Considering a Practice Sale to Corporate Volume 2 – Prospective Corporate Buyers

Considering a Practice Sale to Corporate Volume 2 – Prospective Corporate Buyers

Kara Cobb

Veterinary Business Advisors, Inc.

1 Washington Drive

Whitehouse Station, NJ 08889

www.veterinarybusinessadvisors.com

 

In our last article, we discussed how to prepare your veterinary practice for an acquisition by a corporate buyer. We recommended that you first gather your team of professionals and have them review your financials and practice entity documents. We explained that you will need to set aside time to devote to the process for tasks such as digging up documents and having introductory meetings with the buyers. When you have all your ducks in a row and have decided that you are ready to begin, you will then need to determine which corporate buyers would be interested in your veterinary practice.

How Corporate Buyers Choose Veterinary Practices

Many corporate consolidators base their acquisition criteria on a number of factors, starting with geographic location. While the big dogs are nationwide, there are also some smaller corporates popping up all over the country that are specific to a particular geographic region. Their pockets may not be as deep as the larger, older companies; however, they may have a strong infrastructure in your area and may be able to provide you with better support. They may also offer you a future career opportunity in their local corporate office.

Location also matters because as the smaller companies grow, they strategically pick the next market where they are potentially expanding. If your practice is located in that market, they may be willing to pay top dollar to acquire you.

Your pool of prospective buyers can vary depending on the size of your practice. A few factors that buyers take into consideration are the following:

  • Number of veterinarians employed at the practice
  • The practice’s gross revenue for the previous year
  • The presence of year-over-year growth

The size of the hospital building can also influence buyers such as:

  • Number of exam rooms
  • Extra space that can be converted into additional exam rooms
  • Multiple floors in the building
  • Space on the property that could accommodate expansion of the building and future growth

The type of hospital will also determine who is interested in your practice. Some buyers are interested in acquiring specialty and emergency hospitals, while others only want general practices. There are corporates that are in the market for equine and mixed animal practices, but many only acquire small animal hospitals. If you are the owner of an equine facility, make sure the buyer you are entertaining has experience and is able to support your practice. It can be risky to sell to a “newbie” who is just dipping their toes in the water and wants to start with you.

How Practice Owners Choose Corporate Buyers

Once you reach out to the various corporate buyers and determine who is interested in reviewing your practice, you can then begin getting to know them while asking yourself the next question: which of these buyers would be a good fit for your veterinary practice?

Consider the type of management style you would prefer in a buyer. Some practice owners need to have more control and may want to continue running the show after the sale, while others have had enough of the business side and would prefer to step back. Would you like a company that is highly involved and takes over all of the management duties so you can just focus on medicine or would you prefer a company that is a generally hands off?

You can also ask the buyers for a list of references. They should be able to provide you with contact information for practices they have recently acquired in your region. Be sure to speak with both the former owners as well as the practice managers to get the inside scoop on what it’s like to interact with the company on a day-to-day basis. Talk to someone who closed a few years ago to see how they are doing today. Did all of their doctors quit? Is the majority of the staff happy? It’s also helpful to speak with someone who closed more recently and is still going through the transition process today.

Corporate buyers offer different types and levels of employee benefits. Some buyers say that they will keep your staff whole by making adjustments to their hourly rate/salary if their benefits are not as good as what you are currently offering your staff. You certainly don’t want your employees to have to take a pay cut or pay more for insurance after the sale. That would not be good for employee morale. You may want to ask the buyers what kind of discounts they offer the employees. You could provide the buyers with a copy of your employee manual to confirm that their company would offer similar perks and benefits.

Another aspect to consider is how you may feel about the buyer making changes after closing. Some will show up on closing day and immediately switch your practice management software over to their system. They could also change vendors including the reference laboratory or even your in-house lab equipment. It’s something to consider because your employees would then have to learn how to use all new machines. Other corporate buyers choose to continue using all of your current vendors and don’t really change a thing, or at least wait until the dust settles.

The best way to determine whether a corporate buyer would be a good match for your practice is to get to know them. Through phone calls, zoom meetings or in-person meetings, practice owners gain the opportunity to ask questions and get to know the culture of each company. Keep in mind, that most owners continue to work after the closing and their buyer becomes their future employer. Ultimately, you should ask yourself if you would want to work for this company.

In the end, the decision to choose a buyer often comes down to the purchase price. Many, if not most owners are counting on the funds from their sale to enable them to retire down the road, so the final number is important. However, it’s good to do your homework because if you have two similar offers, you will be giving the other factors some serious consideration.

If you are fortunate enough to receive multiple offers on your veterinary practice from corporate buyers, you will be faced with making one of the most important decisions of your veterinary career. In our next article, we will explore the various types of offers and sale structures.

Top 5 Veterinary Practice Information Management Software (PIMS) Products

Top 5 Veterinary Practice Information Management Software (PIMS) Products

Isaac Brownstein

Veterinary Business Advisors, Inc.

1 Washington Drive

Whitehouse Station, NJ 08889

www.veterinarybusinessadvisors.com

 

Abstract

The use of technology has revolutionized operations and methods of performance for businesses while simultaneously providing competitive advantages and economic opportunities.1 Using practice information management software (PIMS) has the potential to streamline processes by reducing operating costs, improving the communication process, and boosting productivity.1 Veterinary practices can use PIMS programs to make practicing medicine more convenient and efficient as well. Within the last decade, the field of PIMS options has grown exponentially. So, how do you decide which program is the best fit for your practice? This article is meant to provide veterinarians with an overview of the major PIMS options available to their practices and the benefits they potentially bring to the table.

 

Introduction

The demand for veterinary services has skyrocketed since COVID-19.2 Increased demand for services combined with a shortage of veterinarians, wide-spread burnout, and staffing challenges, has created a near-perfect storm for the veterinary industry. At the same time, the previously mentioned variables are also partially responsible for the ongoing advancement of veterinary-specific software.3 Given the state of the industry, the need to maximize productivity and efficiency has arguably never been greater. Historically, technology has been a massive driver of transformation in the industry,4 and the future will, in all likelihood, continue this trend.

Before Cornerstone and Avimark, there was PSI, one of, if not the earliest veterinary-specific programs. It most notably offered a primitive computerized SOAP, reminder system, and receipting. Since then, the selection of veterinary programs, and now applications in addition to the features they offer, has thankfully increased. Globally, and through our own research, we would conservatively estimate there are currently over a hundred veterinary-specific programs and applications on the market. Granted, not all of these programs and applications are complete and all-inclusive platforms, and many of them exist within niche spaces to meet the associated demands of said niches. From generalists to specialists, a modern and efficient PIMS system that compliments a practice’s unique personality is an increasingly crucial tool. Through over a month of careful research, we personally test-drove (when able) the major PIMS options available on the market in North America. Join us as we compare the notable options and offer a comprehensive guide on how to pick the best product suited for your hospital’s unique needs.

