Presentation Ordem Dos Medicos Veterinarios Lisbon April 15th 2018

2. Today’s Program
The Economic Performance of Equine
Veterinary Practices in Europe
Recent Development in Ownership of
Veterinary Practices
Putting a Strategy in Place for your Practice
(and your Neighbors)
Getting a Return on your Investment in
Veterinary Practice
Keeping your Customers, your Staff and
Yourself happy

3. www.slideshare.net/OculusInsights

4. www.OculusInsights.net

5. Who is Oculus?
• Global Business Education Company
• Business Consulting & Management Services
• Industry-Focused Programming
• Relationship/Networking
• Strategic Partnerships

6. The Oculus Learning Opportunities
• 4 Day Immersion programs at different locations in
the worldBusiness Summits
• One-Day, Topic Driven programs not species specificBusiness Workshops
• 3 Year Educational Certificate program not species
specific at MBA level
Veterinary Business
School
Business Consulting • Customized solutions and speaking engagements

7. Joop Loomans DVM, PhD
Utrecht, The Netherlands & China
Robert Magnus DVM, MBA
Wisconsin, United States
Michael Pownall DVM, MBA
Toronto, Canada
Executive Leadership Team
Including: Consortium of business
professionals, industry specialists,
instructors, and coaches

9. Joop Loomans DVM, MS, PhD, PTV FEI,
Certified Equine Practitioner
Heilan International Equestrian Club, China
Loomans International Veterinary Expertise
Oculus Insights BV LLC

10. THE EQUINE VETERINARIAN
PAST, PRESENT AND PROSPECTS
OF A PROFESSION
J.B.A. Loomans
Department of Equine Sciences
Faculty of Veterinary Medicine,
Utrecht University, The Netherlands
November 2008

12. Session 1
The Economic Performance of (Equine)
Veterinary Practices in Europe

14. The target group for this survey exists of the Veterinary students of all
stages of study from all over the globe. We have been collecting answers
from 31 of October 2014 till 31 of January 2015. In total, 3111 students
from 89 countries participated in the survey. Survey was done online and
it was anonymous.

16. Loomans et al 2008, Brown and Silverman 1999, Bakhuizen et al 2007
Aspects of job motivation in order of importance.
1 = very important, 2 = important, 3 = indifferent, 4 = not important,
5 = not important at all.
Total
Satisfaction of clients’ needs 1.72
Solving (veterinary) problems 1.87
Applying clinical skills 1.93
Curing sick animals 1.94
Working with horses 1.94
Fulfilment of own expectations 2.19
Working in a team 2.29
Working outdoor 2.47
Working with horse owners 2.66
Income 2.71

17. Federation of Veterinarians of Europe
www.fve.org
4 FVE Sections
 UEVP (Practitioners)
 UEVH (Hygienists – Public Health Officers)
 EASVO (Veterinary State Officers)
 EVERI (Education, Research, Industry)
Federation of veterinarians
of Europe
46 national organisations
38 European countries

18. Content report:
5 chapters + country reports
1. Demography
2. Demand veterinary services
3. Veterinary practices
4. Working as a vet
5. Future of veterinary profession
See: www.fve.org

19. www.fve.org
FVE Survey of the Veterinary Profession in Europe
24 FVE Member Organisations
participated fully
2 partially (provided results of
own surveys)
> 13 000 vets replied to the
survey (statistical confidence +/-0,85 %
at 95% conf. level) 173 Portugal (5.000
vets)
Results reflect personal
understanding, perspective and
knowledge of the individual
vets. This can divert from
national statistics.

23. www.fve.org
Key findings demography
DEMOGRAPHY
• Estimated number of veterinarians in European Union (EU 28) 182 900
in Europe (FVE 38): 243 000
• 44 % aged under 40 years
• 53 % female / 47% male
• 78 % work full-time
• Reported unemployment is 3 % (reality probably higher)
• Private practice dominates, employing 60 % of veterinarians
• 19 % work in public service
• 48 % work with/on issues related to companion animals

24. www.fve.org
Age versus Gender
DEMOGRAPHY

26. www.fve.org
Employment status – Europe
26
DEMOGRAPHY

27. www.fve.org
Fields of employment
60%
19%
6%
10%
1%
4%
DEMOGRAPHY

28. www.fve.org
DEMOGRAPHY
Vets/1000
population
% < 40 yrs % unemploy-
ment
Regarded
by
general public
(rank 1 – 24)
Regarded
by
customers
(rank 1-24)
Belgium 0,57 30 0,6 13 12
Italy 0,50 31 5,4 24 23
Spain 0,48 52 8,2 20 20
Portugal 0,48 76 5,3 17 18
Norway 0,44 40 0,9 4 5
Germany 0,33 43 1,8 6 9
France 0,26 39 0,9 7 6
Netherlands 0,23 32 0,6 9 8

31. www.fve.org
Key findings demand veterinary services
31
DEMAND
 Long term downward trend pigs, poultry, cattle and sheep
 Dogs: stable, cats: slight increase
 Nothing about trends on horses 
 104 million cattle
 150 million pigs
 90 million sheep
 13 million goats
 417 million poultry
 157 million companion animals
 6 million horses
 59 million exotics

