Can you predict the future?

Originally published in OVMA Focus Magazine July/August 2024

BY GREG TONER

As a kid, I loved the movie Back to the Future and its sequels. It has good humour and a great soundtrack, and there was something about the concept of knowing what’s going to happen in the future that stuck with me.

Early in my career, one of my mentors talked to his clients about “seeing what’s coming around the corner,” and that expression has resonated in many of my own discussions with clients.

How do we know what’s coming around the corner? Well, we don’t. But, if we spend some time thinking about what we want to be around that corner, we can then think about what will enable it to happen and what might prevent it from happening.

So, what do you want to be around the corner? More time with family? More money? A smoothly running practice with the capacity to handle surprises? Spend time thinking about this, as a poorly defined goal will give you results that you don’t want. Once you have an idea of what you want, think about:

• What are the things that are getting in your way?

• What are the things that you need to do more of?

• What are the things that you need to say no to?

Many practice owners I work with have a degree of chaos in their lives. They’re entrepreneurs, and every day brings new challenges. It can be the most rewarding and draining part of running a practice. This chaos can have an impact on them, their teams and their families. The most chaotic practices see high staff turnover, which adds to the chaos.

What if we could take away the most draining parts? For example, the feeling that everyone needs your time and that only you can solve issues that come up, or the anxiety during the slow days and the stress of busy days when you don’t have enough time to eat.

Getting control of the factors that add chaos to your day will help you predict how your days, weeks and months will unfold. You’ll be able to “see” into the future. These changes take time to make an impact. The top three changes that I’ve seen help practices are:

1 Tracking and reviewing key practice data.

There are a few key pieces of data from prior years that can help you predict what the next month or year will look like. Track things like the number of invoices, number of surgical cases, number of dental cases, revenues by service type, number of appointments and number of staff hours by role. It’s also important to know your clients and your client retention. Measure the number of active clients, new clients and pet ages. Monitor your practice’s performance relative to last year’s figures. Are you on track? What do you need to change? What levers do you need to pull to make those changes? It’s easy to watch revenues, but they don’t tell the whole story. By tracking these other data points, you’ll dig below the surface and get an idea of the health of your practice.

2 Developing and sharing clear processes for clinic operations.

Have processes in place for critical functions of your practice. For example, the beginning and end of day, new client visits, existing client visits and maintenance. If you do something more than once, you should have a documented process for that activity. This will ensure consistent results, and it will allow you to delegate more effectively. Make sure these processes are easily accessible and followed.

3 Hiring and promoting based on clear job descriptions and having a training plan.

Does your staff know the difference between an average and an amazing employee? Do they understand how to advance in your practice? What can they do to develop professionally? Having clear job descriptions and a progression of levels for the same role will allow you to identify who your star players are and reward them. It will also help your whole team progress, regardless of how skilled they are when they join your organization, since they have a path to follow. Develop training protocols for new hires, assign a mentor/trainer and have regular staff check-ins for your whole team.

If you have data (and more than just a revenue number), you can relax when it makes sense. You’ll know what’s normal and when it’s time to energize your staff and push harder. If you know what you want and don’t want to happen, and you document those processes and make sure they’re followed by your staff, you won’t have to worry about as many surprises. And if you hire and promote based on clear job descriptions and have a training plan to support those roles, you’ll be able to quickly identify who’s a good fit for your team and who isn’t. You may not be able to predict the future, but if you can reduce the number of surprises and move with more confidence through each day, isn’t it kind of the same thing?

Greg Toner, CPA, CA, TEP, CLU, is principal at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

Employment insurance for the self-employed

Originally published in OVMA Focus Magazine May/June 2024

BY GREG TONER

Melissa has been one of my clients since shortly after she graduated. She started working as an associate, and after about three years, she started working as a locum at a local emergency clinic. About six months ago, she and her husband, Tony, who is also a veterinarian and owns half of the practice that his father started 25 years ago, let me know that Melissa was pregnant.

