.>> Not happening.>> How if things might over the top?>> I'm going to measure it later and just make sure. So we got some good gifts. I really enjoyed Christmas time, but I do feel like I need a vacation from the vacation with the sickness. But the kids are back in school. We're getting back on schedule. I'm actually starting to travel again, starting tomorrow morning. So we're ready to be back at it. But make sure you pay attention to our channels. So you know where I'll be when, because I loved interacting with people in person, meet them and when you come to conferences, you also can meet people because I know that's your most favorite thing ever.>> I did. I've got a day job. I've got to do.>> Which your day job has been a little tough to do, because we are in full swing renovations at the framing stage of our vet hospital. So tell everyone what's been going on with that.>> I'm now a general contractor. Anybody is looking to renovate at the hospital.>> Did you? Okay.>> But legit, did you guys know you can just pay a fee and say your general contractor in any city? I mean->> I'm in any city.>> Oh, okay.>> I mean Texas, you don't have to necessarily have a contract for license. Louisiana, you do.>> Okay, got it.>> Texas, you do not.>> Got it. Which seems backwards. I feel like Louisiana, you could like, pay your way.>> You like to pay your way.>> A little easier than Texas. So yes, we have people who are skilled, who are doing the work, but you are assembling the different crews and managing the job. And you have oversight by other people that have helped us with projects in the past. But you're taking this task on. And I am trusting you with it.>> It's a lot of things.>> But it's a little nerve-wracking. It's like our third child. And so it's just a lot. And we've only had a few minor disagreements in the last couple of weeks, I would say.>> I would agree.>> And for the most part, we've worked through it, I would say.>> I would agree.>> So we're still going strong. A, we'll see how it all turns out. We'll see who is right and who is wrong.>> We have walls up.>> At the end. We do have walls. We have doors. We have windows. We have a lot of stuff. I mean, I get to do all the fun stuff now, picking out flooring, paint, colors. And so that's the part I really enjoyed. But I think it's gonna be great.>> We're not there yet.>> I'm really.>> Past a few inspections before we start.>> Before we start slapping green.>> Paint on the wall. That's all right. Okay, so let's get into it. This podcast is based on your questions that you have about veterinary medicine, about things behind the scenes, about practice ownership or emergency medicine, whatever you want to know about. And we got a really great question from @JMSwift92.>> Swifty.>> I don't know, maybe a swifty. So many swiftees in our lives. And so, JMSwift92, I'm gonna pardon the question a little bit, because it was a little bit longer. But wanted to know, basically, is practice ownership financially worth it? And the comparison that was made is that they know an ER vet, making $250,000 a year. And they want to know, like, should they just go and do ER medicine and make $250,000 a year? Or can a GP practice owner make more than that and have it justify the headache? And so I thought it would be a good conversation to have. And I think it's interesting because I am an ER doctor and I work with many doctors who make $250,000 plus in the emergency room. And I have some thoughts and feelings on why someone would choose one or the other. So what are your initial thoughts on it?>> My initial thought would be, don't make a decision based off the financial impact of either one of them. You can be financial successful, going either direction, but you have to be ready for both. I mean, they're very different in the way you practice, the way you think, the way you approach every day, right? So I would take that first.>> Which is actually an interesting point because I think a lot of people looking for jobs in this career, lead with money and lead with salary. And I have talked against that and how there's so many other aspects of a job that make a job fulfilling and sustainable. And so I love that you started off with that right from the bat that like it's not just the financial side of things that would push you in the direction of owning your practice versus working.>> Yeah, I mean, we've been successful doing both, but they are very different in the mentalities. So can you make as much as a practice owner as being ERBAT? I think the answer to that is yes, but you have to look at it in multiple buckets. It's not just one bucket. It's also dependent on where you're at and cost of living and everything else. But if you're GP and you're working in the practice in theory, you pay yourself a percentage of the revenue that you drive. So if you do 800,000 a year, you pay yourself 20% of that at your salary. If you have multiple bests that work for you or have other revenue sources coming into that practice, you typically drop money to the bottom line, which is your income. So those two brought together should put you around the same number if not more depending on how big a practice is. Nessam is a phantom income, meaning you may get taxed on it, but you can't spend it because you have to reinvest that back into the practice if you're working capital. So that's one thing to consider. The other is if you're owner, you're building an asset that it's someday, hopefully you're able to sell for a profit. And if you take that and back out, you know, that number over at X number of years, let's say you own the practice for 10 years, you sell it for $2 million, you know, you could back that out of 10 years and say you made extra X per year in theory. So there's different ways to look at it. So the answer