Finding the Virtual Glass Slipper

Before we dive too deep into the various PIMS options, we would recommend asking the following practice-specific considerations. Is the program financially feasible? Regardless of how helpful implementing a new PIMS program would be to your day-to-day activities, it’s not going to be beneficial in the end if your practice can’t afford it. Is the program able to be integrated with any other current programs or vendors? Many PIMS programs can automatically port diagnostic results and inventory supplies in real time, so it’s important to consider whether these aspects of your practice are able to talk to each other seamlessly. While you may be enamored with one program it’s also important to compare the pros and cons with other options. The veterinary PIMS market is arguably crowded, so make sure you are taking every aspect into consideration. You will want to ask yourself whether the seller is a good fit for your practice overall. When it comes to partnering with a PIMS supplier, the program itself is, at times, just the tip of the iceberg. It will be important to make sure your practice and the seller are compatible as well. For example, if your practice is open 24/7 does the PIMS supplier offer 24/7 customer support? If not, you may want to reconsider. Lastly, you may want to contemplate whether the program is compatible with your staff’s personalities. If you have an associate that is easily intimidated by technology, opting for a program that has a more simplistic layout may be beneficial. If you are an equine practitioner and often find yourself without an internet connection, you may want to look into a cloud-based program that automatically updates when internet connectivity resumes. Now that you are prepared to ask the right questions, there are just a few more trends to consider.

 

  1. Cloud-Based programs are the future in our opinion. Often accessible anywhere, these programs mean less money invested in hardware, improved live collaboration amongst staff, improved data security (generally), automatic software updates, mobility, and scalability. In today’s fast-paced world, we highly recommend considering a cloud-based PIMS.

 

  1. Veterinary phone applications are our prediction for the next big trend. If you haven’t noticed as of late, the world is increasingly on the move, and working with a phone application has the potential to save time and make your job more convenient. Some veterinary PIMS programs currently offer mobile access and integration with practice computers.

 

  1. Telemedicine has become extremely relevant given the recent pandemic. Many of the practice management programs have telemedicine capability, providing a great way to accommodate clients and staff who would prefer to practice social distancing.

 

Without further ado, let’s dive into the major available options. All of the programs that we are about to discuss are capable of doing the following: appointment scheduling, billing and invoicing, confirmation/reminders, have 24/7 customer support, and are cloud-based.

We have also included a Capterra rating for each program. Capterra is a software review site openly viewable by the public where reviews are posted by real buyers and validated. Vendors cannot influence these reviews in any way.

 

1. DaySmart Vet (Formerly Vetter):

Pricing: Starting at $99 per month for one user and up to $399 per month for 15 users.

Capterra Rating: 4.6 stars out of 5.0

 

Pros: From inquiry to demonstration, DaySmart Vet stood out as an impressively intuitive and customizable product. The software was originally created for the brother of Vetter’s founder, a veterinarian. It most notably allows for live SOAP collaboration amongst users, meaning multiple people can work on one SOAP if the practice would like. The design is simple and modern. DaySmart Vet’s customer service is 24/7 and notoriously excellent across multiple practice review sources. Based on our research, the development team behind the platform is very responsive to client suggestions.

DaySmart Vet recently released their PetCare client-facing phone application which pet owners can use to schedule appointments, view medical records and invoices, and much more. The phone application is an additional $99/month for clinics. That being said, it’s the minor details about this program that excited us the most. From the automated cage card creation to the Google Maps interface for mobile practices, DaySmart Vet was clearly made with a high-level firsthand understanding of the veterinary industry. One significant highlight about this program is the lack of a contract requirement.

Cons: Some common complaints about DaySmart Vet include that its reminder system can be a bit difficult to use and that the program lacks substantial reporting capabilities.

2. NaVetor:

Pricing: Starting at $140 per month for 1-2 users and up to $500 for 31+ users.

Capterra Rating: 4.3 stars out of 5.0

 

Pros: NaVetor’s smooth integration with diagnostics companies like IDEXX and Petlink are a favorite amongst many clinics. The program’s developers are very receptive and have been known to implement customer suggestions into the product. Pricing is extremely attractive when compared to other options. The interface is attractive, modern, and cohesive from start to finish. NaVetor is impressively easy to navigate and its list of integrations are substantial and constantly growing. The company also consistently receives praise for its customer service.

Cons: Like many other PIMS options, NaVetor is click-heavy, and many other reviews seem to agree that there are at times too many steps to a single task such as processing payment for a customer. User interface is definitely geared more towards veterinarians and not technicians or other staff.

3. Covetrus Pulse (Formerly eVetPractice):

Pricing: Pricing varies based off many variables. We would recommend calling Covetrus Pulse so that they can provide pricing based off the specifics of your practice.

Capterra Rating: 4.2 stars out of 5.0

 

Pros: If you are looking for a PIMS option that has a massive number of features, then look no further. Covetrus Pulse puts all applications and integrations front and center in one place, saving you time and money. The program has a great task dashboard to improve organization and boost productivity. Covetrus Pulse is generally recognized as an approachable program that is friendly towards users who do not consider themselves tech-savvy. As a result, onboarding for this program is generally short and easy.

Cons: Many people have sited issues with the program’s practice management reporting function which can be complicated and a bit nonsensical. Additional comments include the sheer number of mouse-clicks it can sometimes take to work through tasks. Lastly, many users have cited a lack of customer-suggested edits.

4. Hippo Manager:

Pricing: Starting at $119 per month for 1 user.

Capterra Rating: 4.0 stars out of 5.0

 

Pros: Hippo Manager is reportedly easy to learn and gets a lot of love from clinics for that reason. If you are easily overwhelmed by the other PIMS out there, this may be the software for you. Their tech support is also quite popular according to many verified reviews. If you checked out Hippo Manager sometime in the past, it may be worth revisiting as the program is constantly being updated.

Cons: Unfortunately, Hippo Manager’s team has put new subscriptions on pause for the remainder of the year as they are transitioning into Hippo 2.0. Like many others, Hippo Manager’s reporting capabilities have been frequently cited as an area that could use improvement.

 

5. Rhapsody:

Pricing: One-time fee of $300 per payment terminal and $1,000 for data migration. Then, a per transaction fee from 1.39%-2.69% depending on the payment method.

Capterra Rating: 5.0 stars out of 5.0

 

Pros: Rhapsody is lesser known but does have some great features, and has been recently implemented into hundreds of NVA practices. This PIMS program does not utilize tabs, making browsing much less cluttered. The program is easy to set up, and the company boasts it has gotten practices up and running in just 48 hours. Rhapsody is constantly producing updates to improve the product, so if you have an issue or suggestion there is a higher chance that it will be addressed. Rhapsody launched in 2019 but has the lowest number of negative reviews. Rhapsody also has an add-on application called Boop, which integrates with Zoom for telemedicine. Our favorite feature from rhapsody is its check-in kiosk function. Through Rhapsody’s check-in software, customers can confirm they are ready for their appointment, fill out any necessary paperwork, confirm account information, and much more. This lightens the load for your front desk team.

