Back in 2016, Dr. Autumn McKenzie was in a position thousands of associate veterinarians across the country share today. Oakhurst Veterinary Center of Seminole, FL, her employer, was a large, multi-doctor, small animal practice. She had aspirations for being a practice owner some day and loved Oakhurst, but the idea of buying it seemed too fantastical. “It was just such a big practice. For myself and a lot of associates, it was too big, too scary a proposition to do alone.”
At its size, Oakhurst is one of roughly twelve thousand small animal practices with over a million dollars in annual revenue. Except in unique circumstances, borrowing the necessary money from a bank to purchase one of these businesses outright can be challenging for an individual, especially if the practice is highly profitable and the borrower has significant student debt obligations. It is for this reason that most large practices these days are being purchased completely by corporate players; there are simply too few individual veterinarians able to compete as bidders.
Today though, Dr. McKenzie is an owner and the Medical Director of Oakhurst Veterinary Center. She did not need to purchase the whole practice herself. She did not have to pull together a large group of doctors to complete the deal. Instead, one of her co-owners in the practice is Veterinary Practice Partners (VPP), a practice ownership company whose stated mission is to keep practice ownership in the hands of practicing veterinarians. When Oakhurst’s original sole owner decided it was time to sell, VPP purchased a majority stake in the practice, leaving room for Dr. McKenzie to purchase her own stake several months later. In the near future, it’s possible another associate could buy-in as well.
Founded in 2011, VPP has deviated from the traditional “corporate” approach of buying practices outright, and instead has committed itself to owning portions of practices alongside veterinarians and helping clinicians to manage the business side of their practices. “It’s simple,” states Rich Lester, Founder and CEO of VPP. “We believe that aligning our incentives with those of our DVM partners leads to better medicine, a better client experience, and a better business overall. VPP can do some special things from a marketing and purchasing and strategic perspective, but Oakhurst will be a better practice because Dr. McKenzie and Dr. Tollon [Oakhurst’s original owner] are Partners there. We’re just unique in the industry for this line of thinking.”
Dr. Doug Aspros, VPP’s Chief Veterinary Officer and Past President of the AVMA, believes the key to more young veterinarians owning larger practices comes down to self-confidence and knowing where to look for help. “A lot of associates look around, read VPN, hear how expensive it is to buy practices and simply never ask their practice’s owner the question: when you’re ready to have the conversation, what would it take for me to become the next owner of this practice? If you don’t ask, the answer will always be no. Likewise, just because you didn’t learn how to process payroll or search engine optimize a website in vet school doesn’t mean you can’t ever own a practice. Help can be found when you need it.”
The advice both Rich & Doug give to associates who have aspirations of owning is straightforward: invite the current owner out for coffee or dinner, start a candid conversation, and be direct with your desire to be included in their process. Ask questions like “Have you thought about what you will do with the practice when you retire?” Be clear with statements like “I’m interested in being an owner some day and would like to continue this conversation as you decide the path you’re going to take.” Initiating a mentor/mentee relationship in this way can pay dividends down the road. Further, there is considered to be little to no downside risk to the associate for being direct for this type of conversation, especially as most practice owners are already being inundated with appeals from corporate players interested in purchasing their practices.
When the topic eventually turns to purchase price, the key is to know your options, not just assume a deal can’t be done. “Previously, if you wouldn’t buy 100% of a practice, you were out of luck. Nowadays, you can buy 10-15% of a practice, be an owner, make decisions, and profit from the long-term prosperity of the business,” says Lester. “Roughly a quarter of the doctors at VPP practices are co-owners of their individual practices. 14 of our current doctors had never owned prior to our involvement – and that number will grow by year end. I would imagine few of them thought it would be possible because of the faulty assumption that they had to buy it all or none of it.”
Finally, if you do decide to embark on a partnership, make sure to spell out each Partner’s responsibilities from the outset. “Partnership used to be a bad word in our industry because it historically involved two doctors, each bringing the same skill set to the equation. That can produce animosity over who leads what and dooms the relationship,” remarks Dr. Aspros. “Avoid that by being clear early. For example, we lead the business side of our practices and our doctors lead the medicine. No questions. At independent practices, when we see two doctors co-owning together and one leads medicine while the other leads the business, those are simply more successful relationships for longer.”
For Dr. McKenzie, just such a partnership has proven successful. “Oakhurst is a special practice. Being a part of it in this way is going to be good for me and my family for years to come. Co-owning with Dr. Tollon and VPP seemed like the right thing to do at the time and so far it has been great. It’s nice not to have to go it alone.”