is yes, you can make that much money or more. You could also make less. But if you're taking that risk as being an owner, it's not guaranteed income, but the potential is there. So I think there's a couple of important things to pull out of what you said. I thought that was very muddy. No, I think it was clear to me, but we're going to break it down a little bit more. So first is your personality dictates a lot, whether you should go into practice ownership or not. I think that if you want to show up to a job, do your job, make really good money, but leave and not have to deal with anything else, then yes, go be an emergency veterinarian and make $200,000 plus a year, work less days and enjoy your life, right? But if you want... But that's also not easy work. No. Make sure that... Emergency work is not easy work. It's long hours and it is very difficult. Or if you want to invest and grow financially over time and you have a vision for practice and you feel very strongly about the way things are done and run and you're okay with the fact that like, you're not going to leave at five and just be done with everything. Then I think practice ownership is something to consider. I mean, I got to a point in my career where I didn't have enough say in what was happening in the hospital that I could go to the hospital and really enjoy what I was doing. I love the patients. I love the clients. But like, the fact that HR decisions were being made that were out of my control and other things were being done that in the end were hurting the practice and I didn't feel like we're putting it in the right direction. I couldn't see myself being at that practice for, you know, 20 plus years and not having some form of control. Now, emergency, yes, I show up, I work my butt off. I have ownership over my shift and I lead, you know, that team and I'm a part of a great experience. But when I leave, I'm okay leaving and not having to worry about anything else having to do with that business. And so it does work for me. But I do think that you have to have a certain personality to go and practice ownership. But it's definitely not just about the finances. Now, the other thing is, are you going to have a single doctor practice or are you going to have a multiple doctor practice? That is a huge, huge determinant of how much money you will make in the long run and whether you can sell your practice in the long run. I agree. Because right now, we actually have a ton of people on Facebook groups that are like, DBM owners that are single practitioners that have taken their practices, built them up. They were originally asking for like 1.4 million for them. They are down to asking like 600,000 pretty much for the real estate of their practice. Hit us up at, where we at? At, sorry, handbook. I'm questions this got occur. Yes. We have some interest in buying practices. No, it made me laugh. No, they're like in Maine and California and they're a little too far away. I'm in. But people, like corporations, aren't buying these single doctor practices. And other people don't want to buy them because the clients have maybe been trained in a certain way or the hours or what they want or the location is in. And so these single doctor practices can't resale? Yeah, I think I mean, even going a step further than that, I think we saw a lot of private equity groups getting into the market over the last X number of years. They drove a lot of valuations up for multi-doctor practices. I think maybe some people are still looking at those numbers thinking they're going to get some kind of crazy multiple. Those multiples don't exist. They were kind of inflated to begin with. So keep that in mind too and you're doing your calculations that if you think you're going to get, you know, 13 times EBITDA when you go to sale, that's probably not the case. You need to look at more realistic numbers. Yeah, so I personally would not go into practice wanting to be a single practitioner, build the practice room me only and have that be how it is. But we have some people that have a, they've built that practice and they have wanted to employees and they control the lifestyle they want and they make enough money to be financially independent. So if that's just somebody wants, then it'll be it. But I think financially in the long run, you make more money if you're a multi-doctor practice. Oh, completely. Because you're going to be making money off of the revenue that drops down from those additional doctors. I agree. And you can choose to work in the practice and be paid as a doctor or not. However, you want to do it. But I think being a practice owner, if you're looking at the financial component of it, growing it to at least a two, three doctor practice is going to be better than being a single doctor practice. Bonnitiously. It's going to be more of a lifestyle, maybe not. No, it's definitely going to be more of a headache. I mean, we've seen that already. The bigger you get, the harder communication is, the harder workflow is. Dr. Staten, who I talk about all the time, has a huge practice talks about that. I mean, the levels of leadership and communication you have to have the bigger you get. And I think there's actually a set number that I heard one time in a talk that it's like once you get over 20 employees, the amount of miscommunication that occurs and the inefficiencies that can occur just skyrocket. And so you really have to have procedures in place to manage that. But the short answer of, can you do it and is it financially worth it is yes? The long answer is there's a lot more that goes into it than just practice ownership versus, financially lucrative yard job, essentially. Did you think that it matters like how much school debt you have? Do you think it matters whether you own