The Veterinary technician profession has been subjected to variability since birth. Today, it faces a new, and hopefully positive, change with discussions about modifying the profession’s title to “veterinary nurse”. A movement lead by the National Association for Veterinary Technicians in America (NAVTA) has illuminated differing opinions between those in and outside of the profession.
Veterinary Technician History
The profession began in 1908 when the Canine Nurses Institute made its first organized effort to train English “Veterinary Assistants”. Over the next eighty years, the profession grew. First, the American Association of Laboratory Animal Science created three different levels of “animal technician” certifications at research institutions. Next, the US Army, Purina, and State University of New York (SUNY) established “animal technician” training programs in the 1960’s, which the AVMA then began regulating in 1967. The AVMA waited until 1989 to adopt the term “veterinary technician”, feeling until then that people would be confused with the “veterinary” modifier.
Michigan State University and Nebraska Technical Colleges were the first animal technical educational programs accredited by the AVMA. There are now 230 AVMA accredited veterinary technician education programs. Of these, 21 offer four-year degrees and nine offer distance-learning (online) options. Even before the AVMA adopted the term, the North American Veterinary Technician Association (now called the National Association of Veterinary Technicians in America) was formed in 1981. It works alongside the AVMA to protect the profession and encourages veterinary technician specialty developments. However, the profession has not grown uniformly across the United States.
In the United States, 37 states have established “veterinary technician” licensure, 10 states have non-profit organizations that implement voluntary credentialing, and 5 states/territories do not have any credentialing systems. This means that being a veterinary technician today could mean that either the state government regulates your credentialing, you are privately credentialed, or someone gave you the title “veterinary technician” when you started working at a veterinary practice and there is no credentialing system in your state.
Pros of “Veterinary Nurse”
The profession is fragmented by more than their state’s accreditations. Depending on their location, Veterinary technicians currently have varying titles. There are 19 states that use “certified veterinary technician”, 15 states that use “registered veterinary technician”, 14 states that use “licensed veterinary technician”, and Tennessee uses “licensed veterinary medical technician”. With this amount of fragmentation within the profession, how do we as veterinary professionals expect the general public to understand or trust a veterinary technician’s job description? As such a close-knit profession, we forget the foreignness of our commonly-used terms. Most clients underestimate the value of their veterinary technician simply by not knowing the education process. In fact, in a NAVTA survey to human nurses, 71% did not know the difference between veterinary assistants and technicians. Yet, we are baffled when we find that credentialed veterinary technicians are repeatedly unhappy and facing low income, compassion fatigue, lack of recognition and career advancement, underutilization of skills, and competition with individuals trained on-the-job. Due to this culture, the profession has incredibly high turnover rates despite its increased demand by the growing veterinary industry; veterinary technicians are projected to grow 30% by 2022.
How can we, without spending incredible amounts on advertising, uplift our veterinary technicians in the public (and practice’s) eye? Many have suggested using the familiar and applicable “nurse” title. The word “technician” implies an individual who has mastered veterinary science and technology, while “nurse” incorporates caring for animal patients into the description. Heather Predergast, RVT, CVPM, SPHR, a specialist with Patterson Veterinary Supply, Inc., discussed the need to abolish the profession’s fragmentation. She noted that “there has long been a need for common credentialing in this area. The responsibilities and job tasks of a veterinary technician have evolved over time and are inaccurately described by the term ‘technician’, implying a definition of their identify based on technical tasks. The term ‘veterinary nurse’ will incorporate the art of caring for patients from a patient-centered perspective, in addition to the science and technology.”
For these reasons, NAVTA has launched the Veterinary Nurse Initiative in an action to unite a single title, set of credential requirements, and scope of practice. This movement would hopefully provide recognition to the profession and elevate its credibility by requiring further education. Like human nurses, differing titles would recognize individual’s efforts for further education. To distinguish associate and bachelor’s degrees, NAVTA has proposed designating Registered Veterinary Nurse for associate degrees and Bachelor of Sciences in Veterinary Nursing for bachelor’s degrees.
Australia and the United Kingdom have already changed the name to “veterinary nurse” with large success. As the movement poses potential in the States, many academic institutions and corporations, such as Purdue, Midmark Corporation, and Patterson Veterinary Supply Inc. have published endorsements for its change; however, the initiative does face fair opposition.
Cons of “Veterinary Nurse”
Many veterinary technicians still opt to keep their current title. When questioned in a 2016 NAVTA survey, the majority of veterinary technicians (54%) favored the term “veterinary nurse”, over a third (37%) wanted to keep the title “veterinary technician”, and the remaining surveyed were undecided. Most of the pro-technician responders attributed their answer to disbelief that it will be possible to change the title. Some current veterinary technicians have voiced unease at their unsure futures after working their entire careers in a state that does not require licensure. Another similar situation arises for those that have passed the veterinary technician national examination but have not graduated from a school accredited by the AVMA committee.
While, ideally, this veterinary nurse initiative works to unify the profession and ensure quality standards, we must realize that we may be alienating a population of technicians at the end of their careers that would be offended if required to pay for an accredited teaching program and learn alongside new, inexperienced future technicians. Another important consequence to consider is liability. Currently, liability for veterinary technicians falls to the veterinarian on all cases; however, human nurses have their own liability to practice under their license governed by a separate board. This is a consideration essential to address as we raise the accountability of veterinary nurses.
The Veterinary Nurse Initiative has faced opposition outside of the profession as well. In fact, the veterinary technicians initially opposed to changing the name also noted conflict with human nurses in any past attempted title changes. The Veterinary Nurse Initiative investigated this further by sending a survey to three nursing groups. Two of the three declined to even acknowledge the survey, potentially indicating apathy for veterinary-related topics. Of the one group that did complete the survey, 66% did not object to “veterinary nurse”; however, regardless of whether or not they were opposed to the title change, almost all of the responders incorrectly assumed a veterinary technician’s educational requirements. An analysis of the opposed responses to the nurse title found that the objectors believed technician education was subpar to human nursing and the title was not deserved by veterinary technicians. It suggests that the human nursing profession worries about maintaining the quality of its own title and hopes to avoid misrepresentations.