32. www.fve.org
Area of focus - Europe
DEMOGRAPHY
As percentage of veterinarians

33. On a larger scale:

35. www.fve.org
Key findings working as a veterinarian
35
WORKING AS A VETERINARIAN
 Average earnings: €38 500 (adjusted for Purchasing Power Parity PPP)
 Large difference in average earnings between countries: from 9 506€
to 63 579€
 Outside practice, highest salaries in industry and research
 Male veterinarians earn on average 28% more than female
veterinarians
 28% of vets do not have a pension plan, and many who have a plan
do not think it is adequate for their needs
 Vets are a mobile profession; 6% worked in another country in last 3
years

36. Average earnings (in €, adjusted for ppp)
36

37. 37

38. Working Hours Equine Vets
Veterinarians Total Male Female Sign. P<0,95
the Netherlands (Loomans et al. 2008c)
Workig week 43.0 47.2 35.4 *
After hour duty 9.4 9.5 9.2
Total 52.4 56.1 44.5 *
Belgium (Meers et al. 2008 55.7
USA (Volk et al. 2005) 50.0
Australia (Heath 2003) 53.0
Finland (Reijula et al. 2003) 44.3 (excluding after hour duty)
Total work force
the Netherlands (Parent-Tirion et al. 2007) 31.0
1

40. Estimated Time spending equine vet:
Loomans et al 2007
Equine
61%
Porcine
1%
Ruminants
8%
Pets
3%
Education
4%
Breaks
4%
Teaching
1%
Research
1%
Telephone calls
5%
Administration
12%
Patient
contacts
73%

41. Time “hands on”
Working week of 15 - 80 hours
Average 54 hours
Available for equine 33 hours (61% of 52)
However really registered 15 hours hands on and 6 hours driving.
Still a lot of hours “missing”

42. Time “hands on”
Locomotive system
27%
Female genital system
24%
Alimentary system and
metabolic disorder
11%
(Pre purchase)
examinations
11%
Vaccination
6%
Anaesthesiology
5%
Respiratory system
3%
Rest category
4%
Male genital system
3%
Circulation, blood and
hematopoietic tissues
0%
Nervous system and
sensory system
0%
Identification,
Registration,
certificates
2%
Injuries and trauma
2%
Euthanasia
1%
Urinary system
0%
Skin
1%
Loomans et al 2007

43. Most time consuming in Equine
• Driving to patient
• Follicle checks
• Lameness examination
• Full Pre-purchase
• Vaccination
• Pregnancy diagnosis
• Radiology locomotion
• Nerve blocks
• Dentistry
• Colic consultation
• Clinical pre-purchase
• General anesthesia
• Ultrasound locomotion
• Arthrocentesis
• Uterine flush
• Arthroscopy
• Sedation
• Endoscopy
• Respiration consultation
• Wounds
• Colic surgery

44. Comparing Equine and Mixed
Equine Mixed Sign. 95%
Benchmarks: Practices Practices
Monthly equine hours "hands on" 71 34 *
Equine revenues / Equine hours available € 94 € 129
Equine revenues / Equine hours "hands on" € 196 € 209
Equine revenues / Equine hours charged for € 140 € 150
Equine revenues / Equine patient € 151 € 110
Loomans et al 2007

45. Revenue by type of Service – Europe
 Share of revenue: treatment 52%, surgery 20%, medicine sales 13%,
official tasks 4%, food sales 6% and other 5%
 In countries with decoupling medicine prescription and distribution,
less on medicines
DEMAND
45
As percentage of total amount

46. Average revenue per practice
The average practice revenue figures are as reported and have not been
adjusted to take account of purchasing power
Vets
and nurses
24 countries BE DE NL
1 person 85.318 € 103.280 € 92.215 € 98.551 €
2 persons 163.097 € 153.250 € 249.424 € 181.455 €
3 – 5 persons 312.313 € 360.455 € 298.516 € 308.075 €
6 -10 persons 794.386 € 986.000 € 506.634 € 496.256 €
11 – 30
persons
1.414.384 € 1.000.000 € 1.128.205
€
1.179.648 €
31 – 50
persons
3.394.478 € 2.573.333
€
4.122.000 €
> 50 persons 6.488.876 €
46
PT
22.500 €
na
55.167 €
164.000 €
na
na

47. www.fve.org
Key findings in respect to the future
47
THE FUTURE
• 68% believe that “Too many newly qualified veterinarians are emerging
from Veterinary schools”
• Areas where more veterinarians will be needed:
 animal welfare
 Companion animals & exotic animals
 disease control
 Environment
• In order to meet the challenges of the next five years:
 83 % think more specialization is needed
 80 % think more business training is needed
 49 % think more legislation for the profession is needed

48. Sample Practice Income Statement
Benchmark Data
Is the average of 30
equine practices in the
USA in 2016.
Industry
Benchmarks PRACTICE 2016
100.00% Practice Income (Revenue) $ 2,500,000
Expenses
26.39% Total Cost of Professional Services $659,750
19.36% Drugs & Supplies
7.03% Hosptitalation, Lab costs, etc
73.91% Gross Profit $1,840,250
5.67% Administrative Expense $ 141,750
10.22% Facility and Equipment Costs $255,500
45.04% Payroll Costs $ 1,127,250
12.63% Operating Income (EBITDA) $ 315,750
2.79% Depreciation Costs $ 69,750
0.45% Other Income/Expenses ($ 12,500)
9.39% Net Income € 233,500

