What Separates Veterinary Clinics XXXIV
Since the recession hit us a few years ago, I don’t think that there are too many veterinarians that haven’t been affected in one way or another. Profits are down and client numbers are down all across the country. This means that there are more veterinarians competing for less work. Will this affect prices? I believe so, since everyone has to stay competitive and some will have to lower their prices. The bottom line is that the clinics that watch their bottom line and stay profitable will continue on the road to success; however, the ones that just do business as is will fail. I predict that we will see veterinary clinics closing over the next few years and that is something that has not happened in the past.
When we start looking at expenses, there are only a few places where we can cut costs. Many of our expenses are fixed and the two variable ones that we can cut are payroll and inventory. Payroll is always a big one and I believe that most clinics are overstaffed. This is also the hardest area since we have to look at an individual and tell them that we have to let them go because we simply just don’t have the work. Whether we try to be tough or not, it is always hard to let people go. Someone’s life is affected when this happens. How about inventory? Is there any way to make cuts there? We looked at that a few years ago and we were running around 18-19% of our gross monthly in inventory. Most experts say to keep it around 18% so I felt like we were okay. However, I made a decision that I wanted to cut here first, so we cut our inventory down to 14%. We have stayed there for two years consistently and are not out of products that we need. We did over $3 million in our practice last year; therefore, a savings of 4% in inventory amounted to around a $120,000 savings in one year, without affecting any lives or our practice in a negative way.
I am sure many of you are saying that this is impossible. What we did is we decided on one type of heartworm and flea prevention each to carry. We had been working on this anyway, so it was an easy transition. To me it makes more sense if you tell your clients what to use and why rather than having a smorgasbord of products for them to choose from. Who is the expert, the veterinarians and staff or the client? The good news is that now distributors are willing to ship products directly to clients, so when we get that client that insists on a specific product that we do not have, we can have it directly shipped to their house for the same cost. We get the sale and no inventory. We also as a group of veterinarians decide on what antibiotics we will carry and don’t overlap on types. We only carry two antibiotics and the same with anti-inflammatory drugs. We limit our shampoos and food so that everyone understands our products better and that makes them much easier to sell. This has been an easy transition. Furthermore, with fewer products, there is less chance of an employee accidentally putting some in their pocket on the way out of the hospital. Would you rather let an employee go or have less inventory that is costing you money until it moves off of your shelf? Carry less and be the expert on the products you have and watch your bottom line grow.