In the past, other professions, not similar in scope to human nurses, have attempted to claim a “nursing” title. For example, a Christian medical community attempted to title their “spiritual healers” as “nurses”; however, they did not share nearly the same amount of education rigor. When confronted with a potential title change in the veterinary profession, human nurses mistakenly worry that the term “veterinary nurse” will also encompass veterinary assistants. This confusion highlights the need for public awareness of technicians – if the closest human counter-part profession does not understand a technician’s role or certification, how can we expect the general public to know any differently? The veterinary profession must raise awareness to the public about the differences between its assistants and technicians.
Currently, as the veterinary nurse initiative gains a foothold in Ohio, the Ohio Nurses Association and its 170,000 members have fought its new legislation, arguing that the state legally defines the term “nurse” as caring for humans and that no other person or profession may insinuate that they practice as a nurse. With similar nurse title protection in about 24 other states, the veterinary nurse initiative is likely in for its fair share of conflict as it continues to grow.
The debate over the title of veterinary technicians remains controversial both in and outside of the veterinary community. As with any impending change, it is important to recognize its potential benefits and shortcomings in order to formulate the best strategy to improve the profession. If the Veterinary Nurse Initiative ends up being successful, the change will likely empower today’s veterinary technicians and reduce the profession’s current high turnover rates.
Originally Published in Today’s Veterinary Business October 2018
Although mentoring is not a new concept in the workplace, modern partnerships are not necessarily like those in the past. According to HR Magazine, formal mentoring relationships in previous eras would have typically lasted at least a year. Informal ones? They could last a decade. In today’s workforce, though, these relationships are often shorter and more specialty-oriented than before.
Because of this shortened timeframe and accelerated pace, lines between mentoring and coaching can be blurred. Increasingly, mentors are no longer necessarily higher on a company’s organizational chart. In fact, reverse-mentoring now exists. In reverse-mentoring situations, newer staff members are teaching older, more experienced ones about new technology, as just one example. As one scenario, a Millennial employee may be teaching her Baby Boomer supervisor about how to effectively use social media and crowdsourcing, while also sharing insights into new ways of thinking about business.
According to a survey taken by the Association for Talent Development in 2017, 29 percent of organizations have a formal program in place for mentoring, with 37 percent of them having an informal one. Mentoring opportunities are also available through professional organizations, either online or in person.
A skilled mentor can help the mentee become his or her best possible self. This happens when a mentor takes the time to really understand the person he or she is mentoring, including where the person is in a career path – and where he or she wants to go, career-wise. Once this is discerned, then each of the actions by the mentors should help the mentees participate in the types of behaviors that allow them to become aligned with their own best selves.
Now, here are seven keys to creating the best possible mentor/mentee relationship.
Key #1 Be very clear about the goals established for the mentoring program.
Are there specific job-related skills that the mentee needs to gain? If so, what are they? Is the mentor guiding someone to an understanding of a practice’s culture? Perhaps the mentee worked for a private practice that was recently bought out by a corporate one, and the mentor is serving as a guide and sounding board to an employee during a transition period. Whatever the goals are, make sure they are clearly defined and understood by all involved parties.
Key #2 Make sure the two participants are well matched.
Synergy and mutual commitment fuel mentoring relationships, so it’s crucial to put the right pairs together. As mentioned above, mentoring is no longer limited to an older and/or more experienced person at the practice mentoring someone younger and/or newer. The goal of this evolving process is to have one member of the team fill in gaps of the skills and/or experiences of another employee, so form your pairings for that purpose. It can be tempting to put together people because they’re so much alike that they’re sure to get along. They probably will get along, but that alone doesn’t fulfill the purpose of mentoring. Remember: fill in experience and skillsets through mentoring opportunities at your practice.
Key #3 Mentoring usually takes significant time and energy, so don’t expect quick results.
There are exceptions to this rule, of course. If a Millennial is paired up with a Baby Boomer to teach the use of Instagram, this can all come together rapidly. If, though, that same Millennial is paired up with that same Baby Boomer to help transition the mentee to a telecommuting role at the practice, this can take time and energy for mindsets to evolve.
Key #4 Multiple mentors sometimes make sense.
Some companies pair up a mentee with a primary mentor and are then open to people having numerous more informal mentors to boost the diversity of the learning experience. It can be very helpful, even enlightening, to have mentors from different demographics – whether that’s age, gender or something else. Being exposed to different points of view from thoughtful members of the practice can be quite beneficial.
Key #5 Mentors should provide guidance rather than setting strict requirements.
Your practice will create an overall structure for its mentorship program and, yes, participants should follow the structure you set. But, a mentor is not there to enforce rules or to lecture. Rather, a quality mentor may spend more time asking questions and listening to answers than speaking, offering advice rather than rock-solid answers. Mentees should be encouraged to listen closely to what a mentor has to say and then carefully evaluate how it fits into his or her life and career path.
Key #6 Mentees should prepare and ask questions.
The best mentoring relationships are two-way streets, with the mentee being an active partner in the relationship. Passive listening will only go so far in helping a mentee develop skills and gain knowledge. Instead, engaged mentees should share what has been helpful, what gaps exist in his or her knowledge base and skill sets, and so forth. In a sense, being mentored should also empower the mentee to pass on knowledge to the next person in the practice who needs assistance.
Key #7 Effective mentoring focuses on relationship development.
Near the beginning of this article, we shared how modern mentoring resembles coaching, at least more so than in the past. But, at its core, mentoring has been and should remain relationship-oriented. The mentee should feel safe and nurtured as he or she learns professional skills through mentoring. Although this knowledge will likely enhance the mentee’s ability to perform tasks, mentoring is not as task-oriented as coaching.
Mentoring should help employees at your practice become more self-confident and able to juggle his or her work/life balance. While coaching can be performance-driven, mentoring focuses on developing the employee, both to improve his or her skills and knowledge today and to prepare him or her better for the future.
Starting a Mentoring Program at Your Practice
Be very clear about what you want to achieve through this program and have a plan in place to measure its effectiveness. Determine who can participate, both as mentors and as mentees. Can someone, for example, volunteer or will you select them? Decide how formal or informal the program will be, how often you expect partners to meet and so forth. Explain the program to your team, adding specifics to the employee manual, and strategically pair up mentors and mentees. Invest enough resources to allow the program to be successful, be available to mentors if they need guidance, and use this program to develop your team in a way that dovetails with practice goals and dreams.
