The AVMA-Pfizer Business Practices Study was released earlier this year and presented at the American Association of Swine Veterinarians annual meeting in Toronto.
The first comprehensive study of business practices among food animal veterinarians demonstrated that swine practitioners are at the top when it comes to both incomes and business sophistication.
Even so, the study showed, there is still considerable upside potential for veterinary incomes, and most veterinarians, including swine practitioners, could do better.
The AVMA-Pfizer Business Practices Study, released earlier this year and presented at the American Association of Swine Veterinarians (AASV) meeting in Toronto, reviewed the business practices of food animal, equine and companion animal veterinary clinics.
The objective was to identify the management behaviors most associated with financial success. The underlying goal was to identify business practices or behaviors that, once recognized and put into use by veterinarians, could lead to improved incomes.
The research was commissioned by the American Veterinary Medical Association (AVMA), and sponsored by Pfizer Animal Health. Pfizer, headquartered in New York, is the world"s largest marketer of animal health products and a major supplier to the swine industry.
The study demonstrated that regardless of the species focus of the veterinary business, the following three fundamental pillars are keys to financial success in veterinary medicine:
1. Personnel management.
2. Client relations.
3. Business/financial management.
Seven specific skills
Within these three categories are seven specific practices or skills that drive high personal incomes, the study found. They are:
1. Employee development.
2. New client development.
3. Client loyalty.
4. Business orientation.
5. Negotiating skill.
6. Frequency of financial data review.
7. Sound judgment.
Swine veterinarians performed better in most of the seven business practices than their peers in other types of practice. They also earned the highest mean incomes of all veterinary practitioners -- $109,790 per year.
This was the combined average income for practice owners and associate veterinarians. Average income for all veterinarians in practice was $94,560.
At 53 hours per week, swine veterinarians also work longer hours than other veterinarians.
Seven income drivers
Now let"s take a brief look at the seven income drivers and the performance of swine veterinarians.
Employee development. This included such practices as having written job descriptions and a defined process for hiring new employees. It also included conducting written and oral annual performance evaluations. Slightly more than half of all swine practitioners responding to the survey indicated that their businesses used these practices. That was higher than veterinarians in other types of practice, as shown in the chart below. Employee development had a significant impact on income. Those who scored in the top third in this category earned an average of nearly $35,000 per year more than those who scored in the bottom third. Yet, with only about half of swine practices using these proven business tools, there"s still considerable room for improvement.
New client development. This included such activities as sending letters of welcome to new clients, encouraging client referrals and rewarding clients for referrals. Swine veterinarians scored above average in new client development.
Client loyalty. This was measured through a self-assessment tool in the survey. Respondents used a 5-point agree-disagree scale to rate their practices on several statements including: "This practice earns its clients" loyalty" and "clients frequently recommend this practice." In this category, swine veterinarians scored similarly to other practitioners. Most veterinarians scored their practices relatively high in client loyalty. While veterinarians who excel in new client development earn about 15 percent more on average than those who score poorly, the difference is much greater for client loyalty. There"s a 35 percent gap between those who scored in the upper third compared to those in the lower third.
Business orientation. This included such attributes as using financial concepts and industry trends to manage the practice. It also included defining staff roles based on practice goals and linking salaries to practice productivity. Business orientation had one of the largest impacts on income -- a $47,000 per year gap in mean annual income between those who scored in the upper third and those in the lower third (large chart on page 5). Swine veterinarians also scored much higher in business orientation than their peers in other types of practice, as illustrated in the chart at the upper right.
Negotiating skill. On the surface, negotiating skill might seem like an unlikely income driver. However, many things in veterinary practice involve negotiation. Convincing a production manager to switch to a new vaccination protocol, for example, is a negotiation. Specifying or purchasing the feed, equipment or drugs for a client"s operation is another example of negotiation. Discussing a salary increase with an associate or with your boss, or a fee increase with your client, also are activities that require negotiations. Negotiating skill was measured through a standardized test involving seven questions. Again, swine practitioners scored above average.
Frequency of financial data review. The AVMA-Pfizer Study asked veterinary practice owners how often they monitored such items as revenue production for each veterinarian, aging of accounts receivable, key performance indicators and profit-and-loss statements. There was a clear income advantage to those who tracked more benchmarks more often (e.g., monthly), proving the old adage that you can"t manage what you don"t measure.
Sound judgment. This variable, which defined how a person approached decision-making, was measured through a battery of questions. Once again, swine veterinarians scored higher than their peers, as illustrated in the chart above. There was a difference of 26 percent in the mean incomes of those who scored in the upper third on sound judgment compared to those who scored in the lower third.
In all, the study evaluated 60 variables that fell into 25 different categories. Nearly all had positive correlations to income. However, statistical analysis demonstrated that the aforementioned seven, more than the others, had the greatest influence on incomes of food animal practitioners.
More than 2,600 practitioners participated in the study, completing a detailed 14-page questionnaire.
The swine practitioner sample was drawn from the combined membership records of AVMA and AASV. The response rate from swine practitioners was higher than for the sample as a whole.
The results of the AVMA-Pfizer Business Practices Study are highly actionable. Virtually any veterinary practice not currently doing so can perform annual employee performance evaluations, initiate client referral programs and develop a set of key business performance indicators.
As a follow-up to the study, Pfizer Animal Health, in cooperation with leading practice management experts, has developed a kit of useful tools for swine practices.
It includes such items as sample job descriptions, employee evaluation forms, customer surveys, sample key performance indicators and other materials. Veterinarians interested in obtaining the materials should contact their local Pfizer Animal Health sales or technical service representative.
John Volk is a senior consultant with Brakke Consulting, Inc., Chicago, Ill.