Selecting a Consultant For Profit and Profitability

With today’s intensely populated veterinary medical marketplace, savvy practices look for consultants to solve all their problems and stresses (less than 25% of the practices have used an in-practice, veterinary-specific, consultant).  Recent practice surveys showed an average client transaction (ACT) fee going up by over 20 percent, but the net income brought into the practice as going down; the true net (after clinical compensation, appropriate ROI on tangible asset investment, reasonable rent) is still only 9-15 percent in well-managed practices.

Unfortunately, many “consultants” often lose sight of just how difficult start-up projects can be on already full schedules and tight budgets.  Also, many of the generic consulting firms who enter the veterinary medical industry do not understand clients (versus customers), the patients, the veterinarian’s oath, or the basic value systems of veterinarians.  They are not veterinarians.  SBA tells us that about 70 percent of all new small businesses close their doors within three years of attempting to start.  The veterinary profession does not follow this rule!  Last year, SBA reports that over 60,000 small businesses went bankrupt.  But in the new millennium, only about ten percent of veterinary practices have closed their doors.  Previous to 1990, veterinary practices “never” closed.  The veterinarian would starve his family before closing the practice doors.  It is not that way anymore.

We have entered veterinary medicine as a profession and will sacrifice personal welfare for the good of the practice.  The average MBA approach does not understand this quality care concept, rather the view is that all action must be focused on increasing production within existing expense profiles.  Incredible consumer demand has been sweeping the service sector in the 1990s and into the new millennium.  The primary culprit causing failure is lack of “business” know how; according to Dun & Bradstreet, around 90 percent of all failures are due to poor management.

Even with years of experience behind them, some veterinary practice consultants often overlook what it takes to be successful as an entrepreneur.  Often, these type consultants had one successful practice, and never did the research on the demographics and community dynamics which allowed their success; these guys seldom have earned any advanced degree management education, so they can speak with a personal ‘authority’ on what will work, seldom confused, or even concerned, by the variables and facts surrounding each veterinary practice.

The average veterinarian is not ready to be the innovator in his/her part of the State for external marketing, nor do they have the capability to greatly modify her/his style of healthcare delivery.  The veterinary consultant must be ready with multiple alternatives to meet each challenge in the practice and must have the personal integrity to tailor the “best solutions” to meet the practice style of the healthcare delivery team and veterinarian(s).  More important, a good consultant must realize that there are not “acceptable” solutions to every challenge in a specific practice.  Just as it must be realized that no one person can be all-knowing in every facet of a practice’s need.  Peter Drucker, an American business philosopher and consultant, probably stated the reason best when he said:

“My greatest strength as a consultant is to be ignorant and ask a few questions.”

WHAT’S AVAILABLE TODAY?

To address this apparent hurdle in consultant need and/or selection (you can also review a non-refereed listing of self-identified veterinary practice management consultants and advisors, originally at www.avpmca.org as I left for Australia, but now http://www.vetpartners.org). I am one of the original founder of this group, and have watched it mature into a Veterinary Profession resource, but the original entry criteria (regional or national veterinary consultant, recommended by an existing member, has been opened to all “wanna-bes”, so discrimination is now needed to identify individual credentials. Generically, there are four basic types of consultant:

✭       Immediate fulfilment (gimmick guru – e.g., Open House consultant, selling low net OTC/food products, etc.) – those that give you a fish to gnaw on!

• Would recommend name tags with zone identification
• Would want to add another OTC resale item for clients
• Would recommend business cards with zone identification
• Establish a better web site +/- a recurring blog

✭✭    Participative (sidekick smiles – make the owner feel good) – supporting you in doing it your way, or selling you on methods which worked in their own practice or in the literature – those that like to go fishing with you.

