There are no easy formulas, but there are a few factors that need to be analyzed before hiring a new associate veterinarian. Practices need to quantify the anticipated amount of revenues the associate will bring in the first year after the hire and the increase in expenses related to hiring a new doctor. In addition, you must determine whether the practice is in a positive financial position such that cash reserves and net income are sufficient to cover the increased expenses before the new doctor is productive.
Although it is difficult to forecast the amount of revenues a new associate can bring in the first year, start by assessing the current caseload to determine whether there is likely to be enough work for another doctor. Is the schedule fully booked every day? How long does it take for clients to get an appointment for routine care? Are doctors often overworked in trying to provide care for patients each day? Does the practice frequently double book to fit clients in? Do doctors and technicians consistently stay hours after the normal working day to finish caring for all the patients? To better quantify the answers to these questions, look at monthly reports to see whether the number of transactions is trending upward.
When forecasting revenue production for a new doctor, evaluate his or her level of experience and skills. Veterinarians with multiple years of experience usually are higher producers than new graduates, and it may take a new graduate longer to become productive in your practice. In addition, look at the growth opportunity in your community to assess whether you will be able to attract more new clients or offer new services, which will help increase revenues.
On the expense side, look at the associate’s salary, costs for more support staff, increases in inventory and supplies, and possible increases in equipment or overhead to support the new veterinarian.
The practice must be able to pay additional expenses until the doctor becomes productive enough to cover his or her salary and these related expenses. If the business has little or no cash reserves and little profitability, a new associate may jeopardize the financial health of the practice.
Owners must be willing and able to afford an initial decrease in net income when hiring a new associate veterinarian.