Link to the article on Today’s Veterinary Business: https://todaysveterinarybusiness.com/modern-mentoring/
Whether an owner is transitioning a practice to an associate, colleague or corporate entity, the process of onboarding can be complex. This article intends to outline the medical, financial and staff transition steps to follow, post-sale, along with the challenges each presents.
Although mergers and acquisitions (M&As) typically begin with high hopes of success, not all do succeed. Below are some statistics about practice sale shortcomings:
- 65% of all M&As do not achieve objectives set forth by deal architects
- 83% of mergers do not increase shareholder value
- 50% loss of key managers and technical employees is experienced within 12 months
- 50% of failures are due to cultural clashes
Most failures are attributed to operational, financial and/or customer relations problems. Within these broad categories, common reasons for M&As failing to achieve their objectives include the parties not doing one or more of the following:
- thoroughly consider all types of value critical to the practice
- establish priorities for integration
- identify and address risks that inhibit integration
The buyer may, for example, expect the seller’s personnel to integrate themselves, which may not happen. In other scenarios, the buyer has an integration program, but it does not run efficiently or see things to fruition. No matter the specifics, the ultimate result of poor integration is that morale drops, revenue diminishes, and objectives are not met.
In a full half of M&As, key managers and technical employees leave. This is typically an indication that a new owner has failed to implement an organizational and leadership structure that is emotionally satisfactory to employees, at least not in a timely manner. As a result, talented staff leave for better-run practices.
For a successful transition to occur, timing is key. A prolonged transition period distracts leadership from the mothership of the business. Gaps in communication contribute to a drop in customer service, which is reflected in reduced client retention—effectively leaving the practice vulnerable to veterinary competitors in the area.
There are three main areas to consider in regards to the medical side of the transition.
As part of a transition, medical records must be carefully reviewed to ensure they contain all information and documentation as required by state and federal law. Generally, the physical medical record is owned by the veterinarian or entity responsible for compiling and maintaining the medical record. To ensure no lapses occur in accessing or adding to existing medical records, the owner and buyer should clearly define how such files are to be transferred and managed.
It’s important for the buyer to have access to job descriptions of all the seller’s staff, along with the practice’s standard operating procedures. Often, sellers may propose changes to increase synergy and efficiency. For example, sellers may overhaul product or service offerings to enhance compatibility with the existing clientele or attract new ones. The operational documents created, however, should outline job descriptions and standard operating procedures—and the infrastructure required to execute them—as they currently stand.
Maintaining Medical Standards
Upholding the medical standards of a practice is intricately entwined with retaining key staff members who execute those medical processes. If the practice associates and staff intend to continue working post-sale, employment agreements should be created that include staff roles, responsibilities, and terms of agreement. The owner can suggest that the buyer wait six months to implement any significant changes, and then to do so gradually.
The first steps in planning a financial transition include to generate an expense budget, profit and loss statement, and statement of assets and liabilities. The author recommends creating an expense budget based on the latest edition of Veterinary Economics’ Benchmarks: A Study of Well-Managed Practices. A typical expense budget includes (at minimum) projected and actual values of revenue, cost of goods sold, staff, rent, equipment leases, utilities, office supplies, bank fees, and owner salary.
A profit and loss statement features year-to-date comparisons of items such as fees for professional services, laboratory services, vaccinations, pharmaceutical imaging, grooming, and dental services, as well as food and retail sales. Additionally, it lists year-to-date data on costs of goods sold, along with staff, equipment, and administrative expenses. Finally, it calculates a net income. On average, this statement should take about five to ten hours per month to generate.
A statement of assets and liabilities functions as a balance sheet for the practice. It lists both current and non-current assets; the latter is not easily converted into cash and can include buildings, equipment and motor vehicles. Current assets include money in checking or savings accounts, accounts receivable, and inventory, among other possibilities. An example of a non-current (long-term) liability is a loan taken out to buy the practice; current liabilities include accounts payable and other amounts expected to be paid in the current financial year.
In generating financial analyses of the practice, it may be important to hire an accountant. In general, accountants cost about 0.5% of gross annual revenue. Moreover, owners should consider hiring a dedicated practice manager, which will cost about 0.4% of gross annual revenue.
As a tool to help owners further interrogate data, practice management software allows owners to track gross revenue in multiple ways, perhaps weekly, monthly, and quarterly. Average transaction charges should be tracked hourly; if not, then daily, and then periodically.
Cultural clashes are defined here as differences in human elements between merging companies. For a practice to be successful, these clashes must be identified through an audit and then successfully addressed. A cultural audit would examine factors such as core values, policies and practices, work processes, leadership styles, and human emotions. More specifically, examinations in human emotions should include people’s uncertainties surrounding job security and their fear of change. The importance of an audit of staff emotions cannot be understated, as one survey suggests a 26% increase in successful mergers if human elements are resolved in pre-deal stages.
The buyer must determine the health of the seller’s practice’s human capital. Metrics helpful in determining this include rates of employee retention and/or turnover, the effectiveness of internal channels of communications, and past lawsuits, among others. Specific issues that need to be addressed with staff include any changes in benefits, pensions, compensation packages and reward and recognition programs.
To successfully transition the staff to new ownership, it’s important to plan the integration 60 to 90 days ahead of the target closing date. The buyer must define, in writing, the mission, values, leadership style, and philosophy of the new company. Additional tasks include to:
- identify potential barriers to integration
- craft strategies and solutions to overcome barriers
- prioritize work-streams, especially those that are synergistic
- assign leaders to monitor specific progress parameters
- outline predictable reward and recognition programs for employees that are driven by performance
- solicit employee input so that job descriptions are clear (this is crucial for them and the practice overall to meet expectations)
- create process maps and tools to facilitate career development
- groom potential replacements
- invest in high-potential employees year-round
- retain key employees using personal, one-on-one communication
- clearly point out channels of communication and feedback mechanisms to address employee concerns in real time
- host integration activities between the merging staffs.
If this seems overwhelming, given all the work that needs done, consider hiring a third-party professional cultural auditor. Senior executives are often too involved in the practice vision to fully assess workplace culture. Furthermore, employees may be more forthcoming with sharing their problems to an impartial outsider. Such auditors can offer different perspectives without regard for their own job security, resulting in a more objective cultural examination.