49. Session 2
Recent Development in Ownership of
Veterinary Practices

50. Profession
The principal activity in your life that you do to earn
money.

51. Hobby
May cost money!

52. Veterinary Compensation
(Salary)
Management Compensation
(% of Gross)
Real Estate Compensation
(Rent)
Practice Owner Compensation
(ROI)

53. www.fve.org
Age versus Gender
DEMOGRAPHY

54. Meeting young veterinarians in the
Netherlands 2009
• 50 % is expecting not to be working in practice
within 5 years!
TvD 1-1-2009

55. • Problems for young veterinary professionals?
• International research shows:
• Increased risk of psychological distress and burnout
amongst veterinarians
• Increased risk of developing burnout amongst female
and recently graduated veterinarians
• Young veterinarians experience “the shock to practice”
Reason for Study Mastenbroek:
Mastenbroek et al 2014

56. Current Market Analysis
Current Practice Ownership
• Retiring Owners
• No Exit Strategy
• Private Equity solution?
• 28% in Europe, 58% in Portugal is
not having a pension plan. The
practice it the pension!

57. Current Market Analysis
Next Generation of Owners?
• Work/Life Balance
• Large Student Debt in USA
• Job Dissatisfaction
• Transition Challenges

58. Current Market Analysis
• Price Sensitivity
• High Investments
• Competition
• Lack of Management Skills
• Lack of Data Analysis

59. Current Market Analysis
• Disconnect with Customers
• Expectations
• Delivery Models
• Fragmented Health Care Sources
• Poor Customer Service

60. Number:
Entrepreneurs
Employed
Not in practice
Percentage:
Entrepreneurs
Employed
Not in practice

61. Corporate Buyers

68. Buyers – Others
Associate (employee) Veterinarians
Key Staff
Other Practices
Buying Groups
Family

69. Sample Practice Income Statement
Benchmark Data
Is the average of 30
equine practices in the
USA in 2016.
Industry
Benchmarks PRACTICE 2016
100.00% Practice Income (Revenue) $ 2,500,000
Expenses
26.39% Total Cost of Professional Services $659,750
19.36% Drugs & Supplies
7.03% Hospititalation, Lab costs, etc.
73.91% Gross Profit $1,840,250
5.67% Administrative Expense $ 141,750
10.22% Facility and Equipment Costs $255,500
45.04% Payroll Costs $ 1,127,250
12.63% Operating Income (EBITDA) $ 315,750
2.79% Depreciation Costs $ 69,750
0.45% Other Income/Expenses ($ 12,500)
9.39% Net Income € 233,500

70. EBITDA & Multiple Benchmarks
North America
Equine Practice
Companion Animal Practice
3 – 6X EBITDA (Normalized)
Average = 12%
Range = 3% - 21%
3 – 8X EBITDA (Normalized)
Average = 15%
Range = 3% – 25%

71. Multiples for Small Animal Veterinary Hospitals
20x
18x
16x
14x
12x
10x
8x
6x
4x
2x
0x
0 1 2 3 4 5 6............200………..2,500
Single Site Clinic
1 DVM
3-5x EBITDA
Single Site
multi-DVM
4-10x
Specialty
Hospital
10-15x
20+ site
Corporation
10-15x
Revenue ($millions)
EBITDAMultiple
Valuations have
trended higher in
recent years due to
increased competition
for acquisitions
Sources: Company disclosures and guidance from private equity investors

72. Current Consolidations
• Mainly USA, UK, Northern Europe
• Mainly Companion Animals
• Exit Strategy for Older Practice Owners
• Is it a “Game Changer”?
• Remains a Traditional Model?
• What does it mean for you and our profession?

73. Building Practice Value
1. Increase Turnover (Sales Growth)
2. Increase Operating Margin (EBITDA)
3. Lower Risk
4. Decrease Practice Debt
2016 2015 2014
Annual Sales $1,704,935 $1,461,225 $1,348,197
EBITDA X 5 $914,060 $714,720 $294,080
Less Long Term Debt $130,331 $176,007 $99,400
Value of Practice $783,729 $538,713 $194,680
Prior Year Value Rate Change 45.5% 176.7% X

74. Building Practice Value
1. Increase Turnover (Sales Growth)
2. Increase Operating Margin (EBITDA)
3. Lower Risk
4. Decrease Practice Debt

78. Your road to success
TO BEE OR NOT TO BEE

79. Rehab
Center
Online
Pharmacy
Hospital
/ Hub
Staff
Education
Center
Pet Shop
Traditional
AMB
Insurance
Company
Franchise
Digital
AMB
Traditional
AMB
Traditional
Hospital
Remote
Service
Technician
Remote
Service
Technician
Nutrition
Services
Trainer
Support
Program
Traditional
AMB
Traditional
AMB
Traditional
AMB
Tack Shop
Digital
AMB
Farrier
shops
Digital
AMB
Digital
AMB
Farrier
shops
Digital
AMB

80. Oculus Alliance
Global Alliance of progressive independent
veterinary practices managed for sustained
success based on our shared vision of
veterinary business in the present and in
the future.

