As we enter the New Year there is a growing generation gap that may come to a head before the next decade is through. There is an aging group of veterinary practice owners that are generally male, works at a single doctor practice, and used to working greater than 50 hours a week. Then there is the next generation of veterinarians that is generally female, works in a group and wants to work less than 50 hours per week or even part time. Certainly with any generation gap there are going to be rifts between the type of medicine practiced, hours worked and what defines a work life balance. It is one thing to have these differences between an owner and associate, but how will these divergences in lifestyles affect a buyer and seller situation?
In the next decade the real estate market will improve, the stock market will pick up and so will practice owner’s retirement investments. Everyone will be ten years older and there could be a significant amount of practices for sale. Certainly there will be some buyers, but will there be enough. There is a large group of associates that do not want to have the responsibility of paying off an even larger loan, put in 50-60 hour weeks and practice by themselves. There are plenty of associates that see practice ownership as turning a work-life balance into a work-ownership balance.
There was a time when being a veterinarian meant putting in long hours every week, being on call at all hours of the night and working every Saturday if not Sunday. But the next generation does not agree with that schedule, we want to give it 110% when we are on the job, but we have another 120% to give to other important things away from the practice (and that includes having freedom on weekends and at three in the morning).
It is very plausible to buy a single doctor practice that grosses $500,000 a year and build it to two million so that the owner can afford to hire a few associates to help with the workload and make that doctor even more profitable. But by that time the children have moved out of the house or at least do not want to hang out with you any more, or the back is sore and the hands ache and you are no longer able to play in a sport or partake in a hobby you once enjoyed in your youth.
So who will the next buyer of a single doctor practice be? Will it be a hungry associate willing to give it her all? Will it be a corporation? Will the practice merge with another or several others in the area? Will there be a buyer at all? Or will there be a new hybrid group of future owners that will collectively come together and buy several smaller practices? A hybrid group may be able to afford several practices and have the benefit of a larger pool of clients, staffing and resources. A hybrid group can share the responsibilities of ownership (“you take staffing and I’ll take payroll”). They can also share the non-desirable shifts (“I’ll have Tuesday night off so I can head the PTA meetings and you’ll have Saturday afternoons off so you can coach the soccer team”) and still be available to their clients. Certainly sharing in the responsibility and risk also means sharing in the profits, but those profits would still greatly outweigh an associates pay and this hybrid group has the freedom to set their own rules.
So who will the new buyer be? Probably a combination of all of them, but one thing is for sure; the old model of the single practitioner such as Siegfried Farnon is fading. Siegfried’s daughter Sally is now in line and she has to consider her three small children so she is going to do things a little different.
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