Five Things Not to Say
- “We don’t anticipate making any changes.” On the contrary, changes are to be expected, post-sale; it should be viewed as an opportunity to make improvements. Besides, when changes do occur, they will be attributed to the transition whether they are related or not.
- “This is a merger of equals.” Pre- and post-sale teams are never truly equal in authority.
- “We plan to take the best of both worlds.” This phrase is, at best, subject to the opinions of the pre- and post-sale teams.
- “It will continue to be business as usual.” Practice sales often fundamentally change the psychological tone of a clinic as it transitions to new ownership.
- “The culture of our two companies is very similar.” Although this may be true, people will focus on differences, which will bring unwanted attention to areas where expectations were not met.
Although positive outcomes cannot be guaranteed, owners can take definitive actions to help their team transition operationally, financially, and culturally. Through careful preparation and clear communication, many problems in transitioning a practice to new ownership can be prevented or at least significantly minimized.
In the summer of 2017, a small group of veterinary personnel formed the National Veterinary Professional Union (NVPU). The members of this grassroots movement are largely from Seattle, and they have prompted plenty of conversation about the benefits of unionizing the profession, as well as the challenges that will likely arise. It should be noted that, in rare instances, unions have already existed in the veterinary industry, but these have been isolated ones under unique circumstances.
Here are more specifics about the current situation.
More About the NVPU
The organization has been called the brainchild of Morgan VanFleet, a veterinary technician who is leaving the industry to work in nursing. Another technician, Liz Hughston, is serving as the organization’s communications director and is listed on the group’s website as president. She has pointed out how quickly credentialed staff are leaving the profession, calling the current environment unsustainable and a motivation for unionization.
More specifically, citing a 2016 demographic survey by the National Association of Veterinary Technicians in America (NAVTA): the average veterinary technician works in the field for seven years, with Hughston saying that reasons for the exit are numerous, with one of them clearly being compensation levels. And, because not enough people are graduating in the field to fill in empty positions, people involved in the NVPU are seeking solutions for a labor shortage that has the potential to become a real crisis.
One initiative of the NVPU is their Wage Transparency Project. A representative of the NVPU has said that wage uniformity is not a goal, but transparency is important because it’s difficult to bargain for pay increases if it isn’t clear where the wage basement and ceiling currently exist. As the organization has gathered wage information from people willing to disclose specifics, they have discovered that significant discrepancies exist, with new employees sometimes making more than employees with long tenures. To keep employees engaged in the workplace, achieving more parity is important, as is letting them know what monetary compensation is possible if they work hard and commit to staying in the industry.
The NVPU is currently local and, to nationalize their efforts, they are using Facebook to spread the word (https://www.facebook.com/NationalVeterinaryProfessionalsUnion/) and receiving some print coverage. They also have a basic website at http://www.natvpu.org and, as they get more dues-paying members, they plan to expand their outreach. Hughston expects this movement to grow slowly, first in Washington, then in the West Coast and then elsewhere around the country.
Obtaining better wages and benefits is a key focus, with other foci including requiring practices to invest more in training and providing enough quality protective equipment along with an overall safe working environment. Goals also include more workplace support for employee veterinarians, as well as technicians, unlicensed assistants, reception staff, client-care coordinators and other unlicensed support staff.
Hughston compares this movement to the 1960s and 1970s when nurses began to unionize, pointing out how it is a well-respected profession today. And, in fact, a longer-term goal of NVPU may include joining a larger union, such as the Service Employees International Union, for greater impact and bargaining power. This union represents about two million members who are nurses, nurses’ aides and home health care workers.
American Veterinary Medical Association Position
They are remaining neutral, saying the following. “We respect the right of our members who are employees to self-organize; to form, join, or assist labor organizations, and to bargain collectively through representatives of their own choosing. Similarly, we also respect their right to refrain from any such activity.”
Is it reasonable to argue that corporate buyouts of individual practices are the impetus for the unionization movement. The reality is that increasing numbers of practices are consolidating, largely through corporate buyouts. In fact, Mars Petcare alone now owns about ten percent of the animal hospital market in the United States. As corporations own more hospitals, there will be less market competition, which means these corporate practices will be able to have more control over wages in the industry – which are currently staying flat.
Is unionizing the solution? Well, it depends upon whom you ask. If you’re an employee who struggles to meet expenses, the solidarity of a union will might seem attractive. Or, even if you make a reasonable salary, the benefits of unionizing may seem like a positive if you have crushing student loan debt. Yet another group of people who may find unions appealing: those who work at a corporate practice where there is disconnect between headquarters and the needs of the practice site. Hughston from the NVPU notes that, overall, non-corporate-owned practices typically take good enough care of their employees that they aren’t calling for a union. Instead, mostly it’s corporate staff that are clamoring for help and support.
We’ll now look at the pros and the cons of unionizing, as well as two additional related issues.
Well-paid veterinary technicians, according to the 2016 NAVTA demographic survey, are paid only slightly above the poverty line, when income taxes are factored in. So, it’s clear that a problem exists, one that will continue to affect the industry’s ability to retain quality workers. Collective bargaining is one avenue towards helping workers obtain fair compensation and, therefore, boost retention rates at practices, although not everyone agrees it’s the right one.
From an underpaid worker’s point of view, there is a power in numbers. When, as just one example, an independent practice is sold to a corporate buyer, employees will likely feel powerless, and may desire a union to help them to navigate their new environment. And, there is reason for concern. Approximately 27,000 to 30,000 veterinary practices are operating in the United States today. The majority are still one-to-two doctor practices or at least individually owned. But, over the past decade, corporate ownership is increasingly taking hold, with Mars, Inc. owning more than 975 practices. And that was before they announced a successful acquisition of another corporate holding, VCA, Inc. This corporation owned 800 veterinary hospitals in the United States and Canada. This means that Mars now owns just under 2,000 practices in the United States and Canada, with about another 1,000 veterinary hospitals owned by other corporations. And, as the ownership landscape changes, the environment becomes increasingly riper for unionization.
As more practices become corporate, as already alluded to, there is naturally less competition, which gives the practices more ability to control wages. This seldom benefits the worker. According to a paper written by Richard Freeman, Harvard University economist, union members in the United States earn five to fifteen percent more in wages than their non-union counterparts. These figures do not factor in differences in pensions or health insurance, vacation or any other benefits. Unions can help.