your own house or idea or not? Do you think your personal finances also play into that? Or because my understanding is you can still get financing and get things because like vet hospitals are looked at as good investments by financial backers. But do you think that one maybe keeps somebody from becoming a practice owner? Not, I don't think necessarily from a financial standpoint though. Now maybe a self-awareness of your own financial situation may hinder some people from wanting to take on more debt. So somebody may say, look, I'll just go work here, pay my debt down, give myself in a better financial position and then go buy a practice. But I mean, it shouldn't stop you from being able to buy a practice. Yeah, I mean, there is a doctor that I worked at with Andalus and I mean, she got out of school and she busted her butt and she worked way too many shifts and she will even say she like essentially burnt herself out. But she made so much money that she paid her debt off in like three years, something that it takes people like a lifetime to do. And so you certainly could do that. And I feel like I've had times in my life where I've done that and I've hustled more and like made more money and then I've had times where I slowed down. And so your life stage and different things you're doing definitely dictate that a little bit. But ultimately, still think it is a good investment in the long run to put your time, money and effort into something that you're going to grow and is going to be your own and you can then like sell down the line. I also think it's interesting because there's this big conversation being had on social media pretty much all the time. But I made a comment in one of our other podcasts about veterinary medicine maybe becoming more transactional and less relational. And the comments, you know, from pet owners were, you know, your way to expensive. You're just in it for the money. And so I think it's interesting when we get commerce like questions of people saying, is it worth it being a practice owner like, well, I make good money? And then there's almost a sense of shame in our industry if we do make a good living. And I just don't see that in other industries. So do you get that sense in what is your thoughts and feelings? I've got very strong opinions on this. I think anybody that goes to school for the only the time the veterinarians go to school for and then knowledge that they obtain and the passion they have for what they do should be very well compensated for that. There's no different than a veterinarian as a dentist or a human doctor. And they are very well compensated for what they do to be quite honest. I mean, there are tradesmen in these days that probably make more than veterinarians, plumbers, electricians, you know, some of those guys today are making an hourly rate significantly more than veterinarians are making. So I could understand where some owners would feel like it's expensive to take their animal to the doctor, but there's a lot of other calls to go into that. And I'm necessarily going in the doctor's pockets, paying the technicians, paying the real estate, paying the taxes, paying for the medications, etc. All that stuff is so expensive these days that a lot of that's going to supplement other things besides the veterinarian. Well, and when you look at people with advanced degrees that got some sort of doctorate or advanced degree, other human doctors, lawyers, and us, we are dramatically paid less than them because there is this perception that if we make a good living, if we, you know, have a nice house, if we drive a nice car, and I've even gotten these comments on social media when people have seen, you know, our house in the back under something and they're like, oh, you know, like, how many pets did you overcharge to have to like afford that? It's frustrating that a lot of dual income going into that and other investments and other parts. But we shouldn't have to. We shouldn't have to make an excuse for working hard and making a good living. Like, I went to school. I did the work. I, you know, do the work every day and I show up and I'm good at my job. And I shouldn't have to be ashamed that I make good money doing something I love to do. And so I wish we could remove the, you know, I guess, correlation that pet owners make with us making a good living by working hard and being a good, you know, business owner with your taking advantage of me and my pet. I think those two things need to be uncoupled because they're not related at all. The reality is everything is more expensive in the world right now. The reality is we have people in our profession that are so extremely underpaid and we have to charge more to try to make up for how low our margins have been for so long and how much we have undercharge pets for so long. Yeah, I mean, I think I mentioned this couple podcasts ago. When I look at other businesses we own in the margins associated with those businesses, they are significantly stronger than that of the bet industry. Now again, our prices are probably low in comparison to what we pay. So it drops our margins down, but still overall, I don't think the margins are as good as I've seen in several other businesses. They are. And, you know, we intentionally have tried to be in that mid-range of veterinary hospitals. We could certainly jack our prices up compared to some of the other local hospitals, but we're trying to be intentional about what we're doing and helping us. I need more money. I want to make more money by bringing more clients through the door that really buy into our culture as a practice by bringing people in that want us to do like high-level surgeries and do procedures like ultrasounds and things that they maybe can't get elsewhere. I want to let them come