81. Oculus Alliance Vison
To become the most important Alliance of
Equine Veterinary Practices that safeguards
the future of the profession and its
professionals while keeping the practices
relevant players in the equine industry.

82. Oculus Alliance Mission
To ensure that veterinary professionals
have the skills, resources, network and
tools to implement what is needed to
achieve business, professional and
personal fulfillment.

83. Session 3
Putting a Strategy in Place for your Practice
(and your Neighbors)

84. What is
The Ultimate Goal of a Business ?

85. “The purpose of
business is to create and
keep a customer”
Peter F. Drucker

86. 4/16/2018 86
We Need a Plan!

87. Plan = Strategy
4/16/2018 87

88. “A PLAYBOOK FOR STRATEGY”
The Five Essential Questions at the Heart of Any
Winning Strategy
4/16/2018 88
Playing to Win
A. G. Lafley, Roger Martin, 2013

89. A PLAYBOOK FOR STRATEGY
1. What is your winning aspiration?
2. Where will you play?
3. How will you win?
4. What capabilities must be in place?
5. What management systems are required?
4/16/2018 89

90. Strategy is a Choice !
• What you will do?
• What you will not do?
• It becomes your “lens”
4/16/2018 90

91. What is your winning aspiration?
Translate the “happy future” of a mission or vision
statement into defined winning aspirations
4/16/2018 91

92. Mission Statement
“To give horse people peace of mind with
the health care of their horse by helping
them to make informed decisions”

93. Vision Statement
“Our goal is to be a global equine veterinary business
recognized for leadership and innovation in patient,
client and employee care”

94. What is your winning aspiration?

95. Where will you play?
• Which markets
• Which network
• Which customers
• Which region
• Which product categories
4/16/2018 95

96. Where won’t you play?
• Which markets
• Which network
• Which customers
• Which region
• Which product categories
4/16/2018 96

97. How will you win?
• Very much connected with where you play
• How to create unique value for your customers and
how to sustainably deliver that to customers
• Difficult to copy
• Create your “Brand”
4/16/2018 97

98. What is a Brand
“The expectation a person has when they hear your
company name, or see your logo”

102. The Superstar??

107. What is a Brand
“The expectation a person has when they hear your
company name, or see your logo”

108. Which capabilities must be in place?
What do you have to be distinctively good at in order to
play where you want to play and win how you want to
win!
It is your competitive advantage.
4/16/2018 108

109. What management systems are required?
Systems that build, support and measure a strategy
Otherwise, it’s just a “wish list”
4/16/2018 109

112. 4/16/2018 112
Every Decision Affects the Strategy

113. Strategy
HR
Marketing
Resources
Organization
Leadership

114. Strategy Marketing

115. Strategy
A description of how
we can identify what
our clients value and
how we can deliver it

116. Marketing
The activity and
processes for creating,
communicating, &
delivering offerings
that have value for
customers

117. 4/16/2018 117

118. Winning Aspiration?
•Dominate Markets
•Lowest Cost
•High Quality

119. Where Will They Play?
•Groceries and general merchandise
•Value oriented customer

120. How Will They Win?
provide value and quality to our
customers by being fair and efficient
in all we do

121. What Capabilities Must be in Place?
•Economies of scale
•Integrated logistics
•Efficient systems
•Staff training

122. What Management Systems
are Required?
•Investment programs
•Intensely managed
•LEAN System

123. Try to answer these 5 questions
for your practice.
1. What is your winning aspiration?
2. Where will you play?
3. How will you win?
4. What capabilities must be in place?
5. What management systems are required?
4/16/2018 123

124. ABC Veterinary Services
4/16/2018 124

125. Winning Aspiration?
•Increase dentistry sales by 10%
•Increase Facebook Likes
•Improve newsletter click through rate
•Start Instagram

127. Winning Aspiration
1. Show value of vet dentistry
2. Increase sales 10%

128. Where Will They Play?
• English sport horses
• Trainer stables
• Public stables
• Lesson stables

129. How Will They Win?
English sport horse veterinary care through
excellent customer service and education

130. What are Their Capabilities
•Broad experience
•Good practice management software
•Current equipment
•Online pharmacy

131. What are Their Management Systems
• Client education
• Excellent customer service
• Staff Training
• Social Media focus

137. Facebook Ads

138. Newsletter

139. Demonstrations

140. Results
31%

141. Session 4
Getting a Return on your Investment in
Veterinary Practice

142. What Investments are Needed
for Your Strategy?
4/16/2018 142

143. 4/16/2018 143
How to Use our Money Well

144. Financials 101
• But first some basic understanding is necessary....
• You don’t need to become an accountant
16/04/2018 144

145. What is Financial Accounting
• The preparation and use of accounting
information
• Provided in the form of a company’s financial
statements
• Enables users to make informed decisions
16/04/2018 145

146. 16/04/2018 146

147. Stocks and Flows
16/04/2018 147
Opening Balance
Sheet
Assets
Fixed
Current
Cash
Liabilities
Shareholders equity
Equity shares
Retained earnings
Closing Balance Sheet
Assets
Fixed
Current
Cash
Liabilities
Shareholders equity
Equity shares
Retained earnings
Statement of Cash Flow
Operating activities
Investment activities
Financing activities
Change in Cash
Income Statement
Revenues
Expenses
Net Income
Beginning of
accounting period
End of
accounting period

