Veterinary Practice Partnerships
I strongly believe that one way we keep practices independently owned is by encouraging women to form smart veterinary practice partnerships.
This summer, I spoke with Joanne Yi, winner of the VIN Solutions for the Profession essay contest. During our conversation, she mentioned how much she admired the small independent practice she worked for. However, she was also intimidated by the thought of owning that type of practice. The practice is owned by a single individual who usually works 5-6 days/week. That is intimidating if you are considering being a parent and your spouse also works. But what if you could buy it with another person and split the hours? You wouldn’t make as much to start but many practices have growth potential with two invested individuals and as an owner, you split the profit and build equity instead of just making employee wages. Women should own veterinary practices and partnerships are a more sustainable way to make this a reality.
My veterinary practice partnerships
When I opened my 24/7 emergency and critical care practice in Seattle in 2003, I did it with a partner. I decided early on that it wasn’t possible for me to be the sole owner of a business that never closed. While I love being a veterinarian, I also love to travel and I wanted kids. Luckily, I met a great emergency veterinarian who also was passionate about providing a better service for pet owners and willing to work hard to make it happen. We were introduced through a mutual friend and by working through the process, realized that we could be a successful team. Our business partnership allowed us to bring a mix of talents to the table and allowed us to share the risk. It also made it possible for both of us to have vacations and time with our family. It was not always easy but it would have been even harder alone.
Several years after opening, we added two additional partners. These individuals added further strength, ideas, and commitment to our team. We had to learn new ways of making decisions but were able to keep up momentum.
A guest contributor – Elizabeth Fritzler, DVM CVPM
Elizabeth Fritzler, DVM CVPM, has owned two practices, Lien Animal Clinic and Cascade Heights Veterinary Center. She is also active with both Veterinary Management Groups (VMG) and for the Veterinary Hospital Managers Association (VHMA). In addition, she lectures for the VBMA at Washington State University. She has put together some great resources for individuals contemplating partnerships and agreed to collaborate with me on the next two blogs. In this two-part series, we will:
Part One: Discuss the pros and cons of partnerships and ways to help determine if you have the right partner
Part Two: Provide a suggestion for an equitable pay structure to help eliminate a common area of disagreement between partners.
Pros and Cons of Veterinary Practice Partnerships
When I was first contemplating owning a hospital, I was told many horror stories about partnerships. What often isn’t told is the success stories and the real benefits.
Pros of having a partner
1) Having a partner can reduce your initial financial commitment and risk.
2) Having a partner may make it easier for you to get a bank loan.
3) Ideally, working together should increase the practice’s productivity because there are two of you focused on growth and new ideas. I was good at marketing to the community. My partner was great at realizing when we needed additional capabilities and skills to get the practice to the next level of growth.
4) Partners can help decrease the workload of practice ownership. When we opened, I worked Monday – Wednesday, she worked Wednesday – Friday and we each worked every other weekend. That meant we both consistently had two days off for family but knew the practice was in good hands those other days.
5) Partners can potentially take on some tasks you loathe or lack the skills for, freeing you up to do more of what you enjoy and are good at.
6) A partner will make it easier for you to get away from the practice when you are on vacation or at CE since there will be someone around to deal with any business issues that arise.
7) It can be lonely at the top so the friendships and connections with partners can be invaluable. Sometimes they are the only ones who can truly understand what you are going through.
Cons of Veterinary Practice Partnerships
Partnerships are not all rainbows and unicorns. There are risks and issues. Some specific cons include:
1) Practice profits will have to be shared.
2) Disagreements between partners can be devastating to the business. Nothing brings a practice culture down faster than feuding owners.
3) Decision making can be slowed because of the additional time needed to reach consensus.
4) You will not be able to always do exactly as you want with the business because your partner will want other things.
Thoughts on choosing a veterinary practice partner
Choosing a business partner is a major life decision (not that different from choosing a spouse), so be sure to put a lot of thought into the decision. It is much easier to get into a partnership than out of one. Talk the decision over with your family and friends and get the advice of a good attorney before committing. Ideally, your partner’s skills should complement yours. You want someone who is easy to talk to but your best friend won’t necessarily make a good business partner.
Before starting a partnership, be sure your practice philosophy, skills, and goals are a good match. It is especially important to think about work ethic, overall goal of ownership, and risk tolerance.
Veterinary Practice Partnership Discussion Questions
Before drafting a partnership agreement, it can be helpful to spend time working through a list of partnership questions. Dr. Fritzler’s list of partnership discussion questions can be found here: PARTNERSHIP DISCUSSION QUESTIONS 2019 – Fritzler and Kraabal.
After going through the questions, spend the money needed for a good partnership attorney to draft a comprehensive partnership document.
Personality testing (Meyers Briggs, StrengthsFinders, DISC, etc.) can also help partners better understand each other’s strengths and weaknesses and can be used to divide up responsibilities based on which partner is better suited to the task. Partners can also benefit from going through communication training together. Both Dr. Fritzler and I know of several partnerships that have successfully attended counseling with a marriage counselor in order to work out differences. This blog I wrote last year details the steps these two women have taken to assure the success of their partnership.
Anticipate the end at the beginning
At some point all partnerships end. This may be 20+ years in the future when one of you retires or dies, or it might be sooner. All good partnership agreements should include plans for dissolution of the partnership from the start.
There are 4 main reasons that partnerships end (the 4 D’s): Death, Disability, Divorce & Done (when for what ever reason one of the partners wants out.) Having key employee life insurance & good disability policies in place can help protect all parties in the event of death or disability. Partnership agreements should include details on how the partnership will be dissolved in case of divorce or “done”.
One way to deal with two partners who no longer want to work together is to have a “you cut, I choose” policy, which works much the same as having children divide up a piece of cake. The way this works in a practice is that the partner who wants out of the partnership sets the price for the practice. The other partner then chooses if they want to buy-out their partner’s share at this price or if they want to be the one to leave and be paid for their share.
Closing Thoughts on Veterinary Practice Partnerships
We believe that well thought out partnerships can be a realistic way for veterinarians to buy and own practices. Working through discussion questions early and having a strong partnership agreement will set veterinarians up for success.
Next week, we’ll discuss some pay structure strategies for veterinary practice partnerships.