Cons: Their customer support team is not 24/7 yet, so if you have overnight services you may need to look elsewhere. The program also does not have a color-coding system, which can be problematic for clinics that typically like to color-code. The program also used to have notable connectivity issues, although, those have reportedly been fixed.

 

Return on Investment (ROI):

Almost all veterinary PIMS options have substantial features, but they are not helpful in your day-to-day service if practices do not know how to use them. It’s important to put the features you are paying for to work in order to maximize your investment. A study done in 2021 where an entire clinical staff was trained in the software proved that the right PIMS can help boost productivity through automation, and operational efficiency was boosted by 46%.5

 

Conclusion:

The vast majority of veterinary PIMS programs on the market today have the same key features such as inventory tracking, electronic medical records, reporting and analytics, invoices and accounting, and appointment scheduling. The key to selecting your program is determining which product and seller are a good fit for your unique practice. Implementing a new PIMS system is a commitment, from the financial investment itself to the time spent onboarding your staff, so it’s important to partner up with the right seller-product combo. Make sure you figure out your specific priorities and then do your homework. You should also be ready to test drive every PIMS program that interests you. Demonstrations are great for a quick introduction, but familiarizing yourself through actual interaction will make a huge difference in understanding the product itself and making the best choice.

 

References:

  1. Kiradoo, G. (2021). Analysis of Influential Role of Digital Transformation in Enhancing Effective Business Management and Operations. Turkish Journal of Physiotherapy Rehabilitation, 32(2), 557-560.
  2. Zhang, S. (2022, July 6). The Great Veterinary Shortage. The Atlantic. Retrieved November 12, 2022, from https://www.theatlantic.com/health/archive/2022/07/not-enough-veterinarians-animals/661497/
  3. (2022, August 26). The ultimate list of veterinary software with a downloadable checklist. Vetstoria. Retrieved November 12, 2022, from https://www.vetstoria.com/blog/the-ultimate-list-of-veterinary-software/
  4. Larkin, M. (2020, December 3). Pivot or perish: Veterinary leaders talk industry trends. American Veterinary Medical Association. Retrieved November 12, 2022, from https://www.avma.org/javma-news/2020-12-15/pivot-or-perish-veterinary-leaders-talk-industry-trends
  5. Veterinary Practice Management System Development. Rishabh Software. (2021, June 15). Retrieved November 14, 2022, from https://www.rishabhsoft.com/blog/veterinary-practice-management-software-development

 

Considering a Practice Sale to Corporate: Helpful Tips to Prepare for the Process Volume 1 – Are You Ready to Sell?

Considering a Practice Sale to Corporate:
Helpful Tips to Prepare for the Process

Volume 1 – Are You Ready to Sell?

Veterinary Business Advisors, Inc.

Many young veterinarians have a clear vision that one day they will become a practice owner. What they may not plan for, is what will happen later in life, when they are older and in need of an exit strategy. Ownership consumes a great deal of time and energy at a level that can be difficult to maintain year after year. Many veterinarians reach a point in their career when they are ready for a change. They have been working their tail off at their practice for the past 15, 25, or even 30 years, and they are getting burned out. Some owners are ready to retire from veterinary medicine altogether. Others may want to continue working, but they are tired of the business responsibilities and just want to focus on practicing medicine.

There are also practice owners who had plans that did not pan out. Some may have intended to pass on their practice to a son or daughter, but that child grew up to live out a unique dream of their own. Others were hoping that one of their associates would be interested in buying, but not everyone wants that kind of responsibility or the burden of a business loan. Some owners work with a broker to find a private buyer and that can lead to a successful sale, but they may be leaving money on the table. An alternative that is becoming more and more commonly attainable to all of these owners is the acquisition of their business by a corporate consolidator. The purchase prices on corporate transactions tend to be much higher than many sellers ever dreamt of receiving.

Things to Consider

There are many things to consider when entertaining the sale of a business and this applies to the veterinary industry as well. For starters, you should realize how time-consuming the sale of a business can be, especially if you are bidding to multiple corporate buyers, and consider whether you have that kind of time and energy.

Consider the following questions:

  • How much free time would you have over the course of a week to correspond with prospective buyers via email, phone calls, video meetings or in-person/onsite meetings?
  • Are you ready to take the leap now, or will you have more free time in another 3 months when your associate returns from maternity leave or when that new hire gets onboarded?

There are numerous financial documents to be located, organized, and sent for review before a buyer is willing to show you the money! The last thing you want is to hook a buyer’s interest but then be unable to deliver and have them walk away.

Additionally, you should take a look at your numbers. If you’ve recently lost a doctor and your production reports are showing a drop in revenue, then now may not be a good time to sell. If your COGs are suddenly way up, or your payroll expense is higher than most practices, these are things that are not going to look good on paper when the financial analysts begin crunching your numbers. It may be worth consulting with a CPA or a financial advisor with veterinary expertise to find ways to make your practice more profitable and “clean up your books” before you put it on the market.

In order to sell the assets of your practice, you will also need to confirm that the business entity that owns it is in good standing. Similar to how you need a clean title in order to sell your car, the same applies to selling your veterinary practice. Many owners are not aware of their state’s corporate law requirements such as filing an annual report for an LLC entity or holding annual meetings for a corporation. If you have not been keeping records properly over the years, then you should work with a corporate attorney to bring your business entity into compliance before moving forward.

If you own your facility, the same applies for the landlord entity that owns your real estate. It should also have the required documentation on file. After the sale, that entity will become the landlord of the corporate buyer (unless you plan to sell the real estate at the same time as the practice sale).

The A-Team

Once you decide that you are ready to move forward with the sale, you will need to bring in a team of professionals to help you minimize your risk and get to the finish line. There are various transaction documents that will need to be reviewed. You will be making representations about your practice in those documents and you should have a legal professional explain them to you.  It would be ideal to speak with a consultant who has expertise within the veterinary industry to determine if the terms of your sale are in-line with the current industry standards. This includes the purchase price, the terms of the facility lease (if owned) and the terms of your employment agreement with the buyer. The other thing to consider is whether the level of risk for you as the seller in those documents is what is typical and acceptable for a veterinary practice sale.

As mentioned earlier, your team should include a local attorney. If your practice is owned by a corporation or an LLC entity, the attorney should confirm that all of your corporate documents are in full compliance. If you own the practice facility personally, you may want to discuss the idea of transferring that ownership to an LLC entity to lower your personal risk before entering into a lease agreement with the corporate buyer. The local attorney can also review your transaction documents to confirm they are compliant with your state’s employment and real estate laws.

A tax accountant will be needed to review the financial and tax sections of the purchase agreement, to allocate the purchase price, and to pay the taxes associated with the sale. A financial advisor is also helpful to have on hand when you receive the funds from the sale to determine where you want to move the large lump sum. Additionally, if you are considering a rollover investment with the buyer, you will want to consult with a financial advisor on those documents.

Conclusion

Before moving forward with the corporate acquisition process, have a team of professionals ready to help you get the best sale terms possible and minimize your risk. Set aside time to devote to the process and give some thought as to what you want to do after the sale and how a non-compete could affect your future. A little preparation and organization will go a long way as you begin the next chapter of your professional (or retired) life. 