148. Let’s start with the Accounting Equation
16/04/2018 148
Assets Liabilities Equity= +

149. Balance Sheet: Assets
Tangible and Intangible Economic Value
• Is owned by the company
• Used to generate future benefits
• Assists in providing the products and services of the
business
• Available to meet debts or commitments
• Can be sold or reversed into cash
16/04/2018 149

150. List as many Assets as possible for a ABC
Equine Clinic
•
•
•
•
•
•
•
•
•
16/04/2018 150

151. Assets: An Overview
Tangible Fixed
Assets
Immobilisations
corporelles
Intangible Fixed
Assets
Immobilisations
incorporelles
Financial Fixed
Assets
Immobilisatoins
financières
Current Assets
Frais payés d’avance
Land Goodwill Joint Ventures Trade receivables
Property Software
developments
Deferred tax assets Other receivables and
prepayments
Plants / Hospitals Content Venture Capital (ST) Loans
Equipment (X-Ray,
etc)
Patents Other investments Tax receivables (i.e.
VAT)
Computers Intellectual Property Derivatives /
Financial
instruments
Inventory
Furniture & Fittings Rights (LT) Loans Marketable securities
CASH and EQUIVALENTS
16/04/2018 151

152. Balance Sheet: Liabilities
A Liability is an obligation to make a future payment
•Can be short term or long term
•Can be interest bearing
16/04/2018 152

153. List as many Liabilities as possible for ABC
Equine Clinic
•
•
•
•
•
•
•
•
•
16/04/2018 153

154. Liabilities/Passif: An Overview
Non-Current Liabilities
Dettes financières
Current liabilities
Dettes financières
Off- Balance Sheet liabilities
Charges à payer
LT Loans with Banks Trade Payables Guarantees
Other long term debts Other Account Payables Future rental and Lease
payments
Deferred Tax Liabilities Loans / Borrowings (< 1
year)
Buy back constructions
Provisions Accrued expenses
LT Pension Obligations Deferred income
Derivative/ Financial
instruments
Deferred tax liabilities
Taxes (Income taxes, VAT,
etc)
Provisions
16/04/2018 154

155. Is it OK to have Debt?
• In Personal Life it has often a negative side:
• Can we pay the bills?
• Do we owe enough when we retire?
• In Business Finance:
• An important part of the capital structure
• External financing needed under several curcumstances:
• New buisness
• Heavy investments
• M&A
• Balance out uneven cash flow streams during the year
16/04/2018 155

156. Is it OK to have Debt?
In Business Finance:
• External Financing is in general cheaper than Equity:
• Cost of lending < Return on investment
• Cash rich companies can miss business opportunities:
• Active in M&A
• Share Buy Back
• Cash Dividends
• Some companies, especially Private Equity:
• Highly leveraged (over 90% Liabilities) => During crisis is this
KILLING
16/04/2018 156

157. Is it OK to have Debts?
The trick is to find the right balance between Debt and
Equity
• Every business is different
• Over the Life Cycle financing changes
• Don’t sell your soul to the bank.
16/04/2018 157

158. Balance Sheet:
The difference between a
company’s assets and liabilities
represents the shareholders’
financial stake in a company.
or
• Contribution by owners +
• Retained earnings (net profit)
16/04/2018 158

159. Equity: The Claim on the Assets
• Share Capital / Common stocks
• Share Premium
• Contribution by Owners -/- Drawings by owners
• Retained earnings (profit on the income statement)
16/04/2018 159

160. Income Statement
16/04/2018 160

161. Income statement
A financial statement that reports a company's
financial performance over a specific accounting
period. Financial performance is assessed by giving a
summary of how the business incurs its revenues and
expenses. This results in showing the net profit or loss
incurred over a specific accounting period.
16/04/2018 161

162. Income Statement
• Looks pretty straightforward BUT:
• Some fundamental choices to be made
16/04/2018 162
Revenue Costs Profit- =

163. The Net Income Statement: Revenue
Revenue is the income that a business has from its
normal business activities, usually from the sale of
goods and services to customers. Revenue is also
referred to as sales or turnover.
16/04/2018 163

164. Exercise 3:
List the revenue sources for Veterinary Clinic
ABC
•
•
•
•
•
•
•
•
•
16/04/2018 164

165. Costs:Terminology
• Cost of Goods Sold:
• Costs directly related to the production or delivery of services
• Variable Costs:
• Costs that can easily and accurately be traced to the item
producing the revenue
• Fixed Costs:
• Costs that are related to producing the revenue but that
cannot be easily and accurately traced to the item producing
the revenue
• Operating costs:
• Costs that are necessary to run the business but not directly
related to the revenue,services or production
16/04/2018 165

166. Exercise 4:
List the Costs for Clinic ABC
•
•
•
•
•
•
•
•
•
16/04/2018 166

167. Costs: An Overview
Cost of Goods Sold
Coût des marchandises
vendues
Admin / Operational Costs
Coût d'exploitation
Pharmaceuticals Salaries
Medical supplies Social charges and tax
Lab fees T&E
X-ray expenses Education
Animal Food Rent
Materials lease costs Repairs & Maintenance
Waste Utilities
Surgery equipment Office suppplies
Kennel equipment Advertising
Miscellaneous
Depreciation
16/04/2018 167