In both of their cases, they aren’t covered by employment insurance (EI) for maternity and parental benefits. Melissa because she’s self-employed, and Tony because he owns more than 40 per cent of the voting shares of the corporation that operates the practice he works in.

Melissa and Tony are in their mid-thirties, and they’re planning on having three children. They both love practising veterinary medicine and plan on having long careers. Melissa loves the control that she has over her schedule as a locum, and Tony plans on purchasing the rest of his father’s practice in the coming years.

We recently discussed whether they were eligible for EI benefits, and how they would fund the time that they both plan to take off with their child.

There’s an option for self-employed individuals to register for EI benefits, however, there are two main issues for people in Melissa and Tony’s situation:

1. You need to register for the self-employed program 12 months before you make a claim.

2. Once you register, you’re bound to make premium payments to EI for employment (or self-employment) income for the rest of your life.

Timing

For the first issue, with the average gestation period for a baby being about 40 weeks, Melissa and Tony would have had to apply for the program about four months before they started trying to conceive their baby.

Economics

The second issue is more of an economics question. If you’re planning on having three children spaced two years apart, and inflation (which determines the annual increases in EI benefits) is about five per cent, you’ll receive about $105,000 in EI benefits over all three maternity leaves.

If you miss applying for the EI for self-employed program for your first child, or you only plan on having two children, you’ll only receive about $68,000 in benefits.

EI contributions for 2024 are $1,049.12. In Melissa’s case, she has another 30 years to practice, so using the same assumption of five per cent for inflation, she’ll contribute about $69,000 to the EI system.

It’s about break-even in her case. She gets about $68,000 in benefits when she needs them and pays roughly the same amount back into the system over the rest of her career. On top of that, she’s also eligible for these additional benefits under the EI system:

1. Sickness benefits (15 weeks).

2. Compassionate care benefits (26 weeks).

3. Family caregiver benefits—children (35 weeks).

4. Family caregiver benefits— adults (15 weeks).

For more information about these special benefits visit www. canada.ca/en/services/benefits/ei/ ei-self-employed-workers.html.

Spouses

What about Tony? He wants to take time off as well. In his situation, he would need to register for the same self-employed program and make the same commitment to contributing to EI for the rest of his working life. So, another roughly $69,000.

On top of that, he would need to contribute the employer’s portion of EI through his company, which would be roughly $97,000, since employers pay 1.4 times as much as employees to the EI system.

The total contribution is over $235,000 to receive about $68,000 in EI benefits, since Melissa and Tony need to share the benefits. In Tony’s case, it’s not worth registering for EI. He’ll have to fund his parental leaves from corporate savings.

What should you do?

It depends on your situation. Generally, it only makes sense to consider applying four months before conception.

When the birthing mother owns more than 40 per cent of the corporation they practice in, it likely doesn’t make sense to register for EI self-employment benefits— you’ll need to fund any leave from corporate or personal savings.

With both parents being self-employed, consider having only one parent register for the EI self-employed program. Since the birthing mother is eligible for 15 weeks more of benefits than the other parent, it likely makes sense for that parent to register with EI as a self-employed individual. It doesn’t make sense for both parents to register.

Greg Toner, CPA, CA, TEP, CLU, is principal at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

The benefits of pet insurance and wellness plans

Originally published in OVMA Focus Magazine March/April 2024

BY NANCY POPPE

Many pet owners express confusion on the topic of pet health insurance and veterinary wellness plans. There are clear benefits for both pet owners and veterinary practices when pets have insurance and a wellness plan. As such, it’s worthwhile to provide clients with good information to make informed decisions.

Wellness plans

A wellness plan provides planned annual veterinary care costs bundled as a package that can be paid in monthly installments. For pet owners, when considering the cost of paying veterinary bills all at once or spreading the cost over monthly payments, there’s a financial bud- get benefit to having a wellness plan. For veterinary practices, the benefits of wellness plans include client retention and compliance regarding veterinary recommendations. A wellness plan takes time to set up and administer, but the benefits are significant enough to warrant the effort.