And, there are additional benefits of unionization, at least from the worker’s point of view. Hughston points out that unions can help with work/life balance and can help to create professional boundaries that are respected. These can include putting safe procedures and protocols into place; ensuring there is enough staffing for safety reasons; and more.
Let’s reiterate another point. Hughston acknowledges that unionization won’t be an attractive option to employees in private practices, especially those who feel comfortable and effective in negotiating directly with employers. She sees unionization as a valuable strategy to address the growing number of employees who are employed by corporate practices.
Independent practice owners may already be paying their team as much as they can to still manage their budgets, and they may already be doing all they reasonably can to create a quality environment for workers. Because the veterinary industry is cash-based (meaning most clients they see do not have health care insurance for their companion animals), there is a monetary cap of what an independent practice can afford to pay. Wage increases beyond that, then, will translate into increased prices, which may cause clients to go elsewhere to a non-union practice or not make appointments as often. It can also mean that, going forward, these practices will need to hire people with lower skill sets, which could harm the skilled workers, the practices themselves and the clients and their companion animals. Wages increased beyond what a private practice can bear could also lead to staff layoffs.
Hughston’s viewpoint is that there are other ways to boost wages, perhaps by having corporations accept a lower profit margin and for the entire industry to work together to create a sustainable profession. In the long run, she says, this will save all practices (independent and corporate) money. But, that may an idealistic comment, not a practical one, with private practices potentially hurt by unions as difficult industry problems are addressed.
Some people believe that unionization won’t necessarily improve pay and benefits or provide improved patient care. According to the executive director of NAVTA, unionizing will not necessarily be cheap for members, with the NVPU looking at a union model where members would pay two to three percent of their wages to belong. So, the net result in their paychecks may be disappointing.
Here’s another potential negative to consider. How would the patients suffer if practice employees went on strike?
Proactive Actions for Practices to Take
When employees at a practice unionize, life becomes more complicated for management. The practice would need to bargain with union over wages, terms of employment, hours of work permitted and other issues. Independently negotiating with unionized employees would violate federal labor law; going through collective bargaining, meanwhile, can be a drawn-out and often frustrating process.
To try to prevent employees from seeking to unionize, here are tips. First, don’t create fertile ground for unions. If your employees feel ignored or treated unfairly, or if they feel as though dealing directly with employers would be futile, that’s fertile ground for unionization.
The unionizing process would go like this. An employee (or more than one) would work with a union organizer to distribute literature to coworkers, and they would be asked to sign authorization cards. If 30 percent of the staff signed them, showing interest in the union, an election is held. Then, if the majority of people who show up to the election vote yes, the practice has been unionized.
As an example, let’s say your practice employs 30 people. If at least ten sign authorization cards, the issue of unionization is put to a vote. If only three people show up to the election? Then two yesses unionizes the practice.
So, self-audit. Are you paying the fairest rates you reasonably can? Offering the best benefits that fit within your budget? What creative yet low cost benefits can you offer? What can you do to improve morale? Fix any fertile ground.
Also consider creating a written policy, if you haven’t already, that restricts any solicitation, distribution of literature and the like at the practice. If you enforce the policy strictly, then employees can only distribute union literature in non-working areas during non-working times. But, if you don’t have a written policy, or if you have one that you sporadically enforce – perhaps by allowing sales of Girl Scout cookies, local charity donations, sign-ups for races and the like – then you can’t effectively prevent the distribution of union literature because that’s a violation of anti-discrimination provisions in federal labor laws.
If employees express interest in a union, you cannot threaten them, interrogate them or retaliate against them. You cannot promise them benefits if they switch positions to begin opposing the union. Be sure to train your managers so they know the law and how they can and cannot respond, and get advice from experienced labor counsel, as needed.
What If Employees Change Their Minds? Getting Out of a Union
According to a Forbes article, A Deep Secret That Labor Unions Don’t Want Workers to Know, “It is, quite simply, nearly impossible for workers to get rid of a union once it has been certified as their monopoly bargaining representative.” That’s because the National Labor Relations Act (NLRA) does not require an election when a designated term ends, such as the expiration of a contract. This means that workers will likely not get a chance to vote on whether they want to continue union representation.
And, in non-right to work states, if you are a private sector worker who works in a union shop, union membership will be a job requirement. You want the job? You join the union.
The only option for a practice where workers have changed their minds is what’s called a decertification election, “held after the expiration of a contract or a narrow 30-day window near the end of the third year of a contract. The union can circumvent a time window by agreeing to a new contract before the window opens—thus moving the window to the end of the new contract, when they can move it again.”
The bottom line is that it’s important to think very carefully about voting in a union, understanding that, while it’s not literally impossible to vote it out, it can be extremely challenging. This is especially true in non-right to work states, but not exclusively so.
Practices concerned with unionization should proactively listen to employees and see how concerns can be addressed in a way that doesn’t require a union. Although increased wages are typically seen as the primary goal of collective bargaining, a more abstract but perhaps equally important goal is respect. Practice owners who find ways to contribute meaningfully to their employees’ work experiences and environment and who become increasingly aware of and respectful of their employees’ contributions have the potential to create win/win non-unionized solutions.
After all the blood, sweat and tears that have gone into owning your practice, you’re finally ready to sell. You have a prospective buyer who wants to assume ownership and, after many months of negotiating, you’ve settled upon the terms of your agreement. Then comes the fateful day when your attorney asks, “Is your laboratory contract squared away and ready to be assigned to the new owner?”
You examine your contract with your reference lab and discover that you still owe monthly payments for years into the future. You find some wiggle room in the assignment clause, but your practice’s new owner tells you she has contracted with her preferred lab – and it’s not the same as yours.
Upon taking a closer look at your laboratory service contract, you’re appalled to find that any attempt to terminate the agreement early would result in the entire balance being due. To make matters worse, the equipment you were led to believe was provided to you by the company turns out to be provided, sure, but via a loan. As you continue to read your contract, your retirement dream keeps crashing around you.
The scenario described above admittedly presents a gloomy view of an owner coming to terms with his or her laboratory service contract, one that isn’t necessarily typical. Having said that, though, it is common for these agreements to contain terms and conditions within densely worded paragraphs that can leave a practice owner at a disadvantage when it’s time to terminate the contract. That’s why, like with any contract, you should safeguard yourself against any surprises by taking the time to read all clauses and know exactly what is expected of you and of the contract holder.
