Equine practitioners, like most people, are creatures of habit. We do what we do because we do what we do because we’ve always done it. Perhaps we should look for opportunity in our service mix. Let’s ask ourselves a few questions.
- Unless you are a full service equine referral hospital, should you do less of something and more of something else?
- Does the revenue generated by a service justify the overhead cost of providing the service (is it profitable)?
- If you seek training in a new low overhead technique or modality and change your service mix, can you generate more profit?
Remember, we are talking about the vast majority of equine practitioners, those who deliver primary care and emergency service. As an example, let’s look at Surgery and Acupuncture in that type of practice. First off, step back from the cliff and stop shouting at the computer screen. I am not suggesting any equivalency between Surgery and Acupuncture.
If we look at the results of the Merck-Henry Schein National Equine Veterinary Economic Study, in practices that perform each service, 9.15% of their revenue is generated by surgery and 6.96% of their revenue is generated by Acupuncture. We don’t have to dive too deeply into the financials to know that Surgery carries a massive overhead cost relative to acupuncture. In my opinion the demand for acupuncture services is higher than the demand for surgery in almost every primary care practice and the cost of providing the service is infinitesimal compared to surgery.
The challenge is that most practitioners don’t have training in acupuncture and don’t realize the size of the demand. The situation is compounded by the fact that many equine practitioners provide defensive high overhead surgical services; operating on horses in order to keep competitors from operating on ‘their‘clients horses. By and large, that type of defensive medicine is a huge drain on the profitability of a practice.
A question I suggest my Virtual CEO clients ask themselves is “what would I do if I weren’t afraid?” The answer in this example might be, I would seek training in a new higher margin service for which there is a great demand and I would make my practice more profitable by changing my service mix.
It is neither feasible nor profitable for primary care practices to provide every service. Understanding from the study what product mix really looks like in our industry should give all veterinarians some data with which to make good service mix decisions.
If profit is your objective, look for opportunity in your service mix.