168. Sample Practice Income Statement
Benchmark Data
Is the average of 30
equine practices in the
USA in 2016.
Industry
Benchmarks PRACTICE 2016
100.00% Practice Income (Revenue) $ 2,500,000
Expenses
26.39% Total Cost of Professional Services $659,750
19.36% Drugs & Supplies
7.03% Hosptitalation, Lab costs, etc
73.91% Gross Profit $1,840,250
5.67% Administrative Expense $ 141,750
10.22% Facility and Equipment Costs $255,500
45.04% Payroll Costs $ 1,127,250
12.63% Operating Income (EBITDA) $ 315,750
2.79% Depreciation Costs $ 69,750
0.45% Other Income/Expenses ($ 12,500)
9.39% Net Income € 233,500

169. Stocks and Flows
16/04/2018 169
Opening Balance
Sheet
Assets
Fixed
Current
Cash
Liabilities
Shareholders equity
Equity shares
Retained earnings
Closing Balance Sheet
Assets
Fixed
Current
Cash
Liabilities
Shareholders equity
Equity shares
Retained earnings
Statement of Cash Flow
Operating activities
Investment activities
Financing activities
Change in Cash
Income Statement
Revenues
Expenses
Net Income
Beginning of
accounting period
End of
accounting period

170. Questions?

171. Break-even Analysis
4/16/2018 171

172. Break-even Point
• Occurs when total revenues equal total costs
• can be unit sales volume, or
• can be dollar sales volume
• Operating below break-even
• company operates at a loss
• Operating above break-even
• company operates at a profit
4/16/2018 172

173. Break-even Analysis
• Provides answers to questions such as:
• At what point in the year will your clinic reach a break-even
point (and then make money after that!)?
• How many procedures do I have to do in order to start making
money on my investment?
• What should the price of the procedure be in order to make
money on an investment after x procedures?
4/16/2018 173

174. Variable Costs
are costs that change in total with volume but
remain fixed on a per-unit basis.
Thus, variable costs go up as the level of activity
(volume) rises.
4/16/2018 174

175. What are Variable Costs Examples?
4/16/2018 175

176. Cost behavior in relation to
changes in activity levels
Variable cost behavior
4/16/2018 176

177. Variable cost
4/16/2018 177
The variable unit costs
Direct materials costs per unit € 5,00
Direct labor costs per unit 3,00
Variable overhead per unit 2,00
Total variable cost per unit € 10,00
======

178. Fixed costs
are costs that do not change in total with volume
but vary on a per-unit basis. However, the cost per
unit does vary with output because the cost is
spread over a greater or lesser number of units.
4/16/2018 178

179. What are Fixed Costs Examples?
4/16/2018 179

180. Cost behavior in relation to
changes in activity levels
Fixed cost behavior
4/16/2018 180

181. Break-even analysis
Fixed cost
• lease
• administrative salaries
• office supplies
4/16/2018 181

182. Total cost behavior
4/16/2018 182

183. Break-even point
• there where sales meets the total costs
• p x q = V x q + F
p = price
q = quantity of units
V = variable costs per unit
F = fixed costs
4/16/2018 183

184. Break-even point
4/16/2018 184

185. Break-even point
• judge if it makes sense given the price or
• what price is needed to break-even
4/16/2018 185

186. Break-even formula
4/16/2018 186
Example
Fixed costs vaccination € 10.000
Variable costs vaccination € 24
Vaccination price € 80
Number of services: 80 x q = 24 x q + 10.000
Break-even number of services (q) = 178,6

187. And now some exercising!
4/16/2018 187

188. • Veterinary Clinic ABC wants to introduce a new
product-line by insourcing the x-ray activities currently
outsourced to Company DEF.
• Currently Clinic ABC pays € 32 per plate to Company
DEF. And Clinic ABC charges the customer € 48.
• The number of X-rays per year is 4,500.
• Veterinary Clinic ABC wants to invest in this business
line, as it thinks it can grow its profit by doing it
themselves.

189. The following costs will incur when the clinic ABC invest in this
product line:
• Investment in X-ray machine: € 36,000 – (to be depreciated in 3
years)
• Maintenance / Yearly training costs for vets and staff: € 5,000
• Additional overhead costs (more rental space, etc.): € 10,000
• Time spend by X-ray:
Vet (analysis and advice): 10 minutes
Assistant (taking the x-ray): 20 minutes
• Hourly rates:
Vet: €60 h.
Assistant: € 30 h.
• Other variable costs per X-ray: € 5

190. We want to know:
How many x-rays are needed to equal the profit
generated via outsourcing?

191. Fixed Costs per year:
• X-ray machine:
€ 12,000
• Training/Maintenance:
€ 5,000
• Additional overheads:
€ 10,000
• Total fixed costs:
€ 27,000
Variable costs per plate:
• Vet: € 10
• Assistant: € 10
• Other: € 5
• Total variable costs per
plate: € 25
(48-32) * 4,500 = (48-25) * q – 27,000
q = 4.305

192. At what rate can the clinic set the price for the
customer to generate the same profit?
Price decrease:
• 4.500 * 16 = (p – 25) * 4.500 – 27.000
• P = 47

196. Session 5
Keeping your Customers, your Staff and
Yourself happy

197. Another way of looking at it:

198. Employee Engagement
“Customers will never love your
company, until the employees love it
first”
Simon Sinek
http://sloanreview.mit.edu/article/measuring-the-benefits-of-employee-engagement/

199. Customer Satisfaction….....Employee Satisfaction
Managing Expectations
Question:
1. What were your expectations when you started to
study Veterinary Medicine?
2. Have your expectations been met?

