Performance-related pay for veterinary assistants is increasingly seen in the USA as a key factor in maintaining practice profitability in difficult financial times.
But practice owners should think twice before adopting the same approach to staff salaries in the UK, a leading American expert on veterinary economics, Karen Felsted, told delegates at the BSAVA congress. Ms Felsted has qualifications both in veterinary science and business and is currently head of the US National Commission on Veterinary Economic Issues.
The NCVEI was set up in 2000 to investigate ways of countering the perceived stagnation in the financial performance of practice. Run jointly by the three leading US veterinary bodies – the AVMA, AAHA and AAVMC – the initiative is supported by the animal health industry. The NCVEI gathers statistical data on practice economics which have shown that the recession is definitely having an effect on the sector, with revenue growth of 4% last year compared to an average of 11 to 13% through most of the decade.
Not sustainable
The number of fee-earning transactions fell by 1% last year, with practice profits maintained by a 3% increase in fees. However, practices have been reliant for too many years on generating income from a shrinking number of clients and this long-term trend in fee inflation is not sustainable, she said. Instead, practice owners must look at other ways of increasing practice profitability, mainly through improved efficiency and proper financial management.
Those practices that followed the standard procedures operating in other business sectors have been shown to earn two-thirds again more income per vet than those practices using more ad hoc arrangements. In today’s financial climate, practices can no longer “live off their fat”.
Ms Felsted offered a number of options for practices to consider. They should, for example, be making better use of support staff, freeing the veterinarian’s time for higher fee earning work.
She noted that dentists typically spend a few minutes with each client, who is with the dental hygienist for most of the time that he or she visits the practice. Dentists earn two thirds again more than a veterinarian while working significantly fewer hours, she noted.
Examine the records
Another important activity should be investigating and preventing incidents of missed charges and discounted fees, which can both have a serious impact on practice viability. The current downturn in activity should allow managers the time to examine the computer records and see if particular veterinary or support staff members are responsible for a disproportionate amount of the lost revenue, she suggested.
Giving staff responsibility for setting their own income through the fees that they earn is a popular way for practice owners in the USA to keep a tighter control over their business. Around half of the practices have introduced some form of performance related pay, with assistants typically taking home about 20% of the fees that they earn.
These systems are often complex to set up as it can be difficult to identify precisely the person responsible for specific fee earning activities. But staff members are usually prepared to accept certain anomalies provided that the overall system is perceived as fair, she said.
However, Ms Felsted expressed reservations about rewarding staff purely on their own fee income. She suggested that these systems can turn some individuals into poor team players who are unwilling to help colleagues on any work which will not benefit them personally.
It may also impact the quality of care offered to clients, if a veterinarian becomes unwilling to consult a colleague or refer cases on to a better qualified person outside the practice, she warned.
