Where Have All the Profits Gone?

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In this insightful episode of the Veterinary Business Podcast, host Dr. Peter Weinstein is joined by Melisa Edwards, president of Evolve Practice Transitions. Together, they dive deep into the pressing question on the minds of many veterinary practice owners: Where have all the profits gone? Dr. Weinstein and Melissa discuss the financial health of veterinary practices, trends in profitability before, during, and after the pandemic, and what practice owners can do to reverse the worrying decline in profitability. With a special focus on practice management, employee utilization, and planning for long-term success, this episode is a must-listen for veterinarians, practice managers, and aspiring practice owners.

Key Takeaways:

• The Decline in Profitability.
  Many veterinary practices are reporting single-digit profit margins, significantly lower than pre-pandemic levels. This is often due to increasing labor costs and insufficient fee adjustments.

• Trends Pre- and Post-Pandemic.
  Profitability peaked during the pandemic in 2021 due to high demand and lower staffing costs but has since declined due to increased salaries, supply costs, and inflation.

• Owners Aren’t Paying Themselves Fairly.
  A common issue among owners is not compensating themselves properly for their production and management roles, which impacts the true profitability of the business.

• Focus on Efficiency and Productivity.
  Practices need to optimize staff utilization, particularly leveraging veterinary technicians to their full potential to enhance profitability.

• Valuing and Selling Practices.
  Getting a practice valuation well before selling is essential for understanding its true worth and making improvements before it’s too late.

• Retaining Clients and Staff.
  Profitability is heavily tied to retaining top clients and staff. Focusing on long-term relationships and staff development is key to sustaining and growing profits.

Timestamp

• 00:00 – Introduction to the episode and guest, Melisa Edwards
• 02:36 – Melisa’s journey into the veterinary field and her experience with Bank of America’s veterinary-specific finance unit
• 05:06 – The importance of helping young doctors understand business ownership
• 09:40 – The worrying trend of declining profits in veterinary practices
• 11:16 – Trends in profitability pre-pandemic, during, and post-pandemic
• 13:09 – The impact of increasing labor costs and inflation on profitability
• 17:00 – The importance of fair owner compensation in business valuations
• 21:05 – Diagnosing financial issues within a veterinary practice using key financial metrics
• 25:55 – The challenge of raising fees appropriately and timely
• 31:55 – Efficiency and productivity as solutions to declining profitability
  – The value of early appraisals and identifying problems before selling a practice
  – Encouraging buyers to enter the marketplace in the current climate
  – Building a success team for veterinary buyers and sellers
• 01:00:41 – Closing thoughts on profit-sharing and long-term business success

Melisa Edwards

President of Evolve Practice Transitions, Inc.
CalBRE License #01970519

Melisa K. Edwards has over 20 years of experience and has successfully closed more than 750 deals in veterinary practice acquisitions, real property transitions, and strategic planning. She is the president and broker of Evolve Practice Transitions, Inc., where she specializes in facilitating smooth and strategic transactions for both buyers and sellers in the veterinary industry.

As a founding Vice President of Bank of America’s Veterinary Finance division, Melisa has a deep understanding of the financial and operational intricacies of the veterinary profession. Her expertise covers Real Estate Law, Appraisals, Escrow, Real Estate Economics, and Commercial Finance. She provides hands-on experience with every stage of the buying and selling process, ensuring that all parties receive exceptional service with a focus on win-win outcomes.

Evolve Practice Transitions, Inc. was specifically designed to meet the unique needs of the veterinary community, providing services such as corporate sale facilitation, buyer representation, associate buy-ins/outs, and a DIY seller facilitation package. Melisa’s mission is to advocate for buyers, guide sellers with clear strategies, and mediate complex internal sales with patience and expert knowledge.

On a personal note, Melisa is the proud mother of teenage twins and the owner of Moose, a German Shepherd/Lab mix. She enjoys staying active with hobbies such as pickleball, paddleboarding, and attending concerts—activities that keep both her kids and Moose entertained.

Melisa brings a fresh, innovative perspective to practice transitions, offering customized solutions that fit the budget and service needs of today’s veterinary professionals.

Connect with Melisa Edwards:

• LinkedIn
• Website