For veterinary practice owners, there are multiple options and agreements offered by reference labs that will allow you to outsource your diagnostic lab work to their facilities. Here are typical arrangements.
- At a bare minimum, you can work with a reference laboratory on a “pay-as-you-go” type of relationship, picking and choosing which laboratory to send your samples to on an individual basis. The downside to this style is that labs won’t offer financial incentives to a practice owner who doesn’t enter a contract.
- The next level up would be a basic contract with a specified reference lab that gives you a discount on fees or a better rate schedule. Because the practice is charged lower fees, you can theoretically offer clients a better rate on lab work, which will likely convince more of them to agree to have lab work run.
- The most prevalent type of contract involves signing a multi-year deal with the lab of your choice, with the main incentive offered being a large-sum loan or special in-house lab equipment lease provided to the practice.
As long as you know what’s expected of you from these loans, discounts and equipment financing plans, the rewards of adding them to your practice can be very beneficial. In fact, according to a 2016 article found on the dvm360 website1, there are multiple reasons why it makes sense to sign a laboratory contract. The reasons mentioned most frequently by practice management professionals is the development of a strong relationship with the vendor/laboratory, better customer service and quick response to problems, and easier equipment replacement and upgrades. This data was taken from a survey conducted by the VHMA2 that categorized respondents by how many years were on their current reference laboratory contract. The survey showed that, out of the 64% of professionals whose practice had an exclusive contract with a reference lab:
- 3% were on a one-year contract
- 12% had a 2- to 3-year contract
- 40% had a 4- to 5-year contract
- 11% had 5+ years on their contract
- 34% had no minimum length required
Because the data shows how most of these agreements (51 percent) had four or more years remaining in their terms, it becomes obvious why practice owners need to take these types of contracts into consideration several years before retiring.
With any list of pros, there usually comes a list of cons and, when it comes to entering into a laboratory service contract, cons mentioned in the 2016 survey included:
- inability to take advantage of competitive pricing
- subpar customer service experiences
- confusing language of the contract.
As with many legal documents, these contracts typically contain an elevated level of vocabulary, which helps to explains why many owners look for the main points included and then sign their names. Tempting as this is, it can be dangerous to rush the process and not be aware of exactly what you’re signing.
So, what’s the bottom line? Are these contacts good to sign – or bad? The answer depends upon how long you plan to own or manage your practice. First-time practice owners may very well negotiate an acceptable rate schedule in a clear arrangement that will allow them to build a foundation for their practice. The diagnostic equipment that is provided as part of the contract can be a great asset to the practice once the loan is paid off.
Practice owners looking to sell sooner rather than later, though, will have some tough decisions to make. How will the procedure work when it’s time to assign the contract to a new owner of the practice? Are the economic terms listed acceptable? Can you decline to auto-renew your participation in the program if it’s within the appropriate time frame? Auto-renewal clauses on this kind of contract have been known to range from 60 days all the way up to one year prior to the end of the current term.
Incentives provided by the reference lab can be very beneficial to your practice, but you need to realize that all incentives will very likely cost you in some manner. Laboratory representatives might offer incentives as a show of good faith or appreciation for your business, but these incentives are likely to be a hook to persuade you to agree to other, less enticing terms of the contract. Any large sum of money provided or discount offered may be presented as a signing bonus, for example, but may more closely resemble a loan.
And, unless explicitly stated otherwise, discounts and other price alterations can disappear at any time. Even more troublesome, many of these loans or financing schedules are not commonly assignable even when you have requested written consent from the company. In other words, the lab contract you assign to your successor will not necessarily take the loan payments off your hands and, in some cases, assigning the contract may accelerate payments to make the full balance immediately due.
Pay close attention to monthly purchase requirements of laboratory goods and services, which may take various forms across the scope of these arrangements. The standard example would be a clause within the contract that requires your practice to order a specified threshold of payments to the laboratory for diagnostics ordered monthly. The amount required might fluctuate depending upon the size and productivity of your practice, but it is very important to make sure that your gross production will, in fact, allow for that much payment to the company. Some companies will allow for as much as 10% of your diagnostics to be submitted to other laboratories without a breach of contract, as well as any diagnostic tests that their laboratory cannot run. You’ll want to be clear on exactly what does and doesn’t fall under these exceptions because a breach of contract typically comes with severe consequences.
Ethical considerations also exist. If your practice has a monthly quota of diagnostics and associated charges that you must meet, you must carefully consider which tests are necessary for your clients’ companion animals and avoid ordering tests simply to reach your laboratory quota. Some members of the public already have the perception that veterinarians order unnecessary tests that do not provide meaningful results; practices that are perceived to recommend superfluous tests will begin to drive away their consumer base at best and sever the veterinarian-client-patient relationship at worst. So, before signing a laboratory service contract, make sure you can afford the level of production that your lab contract requires.
So, what happens if you can’t maintain your production and you fall behind on payments, or you order too many diagnostics from another reference lab and a breach of contract occurs? The consequences can be severe, such a penalty that states that, upon the event of default, all future monetary amounts and payments are due to be paid immediately to the company. Some companies will give you a brief period in which to cure your breach or default, but such time would usually only be beneficial if the amount of money owed was small. Another penalty for breach of contract is a tiered structure of money owed upon default that decreases depending on the amount of years the contract has been held. This may be more favorable for owners and managers who know they can fulfill the terms of the contract for the initial couple of years.
Returning to the initial scenario, here’s another variation. Let’s say you’re ready to sell your practice to an excited new owner but, in this case, the new owner is eager to fill your role in the reference lab contract. This is a much better scenario because most lab companies, when given the proper amount of notice as specified in the contract, are likely to assign the contract to the new owner. In this case, it will be very important to know what your obligations are after the assignment of the contract. As with purchase agreements, the original owner may still be kept on the contract as a guarantor, meaning that his or her assets are still vulnerable if the new owner defaults on the contract or commits a breach.
Contracts are not made up of purely economic terms. Within these agreements there are typically confidentiality clauses that prohibit you from discussing any aspect of the terms of your agreement unless necessary by law. This restricts the negotiating ability of practice owners or managers by disallowing them to consult with colleagues and assess the likelihood of more beneficial terms.