This article is the first in a four part series. Next month, we will talk about the various corporate buyers and how to determine which could be interested in your veterinary practice.

Client Service Representative Etiquette

Client Service Representative Etiquette

Veterinary Business Advisors, Inc.

 

Abstract

Being the first impression of a clinic to clients, there is no doubt that client service representatives (CSRs) play an integral role in the logistical function of clinics. In addition to that role, CSRs are also the liaison between the client and the main medical staff. Consequently, veterinary CSRs are more strategically involved with patient care than clients or even some veterinary staff realize. This creates a need for a guide towards CSR etiquette. Who should be selected for the position and how should they be trained during their time at a veterinary clinic in order to optimize their position in patient care, client education, and positive veterinary visits for both the patient and the client.

Introduction

A basic and typical veterinary practice operates with four main roles – management, veterinarians, veterinary technicians, and client services representatives (CSR). Other roles such as kennel staff, grooming, contractors, etc. depends on additional functions a practice might integrate. While much attention and training are focused on the medical staff, CSRs are often forgotten in the crucial role they play in a client’s and patient’s veterinary experience. Considering they are often the first people in contact with a client during either appointment scheduling/walk-in and the last to bid a client goodbye after checking out, they are an integral piece in the process of client communication and patient triage. By focusing more resources and time in CSR hiring, training and follow through, veterinary clinics can practice better medicine, enhance practice efficiency, and cater a more pleasant client experience. In these sections, we will primarily focus on recruiting high-quality candidates and their subsequent training in order to operate in tangent with the medical staff on patient care.

CSR Roles and Their Importance

  1. CSR Roles and Duties

At the fundamental level, CSRs are expected to answer communications to the clinic (phone, email, social media, etc.), schedule appointments, handle billing, provide basic veterinary education, and maintain the appearance/order for the reception area. Through these roles, CSRs are the first to meet a client and their pet and “create the critically important first impression” for the practice. While their job description might sound simple, CSR’s roles are wildly more impactful to a practice than a typical reception position.

  1. Patient Care and Follow Through

CSRs are the first to triage a patient whether an owner calls the clinic or walks through the door. Asking the right questions and visually gauging a patient’s condition skillfully is imperative in assessing the urgency of that patient’s needs. By accurately fielding that patient to the correct medical professional and/or scheduling the patient accordingly trickles down to the type of medical care that patient receives. This role is especially important for clinics that expect any level of emergencies to come in.

CSRs are also important for patient follow through so that sick patients receive the attention they need. Not all clients are aware of the value of rechecks, so CSRs play a role in client education along side the veterinarian and technicians. As a result of the impact they have on patient care, CSRs should have basic medical knowledge as well as training to reflect the types of situations they might encounter.

  1. Practice Efficiency

CSRs manage the flow of the clinic through scheduling and managing the front desk area. By ensuring the schedule is reasonable without situations such as uneven distribution of patients among doctors, excessive overbooking, and correct time allotment for appointments (wellness vs. sick vs. specialty treatments), the day flows much better. This plays a role in creating a better working environment for the clinic staff as well as imparting a better experience for the client and patient. Having hectic days might give the client the impression that this clinic is disorganized. It can also add to the stress of an already stressed-out patient making delivering patient care more difficult.

  1. Building Client Relationships

CSRs are integral in earning trust and loyalty from clients through conveying a desire to help and engaging with the clients during scheduling and check-out. Just by making an effort to connect with the client during phone scheduling and check-in can make a huge difference as the client feels valued and that their pet is treated as an individual as opposed to one in thousands of patients the hospital helps. Leaving that personal touch helps create goodwill.

The Hiring Process

  1. Who makes the best candidates?

Usually, employers think people with veterinary experiences will make the best CSRs since they already have an understanding on how clinics functions and even some basic medical knowledge. However, think about the bulk of a CSR’s job – it is costumer service wrapped neatly with a lot of multi-tasking and organization. To hire the best candidate for the position, clinics must look for the candidates with adequate experiences in those areas. Previous experiences such as working in restaurants, fast food, being a flight attendant, etc. are helping. People who have worked these jobs understand how to work with various personalities, multi-task, and maintain an positive attitude. The knowledge base details can be imparted through training. It is easy to teach someone all the options for heartworm control, but it is not easy to teach someone how to maintain a calm front desk area with two phones ringing and clients waiting to be helped.

  1. The hiring process before the interview

This process should look very similar to how other positions are recruited; however, it is important to go through the steps thoroughly. Create of list of skills and characteristics that are of value to you and your practice and separate them into “must-haves” and “nice-to-haves”. Pay special attention to phone screens even if it is just calling them to schedule an interview. Based on how they conduct themselves over the phone and/or what their voicemail sounds like can say a lot about a candidate. This is especially since they will be spending much of their time on the phone with clients. If you leave a message, their promptness in returning your call can also be an indicator of professionalism although this should not be read into too carefully if the overall candidate is spectacular. Be sure to check references as they can be the best way to gauge your candidate from someone else’s experience working with them. It is a step that is commonly skipped but can add value to your hiring process. While it might take time to call managers, it will ultimately save time since less hours are spent interviewing lackluster candidates or hiring someone who is not a good fit.

  1. What questions should you ask during the interview?

Since hiring might take place out of industry, it is important to gauge the candidate’s willingness to work with animals, medicine, and all the comes with veterinary medicine. Asking a simple question such as “why do you want to work in an animal-care facility?” can tell you a lot about if the person sitting across from you truly loves animals. On the extreme end, it is important to know that this person is emotionally equipped to handle euthanasia. Gauging their experience is important as CSRs are part of the team who consoles an owner after they lose their pet. If they personally have not experienced euthanasia but are ethically in-line and willing to take on the consoling role, then this candidate has a good foundation after some experiences and training. One basic question is asking what their opinion on euthanasia is.

Next, are the technical questions. CSRs should be proficient with the computer, phone, and be able to learn how to operate equipment such as printers, fax machines, and various newer technologies such as headsets, etc. The bottom line is that they should be able to handle technology, be able to multitask between them, and learn new technology. Simply asking about their experience with these modalities can elucidate useful information. Additionally, CSRs sometimes hold a social media role in some practices. If this is the case for your practice, asking if they are familiar with popular platforms such as Instagram, Facebook, and YouTube.

Arguably the most important are the soft skills. Examples include being multitasker, organized, compassionate, understanding how to de-escalate situations, prioritization of tasks, etc. The best way to gauge these skills are experience questions (“Tell me about a time…”) and case scenarios (“How would you respond if…”). You might want to gauge how they would handle an angry client, a person in need of accommodations, non-English speakers, clients with financial difficulties, etc.

Lastly, seeing how the candidate presents themselves during an interview can be the most telling portion. Do they make eye contact? Do they speak well? Do they smile? How did they greet you and your staff? These are all representative to how they will interact with your clients in the future. Once you have hired someone who will excel at being the face of your practice, next is training them to be able to contribute to patient care.

