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  • Writer's pictureDr. Bill Wagner

How Do Veterinary Hospitals Fail?

Fortunately for veterinary practice owners and veterinary healthcare workers it is very rare for veterinary hospitals to fail outright as businesses. It is not impossible, however. This week we’re going to be looking at some of the common reasons why veterinary practices can fail and how their owners can take steps to avoid those pitfalls.

Keyperson risk

Cause: Most veterinary hospitals are small businesses and therefore rely on one or a few key individuals to drive critical functions of the business. Temporarily or permanently losing this individual due to health, turnover, or retirement can cripple the business’ ability to fulfill its core functions. Mitigation:

  1. Have a “disaster” plan: Having existing relationships with relief veterinarians and a transition plan in place before a crisis arrives is important for making sure that your business is prepared to survive the unexpected. Having an equity partner with a set transition plan, whether an associate being groomed for future full ownership or a business partner like AVP, means that your team won’t be left leaderless if life throws you a curveball. Planning is important because finding a buyer for your practice after a crisis has already compromised its core function is very challenging.

  2. Outgrow the risk: Keyperson risk is inversely proportional to business size. Hiring associates and building out your team increases your business’ ability to function without you. This is much easier said than done in the current hiring environment, but as we covered in another blog post it is difficult but not impossible to find good people. If you’re having trouble driving growth, bringing in a dedicated business partner like AVP may be the right choice.

Reputation crisis

Cause: Things won’t always go well. Regardless of whether the practice was at fault or not, you may find yourself in the crosshairs of a reputation crisis. In the age of the internet it is easier than ever for unhappy owners to turn an undesirable medical outcome for their pet into mass bullying by an internet mob. This sort of reputation crisis puts you, your business, and your staff at risk.


  1. Have a “disaster” plan: Sounds familiar? This is advice worth giving twice! You, your associates, and your staff should not be figuring out how to communicate in a crisis on the fly. Having a crisis communication plan will help you avoid missteps. The narrative in reputation crises is set early and very difficult to change once it is established, so saying the right things from the start is critical.

  2. Good client communication is the key to avoiding crises in the first place: Educating owners on risks, having detailed release forms that double down on that conversation for riskier procedures (including ALL anesthetic procedures), and practicing clear and empathetic communication of undesirable medical outcomes are all ways to mitigate the risk that a client will leave your practice feeling like they didn’t receive the proper care for their pet. Pets can’t live forever so even if everything is done right by the medical team undesirable medical outcomes are an inevitability of practice, but how the team communicates those outcomes play a significant role in how those outcomes are perceived by clients.

Local competition Cause: The veterinary industry is booming and most hospitals are currently flooded with demand, but it is possible for local markets to experience over-saturation. Whether it is competition for clients or key staff, if you lose too much ground to a competitor you might find your practice’s finances trending toward disaster.


  1. Know what your “sweet spot” is in your local market and be the best at that: Whether you’re targeting the top of your local market (gold standard, high price/low volume), the middle (the bread-and-butter family GP, mid price/mid volume), or the bottom (competing on price, low price/high volume) it is important to understand your identity and excel in that market segment. You can’t be everything to everyone! Keep in mind that what you think your sweet spot is might not match with what your sweet spot actually is. It is important not to confuse the values that you think your company should have with the values that represent its true, authentic self.

  2. Don’t be afraid to brag: There’s probably a few things that you do better than the average vet. Stump on those! Market your strengths and politely let clients know when you’ve gone above-and-beyond for their pet. After getting owner consent, consider sharing your success stories on your website and hospital social media pages so that your clients know how great you are.

  3. Your staff are your most precious resource: Losing staff hurts. Losing staff to a local competitor hurts even more. Treating, paying, and elevating your people well isn’t just the right thing to do, it’s a competitive advantage. At a time when everyone is scrambling to find good people you can’t afford to be losing your best team members to the practice down the street. Don’t take your All Stars for granted!

Gross mismanagement

Cause: The financial tailwinds of the veterinary industry are very forgiving, and even poorly managed clinics often fall into the “no-lo” category of having zero or little profitability rather than ending up in the red. This is thanks to the relatively low bar of what it takes to run a break-even veterinary practice compared to other industries. However, a low bar isn’t the same as no bar. Gross mismanagement, especially when it leads to secondary issues like poor charge capture, theft, or poor clinical care, can lead to a veterinary hospital achieving net loss and eventually failing.


  1. Don’t go it alone: Whether it is bringing in an experienced practice manager, a practice management consultant group, or ideally a dedicated business partner (like AVP), having help in running your business can make a big difference. The benefit is clear for veterinarians who are struggling with management, but even veterinarians who are savvy business owners will benefit from a second set of eyes and additional operational resources.

  2. Keep track: Small businesses are still businesses so you’re going to see benefits from collecting and analyzing key data (KPIs, “key performance indicators”). Just like collecting clinical data with diagnostic tests is part of being an effective clinician, collecting financial data is part of being an effective business owner. KPIs are the CBC/chem and x-rays that your clinic needs! Financial data will help you find negative trends before they become bigger problems, identify areas where your practice is under-performing relative to industry standards, and track whether business adjustments that you make are translating into results. If running financial diagnostics on your clinic is making your head spin, don’t be afraid to “refer” (see point 1: Don’t go it alone).

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