202. Why equine track?
• Has always been riding horses.
• Cure sick animals.
• “Direct result of action”.
• State of the art equipped clinics.
• Dynamic profession.
• Owners are dedicated to their
horses.
• Owners spend a lot of money on
their horses.
Loomans et al 2008

204. DANIEL PINK, DRIVE

206. Autonomy
• The desire to direct our own lives
• Time
• Technique
• Team
• Task

207. Mastery
• The desire to continually improve at something that matters

208. Purpose
• The desire to do things in service of something larger than ourselves.

209. Purpose
• Making sure that the mission and goals of the organization are
properly communicated to employees.
• Employees need to appreciate how their work and role fits into what
the organization is about.

210. ABC Practice Mission
Purpose = “why are we here?”
“to give horse people peace of mind with the health
care of their horse by helping them make informed
decisions”

211. ABC Practice Core Values
• Take Ownership – “Own It”
• Evolve – “Push It”
• Deliver Excellence
• Collaborate

213. • Problems for young veterinary professionals?
• International research shows:
• Increased risk of psychological distress and burnout
amongst veterinarians
• Increased risk of developing burnout amongst female
and recently graduated veterinarians
• Young veterinarians experience “the shock to practice”
Reason for Study

214. 1. What is the current state of psychological well-being of young vets?
2. What work- and person related characteristics affects psychological
well-being and performance of young vets?
a. positive and negative aspects of work.
3. What is the individual’s role regarding work and mental well-being?
Research questions

215. "...a positive, fulfilling, work-related state of mind that is characterized by
vigor, dedication, and absorption“
Schaufeli & Bakker (2010)
Work engagement

216. Burnout
Burnout is the final stage of long-term
exhaustion of the body. Burnout occurs when
people, despite complaints of stress and
tension, persevere in their work, being unaware
of the severity of their symptoms

217. Characteristics of burnout
• Feeling physically and emotionally exhausted
• Cynicism characterizing a distant and callous
attitude toward one's job; the individual is de-
motivated and withdraws from his/her work.
• Lack of professional efficacy including feelings
of inadequacy and incompetence associated
with loss of self-confidence

218. 1. Every organization has its own unique work
environment
2. Work environments can be characterized
by job demands and job resources
3. Two simultaneous processes: a health
impairment process and a motivational
process
Bakker, A.B., & Demerouti. (20007). The Job Demands-Resources model:
State of the art. Journal of Managerial Psychology, 22, 309-328.
The Job Demands – Resources Model

219. 4. Job resources can buffer the impact of job demands on
strain
5. Job resources become salient and have more motivating
potential when job demands are high
Bakker, A.B., & Demerouti. (20007). The Job Demands-Resources model:
State of the art. Journal of Managerial Psychoogy, 22, 309-328.
The Job Demands – Resources Model

220. 6. Well-being (low burnout, high engagement) predicts
organizational performance
7. Engaged employees optimize their own work environment
Bakker, A.B. (2011). An evidence-based model of work engagement.
Current directions in Psychological Science, 20, 265-269.
The Job Demands – Resources Model

221. +
++
+ +
-
-Job demands Exhaustion
In-role
performance
Personal
resources
Job resources Work engagement
Extra-role
performance
Health impairment process
Motivational process
The Job Demands – Resources Model1
1Demerouti , Nachreiner, Bakker & Schaufeli, 2001; Bakker & Demerouti. 2007;

222. Definition of Job demands
“ …aspects of work that require sustained physical or
mental effort on the part of the employee and are
thus associated with psycho-physiological costs”.

223. Job demands (or potential stressors)
Work-home interference
Physical demands
Emotional demands
Workload
Job insecurity
Conflicts
Etc.

224. Definition of Job resources
“work aspects that are …
(a) functional to achieve occupational goals
(b) necessary to deal with high job demands
(c) important in their own right as stimulants of
personal growth”

225. Job resources
Control over tasks
Support of colleagues
Feedback on performance
Rewards
Possibilities for professional development
Etc.
Ability to use and develop skills

226. The individual
• Personal resources are defined as developable
systems of positive beliefs about one’s self and
the world, that are generally linked to
resilience.
• This definition encompasses a feeling of being
appreciated and in control as well as skills and
attitudes that facilitate these feelings.

