Thinking of owning your own practice: which path to choose?

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1 Vet Times The website for the veterinary profession Thinking of owning your own practice: which path to choose? Author : anonymous Categories : Business, Finance Date : June 1, 2014 For most there are two realistic routes into practice ownership enter a joint venture partnership (JVP) or go it alone. VBJ took a closer look at the options with the help of two leading JVP providers and a successful independent practitioner. Graeme McConnell is head of partnerships south at Vets4Pets Since Pets at Home acquired Vets4Pets in April 2012, the combined Vets4Pets and Companion Care Veterinary Group has grown rapidly opening a significant number of new practices in the past financial year bringing us to more than 270 practices, making us the biggest branded veterinary group in the UK. With plans to open a further 60 to 70 practices in the coming year, the business is growing at an incredible rate. We have a number of partners now who own and run multiple sites, with many partners taking the chance to open their second or even third practice in their nearest Pets at Home store. Our partners have decided to open their own practices with us for a number of reasons, from simply wanting the comfort of being part of a well-known brand and wanting to be their own boss, but not being confident about the business side of things, through to clinical and non-clinical career development and ultimate earning potential. Whatever the reason, we take them through a step-by-step journey with the option of visiting 1 / 12

2 some of our existing partners in their practices to get a real feel for what it s like to be a partner with us. In essence, we do the business side of things so vets and vet nurses can get on with what they re trained to do looking after the health of pets. A joint venture partnership (JVP) with Vets4Pets is really quite a simple concept, where the partner(s) own the A shares and the Vets4Pets Group own the B shares. Partners (often a sole vet, or two vets, a vet and nurse or even a vet and practice manager) require only a 30,000 initial investment between them, which is paid back to them tax-free as soon as the practice has repaid its bank loans. The remainder of the finance required to build the practice is funded through a loan from ourselves and also a business loan from the bank, which we arrange and act as a second guarantor for. This covers everything needed for the practice build, fit-out, and all the new equipment; it also allows for enough cash in the bank to help get the business up and running with working capital. Ongoing, the practice then pays management fees, which cover the tailored business services that are provided by the support office, which includes local marketing, HR and recruitment, operations, IT and commercial management. The fees also pay towards national activity, such as the recent television adverts, professional training and development as well as supplier negotiations. Crucially, each practice s business plan allows for a generous salary for every partner from day one something many people find surprising as, often when starting your own business, paying yourself is a luxury at first for us it s an important part of the successful model. Once up and running, and with our support, every practice has the ability to grow and the potential to earn the partner(s) great rewards, in both financial terms and personal job satisfaction. Adi Nell is senior partner at Medivet We run a traditional form of partnership, usually making 50 per cent of the investment, taking 50 per cent of the risk, and sharing the profits not a percentage of the turnover. Partners generally pay the market value of their share of the branch they are buying, or slightly below that value to allow the incoming partner room for immediate growth. There is no tie-in, partners can leave at any time and sell the branch at market rates to a new partner. Our partnership model works both in terms of clinical excellence (because of the high standards of care we are able to offer) and financially (nearly all our branch partners earn 80k-plus). Medivet works on a hub-and-spoke model, which provides our 100- plus branches with a comprehensive range of expertise and services ultrasound, laparoscopic surgery, in-house blood bank and so on. It works like the NHS, where branches feed into specialist centres and patients are sent to the people who have the best skills to treat them. Our six 24-hour centres offer continuity of care and approach, backed up by centralised patient 2 / 12

3 records, held by our bespoke practice management system. Pooling resources centrally has allowed us to invest in the Esaote Vet-MR Grande, a low-field MRI scanner at our Hendon diagnostics centre, which is in use several times a day. We also have an administrative and legal support centre, strong buying power and an RCVS-accredited vet nurse training college. Our 220 vets work as a team. If one of my patients needs a hip replacement, I send it to my colleague Gareth Richardson. Heart patients go to Jan Doedens; for spinal surgery it s Richard Leonard; eye work is carried out by John Beel; I help with dermatology, and so on. Career flexibility is built in, whether you want to concentrate on general clinical work or specialise, work part or fulltime, or focus on management. Vets often worry about losing clinical autonomy but, as long as Medivet group benefits, it makes sense for all of us to play to our strengths. Branch partner John Beel is a good example: he s an ophthalmologist and has the facilities he needs to investigate, diagnose and treat eye conditions at his branch. We are ambitious for ourselves and for veterinary medicine and work hard to raise standards in every aspect of our work. If you want to find out more, visit our website or pick up the telephone we ll be happy to talk to you. Marwan Tarazi owns NuVet, an independent small animal practice Having worked for many companies since moving to the UK in 2000, in 2009 I felt it was time to move on from being an employee and become self-employed. Several options were open to me at this stage; waiting for a possible partnership, setting up on my own, owning a franchise, buying a pre-existing business or buying a 50 per cent partnership with a big corporation. Waiting for a partnership would have meant putting my ambitions on hold for a number of years without any real guarantees. To have waited for so many years and had no partnership at the end would have been devastating. I investigated the option of a franchise, but I decided against this route because I did not feel I would be able to have complete clinical and business independence, which is important to me. I was not willing to surrender a large proportion of my turnover to a corporation for things I was able to do on my own. So I began looking for a site where I could open an independent surgery. Several practices came on to the market in the area I was interested in, and I considered them all. In every case the premises were too old, too small, in a difficult location, subject to expensive goodwill or were sold quickly to a corporation before I could sort out finance. Then I heard a large corporation was willing to sell a 50 per cent partnership in a profitable practice. I was seriously involved in negotiations before it became clear I wouldn t have any independence in managing and guiding the business simply taking 50 per cent of the profit. In 2009, I found a 300 sq m building, which I thought would be an ideal place to set up a 3 / 12

4 veterinary business. Negotiating the rent as well as finding builders, architects and materials was certainly a challenge (especially as my wife Claudia was heavily pregnant at the time), but after just three months the building was transformed into a purposebuilt veterinary surgery. With three consulting rooms, theatre, prep area, dental theatre, x-ray ward, separate cat, dog and isolation wards, my dream of setting up my own business was a reality. The only thing left was to get the clients through the door, with the help of my brilliant head nurse Jo Gretton. I appointed Onswitch to help me create a strong brand and apply this consistently to all our client communications and signage. NuVet now has four vets, six nurses and five customer care assistants, and our clients tell us we provide the best veterinary care in town. I know setting up a business is not everyone s cup of tea. However, I can happily say I achieved what I was aiming for, and my practice continues to strive for excellence. I had written a business plan, but I m pleased to say the results have exceeded expectations. And with success has come financial autonomy I can buy whatever piece of equipment I need to provide the best care for my patients without having to ask permission from a finance department. Ultimately, good medicine means good business, which is why I would recommend all you ambitious vets out there take your future into your own hands. Be clear about your objectives, get help from experts with marketing and training, and then go for it. 4 / 12

5 Corporates account for 21 per cent (789) of the UK s veterinary practices. Source: Vet Dynamics. 5 / 12

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