CSR Training: Patient Triage

  1. Emergency calls

Whether triage is done over the phone or in-person, the CSRs primary job is to first differentiate a true emergency from something that can wait. If any of the following situations are mentioned, the client should bring the pet to the closest emergency room immediately:

  • Non-stop bleeding
  • Difficulty breathing
  • Severe vomiting/diarrhea
  • Toxin exposure
  • Seizures, altered mental status, or collapse with noticeable behavioral change afterwards or inability to stand-up
  • Inability to urinate
  • Severe pain
  • Ingestion of inedible foreign material followed by vomiting, constipation/diarrhea, lethargy and/or pain

If the situation has been determined to be non-immediate, more time can be taken to gather information about the patient and their situations. It is important to note that it is not the CSR’s job to diagnose the disease; therefore, communication should be strictly information gathering. Important information include:

  • Patient signalment (species, age, sex, breed, reproductive status)
  • When did the symptoms start and how long have then been going on for?
  • How is the pet doing in terms of eating, drinking, urination, defecation, and behavior?

It is important to ask open-ended questions. Simply starting off with the question “tell me what’s going on” can help get a good preliminary view of the situation. More specific questions can be asked when the exact problem is known and as CSRs gain medical experience to know what questions are helpful to ask. Once all the information is gathered, an experienced technician or a doctor should make the judgement call of how urgently the patient should be seen. However, at the end of the day, a physical examination by a veterinarian should always be offered.

Patient triage for a CSR can be very similar to a technician taking a history. This is especially true if all the technicians are busy, but a client/patient is in distress and needs help quickly. This provides an opportunity of team building where technicians and CSRs can be trained together or an experienced technician can train CSRs. As a part of this training, new CSRs should have the opportunity to observe a technician or doctor take a history from a client to understand what to ask and how to ask.

  1. Sick appointment visits

CSRs can contribute to medical care of sick patients by identifying potential infectious diseases. Animals that observed to be coughing, sneezing, and puppies with diarrhea should be place in a room immediately to prevent spread in the lobby. Before the appointment, sick patients can be triaged similarly to emergency visits to ensure there is not something going on that the owner is not aware of.

  1. Wellness appointment visits

Annuals and semi-annuals do not require so much patient triage for CSRs; however, it is important that clients are made aware to bring/send records if the practice does not already have them. This will greatly expediate appointments.

CSR Training: Client Education  

Client education does not just happen in the exam rooms. They happen when the client makes the first call. CSRs are in the unique position to communicate the value of veterinary physical exams and diagnostics. Spending a few extra friendly minutes with a new client can ensure a booking a potential lifelong patient. Even better, if the owner mentions that their pet is anxious during veterinary visits, this is their first vet visit, their pet is animal/people aggressive, or any other information, the CSRs can provide guidance in catering the most stress-free visit possible.

After the appointment is finished and the client is checking out, CSRs have the opportunity to schedule the client’s next exam. This is a chance to communicate how important yearly visits or rechecks are. Unbelievably, clients tend to confide in CSRs asking if the diets, medications, or overall treatment plans really work or ask them questions they were too shy to ask the medical team. Having basic medical knowledge can go a long way in educating the client when the veterinarian or technician is not even in the room. The added benefit is that the CSRs can most easily relay the information in layman’s terms. While veterinarians and technicians are trained to communicate well with clients, jargon tends to slip out especially if appointments are rushed and overbooked.

Working as a Team

With CSRs being in the front of the house and technicians and doctors being in the back of the house, there is literal physical distance between the two teams. Additionally, some clinics might be familiar with frustrations CSRs and technicians might have with each other that ultimately stems from miscommunication. This begs the question of how the teams can work together?

Medical training for CSRs

One common complaint technicians often have is that CSRs rely too heavily on the medical team to answer simple questions or that something was done incorrectly because of a lack of medical knowledge. While it is unreasonable to expect CSRs to be as medically knowledgeable as technicians, increasing the staff’s overall medical competencies will only help patient care and client education. Therefore, CSRs should sit in on technician training, be offered CE opportunities, as well as have opportunities to train as a technician if they decide they want to be more involved with patient care. This allows for mobility within the clinic and help cater to individual future career goals (technician/veterinary school). Veterinarians often bring a head technician with them to conferences in hopes that this technician will be able to train the rest of the team. CSRs should be treated in the same way so the entire front staff can grow together.

Technology

Living in the twenty first century with millennials quickly becoming the main workforce, technology cannot be ignored. Often when there is disagreement or discord, it is due to a lack of communication. With widely available and relatively cheap cost for Bluetooth earpieces and walkie talkies, the front and the back staff can easily communicate without having to walk back and forth which takes time and energy. Anyone can contact any one person or everyone in a certain area to ask a question, ask for help, or give updates. Additionally, computer systems like Instinct which tracks inpatient care helps everyone understand how a patient is doing, what treatments have been done, as well as updates. CSRs can simply search this information from a computer as opposed to doing the dance of finding an available technician. Team members can leave notes to each other as well through this software.

CSRs in Telemedicine

Telemedicine is certainly gaining more traction, especially after a historic pandemic. Even as society moves back to normal, some trends from 2020 are left to stay, and this includes the ability to provide more services via an online format. Especially since millennials are quickly becoming the largest market, virtual care is in demand.

While telemedicine is new to the veterinary field, CSRs can help facilitate its process. Luckily, from a CSR’s standpoint not much is different from in-person care. CSRs will need to be diligent in their organization in knowing which appointments are telemedicine and which appointments are in-person. Which telemedicine appointments are for a technician and which appointments are for doctors? This is especially important since they will be responsible for sending out information regarding how the client can log in and what materials/information they should prepare. After the practitioner and client is finish with the appointment, it is the CSRs job to handle payment. The easiest way to handle this is to ask the client to provide a credit card ahead of time. This effectively “cuts the middle man out” by allowing the practitioner and client to join the call and leave the call without needing CSR involvement unless another appointments needs to be scheduled.