Part of your due diligence prior to signing a contract should be to consider your general impression of a laboratory’s diagnostics and services. Do you agree with their reference values and the sensitivity and specificity of the tests they perform? Have you had positive or negative experiences with their customer service? While you may not obtain much information from colleagues about the terms of their contracts, there doesn’t appear to be any penalty associated with discussing their satisfaction with service they’ve received.
Reference laboratories have pursued injunctive relief against owners and managers that breach their contract, whether such breach was intentional or not. VIN published an article in March of 2012 detailing multiple lawsuits filed by Antech Diagnostics, the laboratory services division of VCA, between 2011 and 2012. These suits were taken against practice owners who had attempted to end their agreement with the company prior to the full term, citing reasons such as the laboratory’s service being “unacceptably poor” or receiving a more attractive offer from competing companies, such as Idexx.
Many of these owners believed they could terminate their contracts by paying the money due for their loans or incentives ahead of the scheduled time, in part because of the lack of language within the agreement about that topic and in part because of information provided verbally by company representatives. However, in events where these attempts were made, Antech responded with lawsuits for the sum of any money currently owed as well as income they were due to receive for diagnostics ordered by the practice through the length of the contract. According to the article, the revenues that Antech was attempting to claim ranged from $234,000 to $798,000! Many times, Antech was successful in pursuit of these funds and, since that time, the wording in relevant clauses of these contracts has become more specific.
The VIN article emphasizes the importance of considering the ethical aspects of having a diagnostic revenue quota set by laboratory contracts and cautions practice owners to carefully read all laboratory contracts to ensure a clear understanding of stipulations before signing. Though these reference laboratories want your business and will offer a friendly gesture in the form of discounts and significant sums of money (as a loan, mind you), there will be no love lost if they feel you aren’t contributing your share or have breached their terms. As long as you know what’s expected of you, though, and can meet those expectations, the sunnier side of offered incentives will shine through, and reference lab relationships can be highly beneficial to you and contribute to the growth of your business.
- staff, dvm360.com. “Exclusive Veterinary Lab Contracts: Deal or No Deal?” dvm360.com, 12 Sept. 2016, veterinarybusiness.dvm360.com/exclusive-veterinary-lab-contracts-deal-or-no-deal.
- Shupe, Christine. “Lab Notes.” Veterinary Hospital Managers Association, 28 June 2016, vhma.site-ym.com/blogpost/1273540/250849/Lab-Notes.
- Lau, Edie. “Veterinary Diagnostics Giant Sues Multiple Practitioners.” VIN, Veterinary Information Network, 9 Mar. 2012, news.vin.com/vinnews.aspx?articleId=21802.
Letters of intent (LOIs) are used in veterinary medicine during employment and practice sale negotiations to put preliminary terms into writing. They can be useful for planning but unclear expectations and ambiguity in LOI language – particularly about the binding/non-binding nature of clauses – can cause proposed deals to fall through, and litigation can ensue.
A letter of intent (LOI) is a document describing preliminary terms in a complicated business negotiation. It is usually written in a letter format by one party with a place for the other party to sign, indicating agreement. Sounds simple, right? Unfortunately, when the LOI is not clearly written, misunderstandings and complications can arise from the ambiguity if parties interpret the language differently. One party may intend the letter to be completely non-binding, while the other may want parts or all of it to be legally binding. If the deal falls through when parties had different expectations, litigation may ensue.
Dr. Jeanie Lock worked for Dr. Bill Manor at Allgood Animal Clinic from the time she was 15 until she was accepted to veterinary school. Dr. Manor was a great mentor and teacher and, before Dr. Lock went to vet school, they talked about her someday becoming a partner in his practice and eventually taking over when he wanted to retire. So, when she graduated from veterinary school, she returned to work at Allgood. She figured it would take two to three years for her to develop her surgical and diagnostic skills, and assumed that when Dr. Moore turned 60 (in three years), he would bring up the partnership deal. Because she hated to negotiate, she decided to wait and trust Dr. Manor to bring up the subject when he was ready.
Three years passed. Then five. By this point, Dr. Lock was no closer to becoming a partner than when she signed on. Plus, around that time, another associate at the practice quit to spend more time at home with her new baby. In response, Dr. Manor hired a new, younger associate as a replacement, one who wanted to own his own practice someday. Suddenly, Dr. Lock felt threatened. If she didn’t make a claim on the practice soon, this new practitioner could become the partner! So, she wrote Dr. Manor a letter asking if he still wanted her to be his partner; if so, she wanted that in writing.
Dr. Manor therefore wrote a letter of intent, not using an attorney to create or review the language used. Both signed the letter, which stated that, within a month, he would hire a purchase appraiser to determine the value of the practice. Dr. Manor agreed to not consider any other buyers, while Dr. Lock agreed to not consider buying into another practice – and to keep any information learned about the practice confidential.
Dr. Manor hired a business appraiser almost immediately. The appraiser, though, worked at a glacial pace and was perpetually six months away from finishing the valuation. This dragged out for a year and a half before Dr. Manor fired him, hiring a more specialized veterinary appraiser. Though the new appraiser was more efficient, the process was still arduous. Two years after the doctors signed the letter of intent, there was still no purchase price, which held up the rest of the process.
Both doctors were frustrated with how slowly things had progressed. Dr. Lock wondered if Dr. Manor would ever sell her the practice; frankly, she was no longer even sure she wanted it. After seven years of working at a fast-paced, high-revenue veterinary practice with 15-minute appointment slots, she was burning out. Ultimately, Dr. Lock informed Dr. Manor she was not interested in the partnership anymore. A week later, she gave notice that she was leaving completely.
Dr. Manor felt betrayed and sued Dr. Lock for the cost of the practice appraisal. The basis of his suit? He had spent time and money hiring advisors because he had relied on Dr. Lock to purchase an interest in his practice. He felt she made a commitment for which she should be held accountable, and he used the letter of intent as evidence. Dr. Lock insisted that the letter didn’t require her to pay for the appraisal; that she was free to pull out of the negotiations at any time; and that the letter was only meant to help them move the process along. It was not, Dr. Lock stated, a formal binding document.