because they are having an experience. They feel like it's worth the value, but it is interesting. I did read a comment the other day on one of my posts and I think a veterinary technician made it. And this owner was complaining because they went and their dog's annual was like $250. And they listed like all the things they got for that, but they're basically said, you shouldn't even upcharge for medication. That's just wrong to even make money off medication. And this person was like $250 is like what most like people spend on like ridiculous things throughout the year. And you're like that's such a small amount of money when you look at it by month and you're getting all this value. And then you also think we should just give away medications. In what world do people get medications just giving away to them? That doesn't happen. Someone pays for it at some point in time. Yeah, I think it would be interesting to put those people to say, what is the equivalent medication in human medicine, Paulston? And you know versus that vet med because there's probably some overlap in meds where you see significantly higher charges in human medicine. You do a vet med. Well, yeah, I mean, even when I've gone to get medications for our kids and if we didn't have like our insurance on file, right, or it wasn't the generic one, they're like, oh, well, it's, you know, $300 for a week of whatever. And I'm like, wait a second, you know, and then they run your insurance. So they're like, oh, it's $10. Like, how is that possible? So there's a huge disconnect and the problem is you can be on social media and be trying to educate people and talk to people, but you're going to have people that had bad experiences in a difficult time with their pet and they are forever going to take that experience with that one veterinary hospital and just fan the flames. That and there's people that are unhappy people in general. That's true. I mean, they're probably complaining about their lunch they had to date. It'll also. That's true. This is a note to young veterinarians. There's going to be unhappy people and you can do the best job ever you can communicate. Really well, you can diagnose the pet correctly, make the best recommendations and they will still be unhappy. And those are the people that you just have to like say, okay, I did my job. I did the best I could. Yeah, and just keep going. And that is a part of being a veterinary medicine. I would say for the most part is rewarding and I do feel valued by clients. We got so many wonderful notes and treats from people over the holidays and people just thanking us and shout outs on social media. And so it is better than not trying to help people and not trying to do it. But definitely the negativity and the feeling of a lose-lose when it comes to making money and taking care of your team, but helping pets, it is a very, very thin line to walk. I feel like. I feel like we did a 360. What do you mean? What do we start with? It's conversation. We started with wanting to know if it is financially worth it to be a practice owner. Yes. So the answer is yes. There you go. You can just fast forward to the end of the podcast and we'll say yes. No. Potentially. Part of it is you just have to know what you're getting into. Yeah. And you have to know that you're going to. And follow your passion because if you're good at what you do and you're passionate about it, the money will follow. Can I ask you a serious question? What? What would be your passion in this? In this? Like we know it, not the podcast in us owning the vet hospital because you're like very engaged, you're doing the renovation. Like what do you love about it? Because I know what I love about it. I know what I'm trying to create. I know what I'm I care about the industry. I care about the pets in our community. I love our team. I love just being a veterinarian and doing that side of it. But like what are the parts of it that you really enjoy? I like the startup phase. I like the turnaround phase. I like the early growth phase. And then I get bored. So that means we sell it or a lot of YouTube. Okay. Y'all heard it heard it here first. We're now in the market for our second vet practice. We're not selling anytime soon. So. I made a decision. We're looking for a fourth child at this point in time. I got to get this renovation done first. Yes. And if you want to follow along on the renovation, on my personal social media on Instagram, they have channels now. And they actually created a veterinary Renault update channel. And so people can see the hospital. We're asking questions. I asked about seating in the lobby the other day. Getting good feedback. And so it's just a fun way to interact and kind of see the progress. You can also follow the hospital itself on TikTok or Instagram. or Facebook @AVAHVet. So I'm excited to show everybody the journey. And I'm excited that we will still be married at the end of this and like each other. It needs a lot of lipstick. It does. It needs some lipstick. But we're slowly turning things around. So when you see where it started and then where it ends up, it's going to be a pretty shocking difference in change. So I can see the vision. It's going to be great. I think that's it. I am talked out. I feel like I'm about to lose my voice. Anything else you need to say? Nope. Feeling good? Yep. Ready for bed? Yep. We too. All right. If you guys enjoyed this episode or if you have additional questions for us, please reach out at questions with Crocker. You can listen to us on Apple or Spotify or watch us on YouTube. And we would love for you to leave a review and give us some quick input. Things you like, things you want to learn more about. And we hope you have a wonderful day. And thanks for listening. Bye.(upbeat music)(knocking)