References

  1. Conrad, B. C. (2017, October 18). How to hire, train receptionists better. DVM 360. https://www.dvm360.com/view/how-hire-train-receptionists-better
  2. Donnelly, A. (2021, June). The Gift of Gab. Today’s Veterinary Business. https://todaysveterinarybusiness.com/csr-communications-training/
  3. Donnelly, A. D. L. (2016, December 29). Three Ways Client Service Representatives Can Build Client Loyalty. DVM 360. https://www.dvm360.com/view/three-ways-client-service-representatives-can-build-client-loyalty
  4. Driesse, Jess. Personal Communication (2021)
  5. Ekola, K. (2021, June 15). 5 Steps to Improving Veterinary CSR Efficiency. Vet2Pet. https://vet2pet.com/2021/04/5-steps-to-improving-veterinary-csr-efficiency/
  6. Felsted, K. F. (n.d.). Critical Aspects of Effective Hiring. Today’s Veterinary Practice. Retrieved June 18, 2021, from https://todaysveterinarypractice.com/practice-building-critical-aspects-of-effective-hiring/
  7. Frederick, C. E. (2014, October). The Art of Telephone Triage. Clinician’s Brief. https://www.cliniciansbrief.com/article/art-telephone-triage
  8. JOB DESCRIPTION for Customer Service Representative (CSR) . Manchester Veterinary Clinic . (n.d.). https://www.manchestervetclinic.com/sites/site-6369/documents/CSR%20MVC%20Job%20Description.pdf.
  9. Miller, L. R. J. (2005, April 19). Simple forms can help train new hires. DVM 360. https://www.dvm360.com/view/simple-forms-can-help-train-new-hires
  10. Rowe, R. C. (2020, April 28). A starting guide for new receptionists. DVM 360. https://www.dvm360.com/view/starting-guide-new-receptionists
  11. Stafford, D. (n.d.). Emergency and Critical Care – Receptionist tips. VSPN. Retrieved June 18, 2021, from http://www.vspn.org/Library/Misc/VSPN_M02367.htm
  12. Veterinary Practice News Editors. (2017, July 24). 7 Interview Questions for Veterinary Receptionists. Veterinary Practice News. https://www.veterinarypracticenews.com/7-interview-questions-for-veterinary-receptionists/
  13. Veterinary receptionists: Anticipate clients whens, whys, and hows. (2016, June 8). DVM 360. https://www.dvm360.com/view/veterinary-receptionists-anticipate-clients-whens-whys-and-hows
  14. Veterinary receptionists’ vital role in emergency medicine. (2018, November 20). DVM 360. https://www.dvm360.com/view/veterinary-receptionists-vital-role-emergency-medicine

Sharing The Windfall

Sharing The Windfall

Veterinary Business Advisors, Inc.

In today’s landscape of veterinary practice sales, corporate acquisitions are far outnumbering private sales. One major reason for this is that the dollar amounts of corporate buyout offers greatly exceed those of any associate or other private interest buyers, often yielding a cash windfall to the seller. The associate veterinarians who remain at the practice, though, typically receive no supplementary compensation of any sort, and any previous hopes that an associate may have had of buying the practice are off the table. An argument can be made, then, that these associates accordingly deserve a new signing bonus. This session aims to decide upon an appropriate value for such an associate’s hypothetical signing bonus offer.

In the current arena of veterinary practice sales, it is impossible to ignore the intense interest in practice consolidation by corporate entities, but it should be noted that this trend is not brand new. Corporations have owned veterinary practices for over 30 years, tracing back to when VCA Animal Hospitals first bought a small animal practice in 1987. Other corporate entities eventually caught on, as VCA’s success led to the formation of several regional and national chains, such as Banfield, NVA, and VetCor. Analysts now place the number of corporate veterinary practice groups at over 40 and growing. In just the last three years, though, the landscape has drastically changed. Multi-billion-dollar deals are not unheard of, such as Mars, Inc. purchasing VCA for $7.7 billion in 2017, or the very recent purchase of Compassion First Pet Hospitals by JAB, Ltd. for $1.22 billion. As another factor to consider, private equity firms, which see veterinary practices as relatively safe investments, are now funding many of the acquisitions by corporate groups.

According to the 2017 AVMA Report on the Market for Veterinary Services, the number of small animal veterinary practices in the USA ranges from 28,000 to 32,000. Brakke Consulting estimated in 2017 that about 3,500 practices were owned by corporations.  Companies own roughly 10 percent of all general companion animal practices and 40 to 50 percent of all referral practices. John Volk, an analyst with Brakke, explains, “What happens is a larger company comes in and buys up the smaller companies and builds a bigger firm.” This is called “roll-up,” a common business strategy applied to many industries made up of multiple, small, independently-owned companies, and has become the new model for veterinary practice sales.

Contrast that with the traditional model for practice sales, in which an owner sells to one of his or her associate veterinarians, likely groomed from day one to eventually take the reins, or where the owner might sell the practice to another veterinarian who was not employed by that practice. Either way, that is no longer the case for most small animal practices. Owners have now found themselves in a seller’s market, where large corporations will pay top dollar for a thriving practice, with corporate windfall offers typically vastly exceeding those of any associate or other private interest buyers. A windfall is defined as “a piece of unexpected good fortune, typically one that involves receiving a large amount of money,” with synonyms being a bonanza or jackpot, or pennies from heaven. Corporations, now routinely providing such payouts to sellers in nearly unbelievable but carefully calculated offers, are doing so for the following reason: a corporation is ready and able to take a hit on a practice’s purchase price as long as its long-term profitability and growth prospects appear satisfactory. Many veterinarians have made a fortune out of their practices this way, often making two to three times what they would have made by selling to an associate. It can be hard to refuse a corporate buyout when the seller has offered such terms. Plus, a corporation can buy almost immediately, typically with a cashier’s check for the full purchase price in pocket, versus associates for whom the seller will very likely have to finance some or all of the purchase themselves, and for a fraction of the corporate purchase price.

Now we return to the subject of associate veterinarians. Although circumstances differ in each sale, one cannot deny that a significant reason that corporations are offering large cash windfalls is often the presence of the associate veterinarians. Corporations want to buy thriving practices that are operational from day one of purchase, with veterinary and support staff in place. A veterinary practice does not exist without veterinarians, and buyers generally have no intention of replacing associates. Furthermore, associate veterinarians usually do not wish to leave when practice ownership changes hands.

Here’s another reason why associate veterinarians are typically off the playing field. The typical associate sometimes cannot afford to be a practice owner. This often stems from the mass amount of veterinary student debt that they have accumulated and may be paying off for many years. According to results from the AVMA’s 2015 annual survey of senior veterinary students, of those students who graduated from the 28 US colleges and schools of veterinary medicine, 89% had educational debt at the time of graduation, with average debt for veterinary students being $142,394. Approximately 68% of the 2015 graduates had debt between $50,000 and $221,000, with 5% having debt greater than $300,000.

These are staggering figures, but what may be even more disturbing is the discrepancy in associate veterinary wage increases versus their debt. The current debt load of veterinarians is rising by $4,900 per year while average salaries are only rising by $700 per year. In 2017, $76,130 was the average salary for a veterinarian, while the mean debt was $141,000. This rising debt-to-income level is unsustainable and is one of the major factors making this profession less attractive than in the past. In fact, a recent Merck veterinary wellbeing study showed that only 41% of veterinarians overall and only 24% of veterinarians younger than 34 years old would recommend pursuing a career in veterinary medicine, citing that student debt coupled with low income was the top concern contributing to emotional stress. Furthermore, between standard and extended loan repayment plans, veterinarians on the average spend 15 to 20 years paying off their student debt. Hence, it is increasingly difficult for an associate to qualify for lending from a bank in order to compete with a corporation on a purchase price, with very little chance for the associate to be able to match the cash windfall offered by a corporation.