Ultimately, the situation did not turn out like either veterinarian had hoped. Originally, the letter of intent had helped them to establish their desires to pursue partnership and outline a basic plan. However, when the deal fell through, there were questions about whether or not the agreement was binding; if so, what were the obligations? What would happen if either of the doctors broke those obligations? Who was entitled to damages?
Letter of Intent Basics
When clearly constructed, the letter of intent can be a useful business tool. It can provide psychological comfort that a deal is moving forward, it can provide documentation to lenders and/or consultants, and it can get the parties thinking about the specific details of the proposed business deal. In veterinary medicine, these documents are most often used when negotiating a buy-in or when contemplating the sale or merger of a practice.
The letter of intent often includes some, but never all, of the specific terms of the potential business arrangement. Which terms are included vary with the purpose of the letter. Below are some terms that might be included in a letter of intent:
- Pre-employment letter of intent
- Approximate start date
- Contract term
- Working hours
- Buy-in information
- Terms of practice sale
- Percent of ownership that is being considered
- The purchase price, if known
- If the purchase price is unknown:
- The date that consultants or appraisers would be hired, and/or lenders approached
- The date the books would be closed for appraisers to examine
- The method by which a purchase price would be determined (fair market value, excess earnings, feasibility analysis)
- How the purchase price would be paid
- Whether it is an asset or stock sale
- If it is a stock sale, what type
- Whether or not the real estate would be sold along with the practice
- Whether a non-compete would be required of the parties
- Approximate closing date
Binding versus Non-Binding
Typically, the parties do not intend most of the terms listed above to be binding because they are still negotiating the terms of the deal. However, they may choose to include several types of binding clauses, such as:
- Exclusivity or “no shop” clauses that keep the buyer from seeking out other sellers or the seller from seeking out other buyers
- Confidentiality clauses that keep employees from sharing the terms of their negotiations with other candidates and/or that keep a potential buyer from using the information they learn through negotiations to help a competing practice
- Good faith negotiation clauses where parties establish a “contract to bargain”; this does not guarantee a contract will be reached but it does keep both parties from renouncing the deal, abandoning negotiations or insisting on conditions that do not conform to the preliminary agreement. “Good faith” is largely an abstract, undefined concept but can be loosely defined as “honesty of intention to abstain from taking any unconscientious advantage of another, even through technicalities of law”
- Expense sharing will be included if the parties intend to split the cost of hiring appraisers and/or other professionals to help facilitate negotiations
- Contract prerequisite clauses, wherein parties may require one another to perform certain acts before the final contract can be drafted; these may include performing appraisals, releasing financial information or signing a release for background checks
Sometimes, a letter of intent will inadvertently create obligations on the parties. Whether explicitly stated or implied, the letter may do the following:
- The letter itself may imply a duty to negotiate in good faith even without a “good faith” clause. If so, then the parties have to show that they made genuine efforts to negotiate over a reasonable period of time.
- If the letter contains too many important terms of the final contract, then the courts may hold that any remaining details were a mere formality and that an enforceable contract existed. The courts may then penalize parties for not completing the contract terms.
- One party may sue for damages if heavily relying upon the other party’s firm promise to make a deal and no deal is made. Examples might include someone relocating because of a letter of intent regarding employment or taking out a loan for purchasing a practice.
A disgruntled party might use any or all of the above to file suit. When cases come to trial because of vague letters of intent, the courts’ decisions tend to vary widely with the facts presented. Thus, it is difficult to anticipate how the court will find in a particular instance.
It takes careful drafting to get the benefits of the letter of intent while also avoiding undesirable or unintended legal baggage. To maximize the usefulness of a letter of intent and limit the downside of their misuse, veterinarians contemplating a business arrangement should consider the following four steps:
Consult with an attorney: Because letters of intent must be balanced somewhere between no agreement at all and a full-fledged contract, precise drafting is required. Plenty of heartache, time, and money can be saved by having an attorney draft the letter in the first place.
Don’t make the letter sound like a contract: The more the letter of intent looks like, sounds like, and has enough terms to make a contract, the more likely a court will hold it to be one.
1. Clauses clearly indicating whether each term is meant to be binding or not binding so misunderstandings between the parties are less likely
2. Clause stating that any term that is not explicitly stated as binding is non-binding
4. A list of any and all steps that must be accomplished before the parties can consider a final, definitive agreement. Expressly state any terms that are still unresolved. This allows you to show, if the process is interrupted, that negotiations were not complete.
3. Hypothetical language using words like “understanding,” “would” and “should”; this can help to give the impression that the current agreement is not definite and may change given additional information or events.
4. Date by which this business exploration must be completed
Do not include:
1. Too many material terms of the potential contract, because the courts may find the LOI is essentially an enforceable contract; this defeats the entire purpose of an LOI
2. A deposit or fee to be paid before entering into negotiations because non-refundable fees tend to make writing binding
3. Definitive language including words like “agree,” “will,” or “shall,” which may imply that the referenced terms are definite and decided upon
Match your actions to your words: Acting like the letter of intent makes the potential contract a “done deal” may indicate to a court that a contract already existed. If parts of the agreement that a party was not bound to complete before the final contract actually are fulfilled, the court may interpret that as “done deal” behavior. Examples include:
- purchasing employee benefits, when considering a hire
- moving to the new place of employment, when considering a new job
- turning over keys or stock certificates, when considering selling your practice
- taking out a loan for purchase, when considering buying a practice
As you progress, record your efforts to comply with the binding terms of the letter and any reasons that you decide to discontinue negotiations. This helps to show that you were negotiating in good faith.
If things fall through, stay professional:
- This will likely be a very emotionally charged time, but resist the urge to take this business situation personally. Avoid confrontations, and have a neutral witness present if you need to discuss the matter with the other party. If the other party starts acting inappropriately, disengage and do not respond in kind.
- If you decide to re-engage in another round of negotiations with the same party, create a period of time between negotiations to allow both parties to think about and process the information exchanged. This break may allow parties to recover from difficult, sometimes hurtful discussions.
Letters of intent are important tools because they help veterinarians who are interested in business relationships lay down the foundations for subsequent negotiations. However, veterinarians should be aware of potential negative consequences. For best results, consult with an attorney, and use caution and common sense so that a letter of intent can serve as a vehicle for progress, and so that you can avoid legal potholes.