A wellness plan should incorporate all preventive veterinary recommendations for a one-year period and divide that cost into monthly payments. When setting up your plan, consider the preventive care needed to maintain optimal health. From there, you may consider add-on options for senior pets, dental procedures and specialized plans for puppies and kittens, which have higher costs the first year (e.g. spay/neuter) that can be daunting to pet owners.

In addition to its development, consider how the plan will be implemented within your practice management software and how payments will be collected. Educate all team members on your wellness plan, so they can educate clients on what a wellness plan is, what it covers and how it works. Use printed materials such as brochures to help further explain your wellness plan to clients.

Pet insurance

Pet insurance is very different than a wellness plan and provides compensation for unexpected veterinary costs. Treatment of injured and ill pets is costly, and when it’s a surprise, it can force owners into a financially difficult decision at an emotional time. Pet owners with pet insurance can receive lifesaving treatments that they may not be able to otherwise afford for their pet. Promoting pet insurance is a win-win: clients will be better prepared for unexpected veterinary costs and veterinarians will see more compliance of treatment recommendations when cost is no longer the driving factor for clients’ decisions.

Pet health insurance and wellness plans differ in patient care needs: one is for unexpected veterinary costs, the other for expected costs. However, they are the same in that they both enable clients to provide the best care for their pets. Veterinary practices offering wellness plans and promoting pet insurance provide clients with valuable options.

Nancy Poppe, CVPM, CPB, is a practice advisor at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

The value of an annual fee increase

Originally published in OVMA Focus Magazine January/February 2024

BY NANCY POPPE

A new year has rolled around again and it’s time to consider the fees you’re charging. Should they be increased? Over the past year you may have had clients complain about your fees, and you may be sensitive to your clients’ ability or willingness to pay more for services.

We’ve all felt the effects of inflation at the grocery store, gas pumps and with any purchases we make. Your practice isn’t immune to inflation and its effect on your bottom line. As OVMA’s Accounting Service, we know that DVM and non-DVM wages make up half of the expenses in a veterinary hospital. To retain and attract staff, wages need to increase as the cost- of-living increases. An annual fee increase is a necessity to keep your practice financially healthy.

Ultimately how your fees are perceived comes down to value. Veterinarians offer a valuable service to pet owners, who want to provide the best care for their animals. When clients are educated on what they’re paying for, they will value the service.

OVMA’s 2023 Ontario Pet Owners Report indicates that being interested in a pet’s well-being was the most important factor for pet owners when choosing a veterinarian. However, offering reasonably priced services was also highly rated when choosing a veterinarian. How do we reconcile these two factors? Clients value honesty and communication— they must understand procedures and feel comfortable with the recommendations being made. Team members who communicate services with confidence and clarity will give clients the knowledge they need to see the value in the service being recommended. Once the value of a service is understood by the client, the fee becomes less of a concern and more readily accepted. All team members need to be on the same page. A team that speaks with one voice will give clients a consistent message and achieve the goal of excellent client education.

Review your current fees and compare them to OVMA’s fee guides. Now is the time to make the necessary corrections to your fees. Once you’ve decided on your annual increase, be sure to educate your staff on the changes. It’s imperative that staff understand the fees. If they think a fee is too high, they won’t effectively communicate value to clients.

Team members see revenue coming in, but they don’t see the costs of running the practice. Without a clear understanding of the whole picture, they may jump to the conclusion that the clinic is charging too much. Share this information with the team. You might consider using a pie chart to illustrate the cost percentages for your clinic, without sharing your financials. Staff will understand that the practice needs to set fees appropriately to cover the costs of day-to-day operations. Once your team is on board, they will be your best asset in advocating for your practice.

Annual fee increases should be embraced rather than dreaded. They’re necessary to operate a healthy practice. When you have your team on board, the fee increase will go smoothly and be accepted by clients.

Nancy Poppe, CVPM, CPB, is practice advisor at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org