In this current climate, it is easy to see why so many practices are sold to corporations. But, while the seller receives the cash windfall for the sale, the remaining associates typically receive no supplementary compensation of any sort—the same associates who often helped to build the practice and who are integral for its revenue, often contributing 30% or more to the overall practice gross. This begs the question, then: Is it not fair for the associate veterinarians to share the windfall?

As stated, the corporation is buying a thriving practice, one not possible to operate at a similar capacity in the absence of associates. So, as an industry, should we not be sharing some of the profit from sales with the associates whom are so integral to the sale itself? Upon practice sale closure, associates are terminated by the original employer and then typically rehired by the new owner. An argument can be made that the associate accordingly deserves a new signing bonus, as they are technically a new hire and should be incentivized towards employment.

In order to decide upon an appropriate value for an associate’s hypothetical signing bonus offer, one could develop a calculation based on actual numbers. The prototype calculation herein requires basic information regarding time and revenue, including the following factors: the number of years the associate has worked for the practice (a minimum of five years of employment), the number of years the seller has owned the practice, the associate’s average gross revenue over the last five years, and the practice’s current gross revenue. With this information, we establish the Employee Leverage Factor (ELF), a figure which, when applied to the purchase price, yields the appropriate signing bonus. The calculation is as follows:

If, for example, an employee has been working for ten years at a practice that has been under current ownership for 35 years, and over those last ten years the employee has been bringing in an average of $700k while the practice brings in $2.1M, the equation would follow as such:

If the practice sold for $4.5M:

In this example, the seller still nets $3,620,000.00, cash in hand, over 1.7 times the gross of the practice.

Thus, we have established a fair and reproducible calculation of an offer that reflects the associate’s contribution to the “windfall” price received by the seller. The calculation should only apply in the case of a major windfall, in our estimates at least 1.5 x gross revenue and all cash. The calculation could be adjusted as the seller sees fit but, as it stands, it is a fair representation of contribution. It is based on the associate’s average gross revenue over five years, and also only applies if the associate has worked at least five years. So, if they have worked 5.5 years, but did not gross nearly as much in the first two years, those initial lower numbers are factored in. For example, if that associate had an average gross of $400k:

If the associate had worked for ten years, as in the first example, it is justified that the signing bonus offer is greater because that associate likely helped significantly more in building the practice, contributed more to the practice’s gross revenue, and thus made the package more appealing to the corporate buyer.

But, should there be a factor that weighs the windfall itself? The previous examples are based on a flat payout in a high windfall. But, if the windfall is of a lesser amount, then the associate’s share should be weighted as less, accordingly. If we use a maximum sale price as 3x the practice gross, we can incorporate a factor that includes the actual sale price over max gross, thus weighing the windfall.

The seller still nets $3,000,375.00 after receiving a lesser windfall for the sale.

A large share of the windfall could be enough to make the associate take the money and run, leaving the practice high and dry. To offset those odds, the signing bonus could be offered instead as a retention bonus, with part of the sum paid up front to the associate and the remainder paid over the agreed length of employment. Or, keeping in mind the high amount of student debt that most associates have, the calculated bonus can in whole or partially be assigned towards debt payoff. Thus, sharing the windfall would secure loyalty and stability for the future of both the associate veterinarian and the practice itself, meriting strong consideration.

The signing bonus offer would come out of the purchase price, and hence may not appeal to the seller. But we must remember that the long-term associates who would benefit from this process are the same ones who helped to build the practice to its current capacity, potentially contributed a high percentage to the practice’s gross revenue, and made the package more appealing to the corporate buyer, thus contributing to the windfall itself.

Without such a bonus, the associate otherwise gets nothing out of the deal. In their eyes, their future with the corporation is uncertain. They may have a new or broader non-compete agreement. They may not have wanted to work for a corporation at all. Furthermore, when they inevitably find out the size of the seller’s windfall, they may feel cheated after putting so much time and effort into the practice and getting no reward. This negative outlook may be compounded tremendously if they had otherwise hoped to someday buy or buy into practice ownership, with this disappointment added on top of the debt and stress they are likely already under. We also cannot disregard the real and unfortunate rise in the suicide rate among veterinarians in the face of issues such as emotional stress, debt, and compassion fatigue. That is the world in which the associate veterinarian lives in. We must therefore ask ourselves, is it moral as an industry to not include our associates in the windfall from corporate sales?

While the corporate consolidation trend will inevitably slow down, it is currently encompassing the world of veterinary practice sales, far and wide. As industry leaders, we must bear in mind the circumstances of many of our peers as associate veterinarians and the effects that our decisions to sell to corporate entities may have on them. The concept and application of sharing the windfall via the associate veterinarian signing bonus would secure a high degree of financial and thus psychological stability in the associate. Furthermore, it would create security for the future of the practice itself through the loyalty it instills in the associate, ensuring that they feel appreciated as the assets that they truly are.

References:

  1. Davidow, B. Who is Buying Veterinary Hospitals? The Veterinary Idealist. Mar 2018. https://vetidealist.com/who-is-buying-veterinary-hospitals-update/
  2. Veterinary practice trends webinar highlights further industry consolidation. Veterinary Practice News. Aug 2018. https://www.veterinarypracticenews.com/veterinary-practice-trends-webinar-highlights-further-industry-consolidation/
  3. Larkin, M. Who’s buying? Who’s selling? Journal of the American Veterinary Medical Association. Oct 2014. https://www.avma.org/News/JAVMANews/Pages/141015a.aspx
  4. Allen, C.J. Consolidation nation: Why veterinarians who hate corporate ownership end up selling out. DVM360 Magazine. Jan 2018. http://veterinarynews.dvm360.com/consolidation-nation-why-veterinarians-who-hate-corporate-ownership-end-selling-out
  5. Nolen, R.A. The corporatization of veterinary medicine. Journal of the American Veterinary Medical Association. Dec 2018. https://www.avma.org/News/JAVMANews/Pages/181201a.aspx
  6. Harrell, J. Fishing for acquisitions: 12 things corporations look for in a veterinary practice. DVM360 Magazine. Apr 2017. http://veterinarynews.dvm360.com/fishing-acquisitions-12-things-corporations-look-veterinary-practice?pageID=2
  7. Salzeider, K. 17 differences between selling to a corporation and an associate. Mar. 2017. http://veterinarybusiness.dvm360.com/17-differences-between-selling-corporation-and-associate
  8. Felsted, K. How to sell to an associate for a corporate price. Veterinary Economics. Aug 2017. http://veterinarybusiness.dvm360.com/print/450884?page=full
  9. King, D. Selling Your Practice – Private vs Corporate. Simmons Veterinary Practice Sales & Appraisals. https://simmonsinc.com/wp-content/uploads/2017/11/Selling-Your-Practice-_-King.pdf
  10. Davidow, B. Thoughts on Rising Veterinary Debt: In-state and out-of-state tuition. The Veterinary Idealist. Oct 2018. https://vetidealist.com/veterinary-debt-and-tuition/
  11. Bain, B., Dicks, M.R. Are veterinary students accumulating unreasonable amounts of debt? Journal of the American Veterinary Medical Association. Aug 2016. https://avmajournals.avma.org/doi/full/10.2460/javma.249.3.285
  12. Williams, R.B., Benson, A., Bain, B., Dicks, M.R. Factors affecting student load debt accrued by graduates of US veterinary medical colleges. AgEcon Search. Feb 2016. https://ageconsearch.umn.edu/record/229834/
  13. Verdon, D. Debt crisis looms for veterinary students. DVM 360 Magazine. Oct 2011. http://veterinarynews.dvm360.com/debt-crisis-looms-veterinary-students
  14. 14. Fender, K.R. Merck study: Veterinarians have normal mental health but poor well-being. DVM360 Magazine. Feb 2018. http://veterinarynews.dvm360.com/merck-study-veterinarians-have-normal-mental-health-poor-well-being