227. Personal resources
• Self-efficacy
• Optimism
• Proactive behaviour
• Reflective behaviour
• Self-esteem

228. Demands and Resources
The
Individual
Work-home interference
Physical demands
Emotional demands
Workload
Job insecurity
Conflicts
Etc.
Control over tasks
Support of colleagues
Feedback on performance
Rewards
Possibilities for professional development
Etc.
Ability to use and develop skills

229. +
++
+ +
-
Job demands Exhaustion
In-role
performance
Personal
resources
Job resources Work engagement
Extra-role
performance
Health impairment process
Motivational process
+
+
The Job Demands-Resources model1
1Demerouti , Nachreiner, Bakker & Schaufeli, 2001;
Bakker & Demerouti. 2007, Mastenbroek et al., 2012

230. Method
• Tailor-made questionnaire
• 1750 veterinary professionals having graduated
between 1999-2009 have been invited to respond
• Response rate = 49%
• Question were on
• Well-being
• Work-related factors
• Person-related factors
• Demographic and occupational details

231. Results
• 1 in 7 veterinarians meet criteria for being burned out
• 1 in 7 veterinarians meet criteria for being highly engaged
• Men rated themselves as less exhausted and more engaged
than women
• Scores on exhaustion drop over the years

232. Results
•Important job demands:
• Workload
• Work-home interference
• Role-conflicts
•Important job resources:
• Autonomy- decision latitude
• Skill-discretion
• Variety of work
• Possibilities for professional development
• Support of supervisor

233. Results
• Important Personal resources:
• Self-efficacy
• Proactive behaviour
• Optimism
• Self-esteem
• Reflective behaviour

234. The art of staying engaged
• Make an inventory of the job demands and job resources in
your work.
• Take time for a dialogue and recognize and acknowledge the
differences in individual needs.
• Increase or decrease job demands but always provide
sufficient and appreciated job resources.
• Think in terms of opportunities instead of threats.
• Take time for reflection and increase your own personal
resources.
• Choose consciously, and take responsibility for your own well-
being.

235. Work
engagement
Burnout
BoredomApathy
Jobdemands
Job resources
HIGH
LOW
HIGHLOW
Interactions in JD-R model

236. Job Crafting
“.. Changes individuals make in their working-
circumstances, their tasks and/or relationships at work
with the aim to improve the person to job fit”.

237. Job crafting is about:
• Increasing job resources
• Decreasing job demands
• Or increasing job demands = searching for new
challenges

238. From a company perspective;
• Businesses with more engaged employees have 51% higher
productivity
• (Harter, J.K., Schmidt, F.L., & HayesT.L., Psychology, 2002 Vol. 87, No. 2)
• Highly engaged employees have less absence days when
compared to employees that are less engaged
• (Gallup Germany, 2011)
• Organizations with engaged employees showed a 19% increase
in operating income over a 12-month period, compared to a
33% decrease in companies with disengaged employees
• (Towers Perrin, 2008)

239. Jim Collins Good to Great
• It’s who you pay, not how you pay them.
• The purpose of a compensation is not to get the
right behavior of the wrong people, but to get the
right people on the bus in the first place and keep
them.

241. “The Gallup 12”
1. I know what is expected of me at work
2. I have the materials and equipment I need to do my work right
3. At work, I have the opportunity to do what I do best every day
4. In the last seven days, I have received recognition or praise for doing good work
5. My supervisor, or someone at work, seems to care about me as a person
6. There is someone at work who encourages my development
7. At work, my opinions seem to count
8. The mission or purpose of my company makes me feel my job is important
9. My associates or fellow employees are committed to doing quality work
10. I have a best friend at work
11. In the last six months, someone at work has talked to me about my progress
12. This last year, I have had opportunities at work to learn and grow

242. The Survey
• 34 Questions online via SurveyMonkey
• Anonymous other than job role and clinic
• 5 point rating scale
• Area for comments after each question
jloomans@oculusinsights.net

243. Career Development
• I am satisfied with my opportunities for growth within the
practice.
• I am satisfied with the internal (in-house) job-related training
the practice offers.
• I am satisfied with the amount of time and money the
practice invests in my CE (training courses offered by outside
sources - courses, workshops, etc.)

244. Work Engagement
• I am inspired to meet my goals at work.
• I am proud to tell people where I work.
• I have a sense of ownership in the practice.
• When the company succeeds, I feel like the success is my
own.
• I am content to spend the rest of my career at the practice.
• Employees adapt quickly to difficult situations at the practice.

245. Compensation and Benefits
• I feel that I am compensated appropriately overall (including
wage/salary and bonus).
• I am compensated fairly relative to similar/the same positions in similar
businesses in my area.
• I am confident that the method used to determine my wage or salary
increases on a yearly basis is fair.
• I am satisfied with my total benefits package (wage, bonus, medical and
dental plans, vacation days, paid personal/sick days).
• I am satisfied by the workplace flexibility offered by the practice.
• My role at the practice allows me to have an appropriate work-life
balance.

246. Relationship Management
• Communication between management and employees is
excellent at the practice.
• I am involved in the decisions that affect my work at the
practice.
• Management at the practice recognizes strong job
performance.
• My coworkers and I have an excellent working relationship.
• Senior management and employees trust and respect each
other at the practice.

247. Work Environment
• The work at this veterinary practice positively impacts clients’
lives.
• I am happy with the overall culture of the practice.
• I understand how our Core Values relate to expectations
around my behaviour at work, and my work itself.
• I feel like the management and staff of the practice adhere to
the Core Values.
• I understand how my work impacts the business goals of the
practice.

248. Scoring Employee Engagement
20 - 39% = Poor
40 - 59% = Good but needs attention
60 - 79% = Overall good
80 - 100% = High Employee Engagement

249. Oculus 2017/2018 18 practices

252. www.slideshare.net/OculusInsights

253. jloomans@oculusinsights.net

254. www.OculusInsights.net