 

Pay Raise Requests: How to Make Them and How to Respond

Pay Raise Requests: How to Make Them and How to Respond

Kellie G. Olah, SPHR, CVPM

 

Veterinary practices, like many other businesses, often award pay raises in connection with an annual employee review. It’s a logical time to do so since that’s when employers provide performance-related feedback to their employees.

As an employee, you may feel that you deserve a raise, even though it’s outside of the normal timeframe for your practice to award one—perhaps, for example, you’ve taken on extra duties during the pandemic. If so, how should you approach your supervisor? As a manager, how should you respond to such a request? This article takes a look at both sides of the equation.

 

Employees: Preparing to Ask

If you’ve decided to ask for a raise at a time when one typically isn’t awarded, then it’s important to be prepared. Make a list of accomplishments you’ve achieved, quantifying them whenever possible, and writing down how these accomplishments have benefited the practice. In other words, what is the business value of what you’ve done? If you’ve won any awards, received a letter of praise from a manager or customer, or otherwise gotten concrete evidence of your performance, gather that information together for when you ask for a raise.

It can help to have data on hand about the average wages of a person who is doing your job in your geographical area. Where does your paycheck fit in? If yours is less than the average amount, it may be easier to build your case for a raise than if yours already matches or exceeds that figure—but you can still share information about why you feel you’re worth the dollar figure you’re requesting if you feel your case is strong enough.

Ask to privately meet with the appropriate manager and practice how you’ll present your request. During the meeting, make it clear that you’re asking for a raise that goes beyond the one you’d typically receive during your annual performance review.

Be prepared for a range of responses from your manager and know how you would respond to each of them. If, as one example, your manager says that they would love to give you a raise, but it just isn’t financially feasible right now, ask what you would need to do to earn that raise and a date when this topic can be revisited.

 

Employers: How to Respond

As a manager, you may be taken aback when an employee asks for a raise during a time when your practice doesn’t typically give them. Perhaps you have the authority to make the decision or maybe you need to discuss it with a human resources manager. Whether you are surprised or not—and whether you have the authority to decide or not—the savvy response is typically the same. Ask for more information and avoid reacting immediately. Listen carefully and take down notes. Once you feel that you have enough information, it’s perfectly fine to ask to schedule a follow up conversion. In either case, thank the employee for bringing this information to your attention and remain pleasantly professional and neutral.

Then it’s time to evaluate the case that the employee has built for this request, as well as to talk to other people in the practice who would have input into this decision-making process. What is your practice’s policy, in general, on giving raises? If you don’t have a policy already created, how have such requests been handled in the past? Is your practice’s philosophy that you only give raises during a certain time of year or do you consider each request on its own merits?

Compare that person’s wages both internally and externally, and doublecheck data they’ve given you. This involves looking at where this employee falls on the practice’s payroll. Do they receive a wage that’s comparable with other people performing the same work and who have been at the practice for a similar amount of time?

It also involves verifying what this employee might receive at other practices in the same geographic area. Also consider how important it would be to retain this person at your practice.

In some instances, the answer may be clear. The person may not have demonstrated a good case to get a raise or their job position may not warrant a higher pay rate. Or it may be that the employee asking for the raise successfully took on a big special project but doesn’t necessarily perform at a higher rate, overall. In that case, a one-time bonus or extra time off could be a good compromise.

If, though, this employee has made a good case for a raise, it can make sense to pitch the idea to others in the practice who would need to approve the pay increase. In a sense, you’d be preparing for the ask in the same way that the employee did with you. During this conversation, you can also focus on the high costs of recruiting and training new employees, with a focus on not being penny wise but pound foolish.

 

Sticky Situations

Sometimes, the situation can get more complex. These can include the following:

  1. An employee threatens to quit if not given a raise
  2. You do give one employee an off cycle raise; other employees hear about it and they want one, too
  3. A star employee gets an offer from another practice

In the first scenario, an employee might literally threaten to quit (“If I don’t get this raise, I’ll need to leave”) or it may be implied (“The new practice in town pays more and they’re hiring”). If this happens, the process—at least at first—can be the same. Listen carefully to your employee’s request and then set up a follow up conversation, which gives you time to think about how to respond. Consider the merits of the employee’s request, as before.

This time, though, you may also want to consider whether this employee uses the “I’ll quit” card in general, as leverage, or if this may be a genuine statement from the employee—meaning that, if they don’t get a raise, they’ll financially need to find a job elsewhere. Does that change your decision?

Will this situation trigger a revision of your policies about raises, perhaps limiting them to a certain time annually? No matter what you decide, assume that other employees will hear about it, regardless of any company policies that require salaries to remain confidential. How will you handle the situation when other employees ask to also get a raise? There is no one size fits all solution. The idea, here, is to look beyond the specific request being made by a specific employee. Instead, place this employee’s request into an overall context of the practice and make decisions that make sense for all employees.

In the third scenario—one where an employee gets another job offer—was that employee job hunting or did the offer come, unsolicited? If your employees are being recruited, it may confirm to you that you have a great team without necessarily indicating that those employees are unhappy. In other cases, employees may be putting out feelers to see what they’re worth in the job market—and, in other situations, those employees may be dissatisfied in their current position.

If an employee asks if you would match an offer from another practice, it can help to determine if they really want to stay. If they are unhappy with aspects of your practice, they may well leave the next time they get a job offer. If they do want to stay, how valuable are they to your practice? How difficult would they be to replace? If you do give that particular employee a raise, what impact would that have on other employees? Again, no one right answer exists.

 

Sidebar: How to Deny a Raise Request

Sometimes, you’ll need to turn down a raise request from an employee. If so, set up a private meeting and then tactfully yet honestly get to the point. If there is a performance issue, share some specifics about how this employee could work towards getting the desired raise. If it’s a financial issue, say that. This isn’t a time to get into exhaustive detail. It is, however, an opportunity to encourage the employee, if possible, and let them know what you appreciate about them.

Through this process, you may discover holes in your practice’s policies about giving raises. If so, now is the time to fix them so that more clarity exists for everyone, going forward. If this process uncovers disparities (such as pay differences based on gender), then this is crucial to prioritize and address. Update your employee manual and share specifics.

 

Read the article originally posted in Today’s Veterinary Business HERE.