• Would support your desires not to change, offering ideas from other sources that may fit with the existing practice culture.
• Would share some of the experiences as motivation to change some things effecting staff or clients (seldom the owner)
• Would center on doing tasks needed right now!
• Believes they can improve the practice by eliminating weaker staff

✭✭✭Subject-matter experts – supporting your practice in regulatory or administrative areas – those that give you the fishing regulations:

• Accountants (CPA), attorneys (JD), financial planners (CFP) – but ensure you have verified their credentials – have they passed the bar, passed the CPA exam, been approved by the SEC for CFP advice.
• Occupational Health & Safety – some players are veterinary-specific and recognized by OSHA and/or AVMA, while others are self-proclaimed.
• Architects, bankers, DEA experts, and other professionals who are sought after in special times of needs. Look for veterinary-specific experience.

★★★★ Credentialed Consultants – Leaders in the new models – the few special consultants who take the hard high road (e.g., team-based healthcare delivery with wellness surveillance, zoned facilities operated by staff, etc.) – those who will teach you to fish, so you can do it yourself in the future.

Have a proven yardstick of excellence (e.g., board certified), maybe have written a dozen texts, plus over two dozen monographs with diskettes, in the past few years, so you know what they stand for . . . including the wellness healthcare surveillance systems of the AVMA initiative “Think Twice For Life” (i.e., I was the consultant selected to roll out this program in 2004 because I was already doing well care on my consults) . . . to wit: centered patient advocacy to extend and enhance the quality and duration of an animal’s life.

Would require the ownership to agree to personally change BEFORE coming on-site.  Leadership is interwoven throughout the consulting

plan to ensure the staff is nurtured rather than intimidated into a new practice culture of continuous quality improvement.

• Believes in team-based healthcare delivery (essential in wellcare programs), so the doctor’s time can be leveraged; believes if “it” is worth doing, it is worth doing right. They may offer a “quick fix” to address a specific disaster looking to happen, yet the transition plan is to teach every person on the practice team to fish for themselves!
• Offer a diversified and specialized set of resources to the veterinary industry; depth of the consulting experience reflects alternatives in finding the right “chemistry” between consultant and practice staff member.

Some practices want a consultant so they may be guided by someone with a broader practice experience than the existing team, while others expect the consultant to change the liquidity without changing the cause of the problem (past leadership or management decisions).  Often the consultant or consulting firm will be a payoff almost immediately, yet other practices report that the consultant was only a sunk cost with no long-term benefits.  The question may be “Why the great difference in results?” or in some cases, “Why do I need a consultant to change my habits?”  If you have not asked these questions, you should!

Often the answer to which is the best consultant lies in the commitment to empowerment of others (inversely, “control freaks need not apply”).  Ken Blanchard, in the text Empowerment Takes More Than A Minute, states there are three keys to successful delegation/empowerment:

• Share accurate information with everyone
• Create autonomy through boundaries

Replace hierarchical thinking with self-managed teams

When all three are in dynamic interaction, look for magic to happen!

CHANGE

Change is not easy.  In the text, Who Moved My Cheese?, written by Spencer Johnson, M.D., you read about Hem, Haw, Sniff and Scurry, progressing through the maze looking for the best cheese; cheese is the metaphor for what you want to have in life.  Change management does have a scientific approach to moving from what was to what should be.  It can be expressed in this model:

C = D² x M² x P² < Costs

C =    Change.  Change only occurs when each of the other factors (D, M, and P) are present in equitable quantity.  If any of these factors are absent or in small quantity, your change cannot occur.  Also, interaction among D, M, and P needs to be positive enough that the benefits of any change will outweigh the costs any change.

D² =   Dissatisfaction/Desire.  When conditions are uncomfortable, change most often occurs, but not usually because of positive desire.  D represents the pressure to change through internal factors, such as doctor or staff unhappiness, or through external forces, such as competition or government regulations.  D is the energy required for change to occur and frequently can be the result of a crisis or of relevant, accurate, and supported data.  The manager’s role is to increase the desire (D) to energize the organization need for change.

M²  =  Modern Model.  M is the leader’s vision for new, positive methods to do things, think, feel, and behave; it is clear target on the horizon which motivates the hearts and minds of the team.  To create a lot of D without M results in blame and finger pointing.  People don’t know what to do.  Many managers can provide M, the picture of what “should be”, but often cannot provide P, so frustration replaces unhappiness.

P²  =  Participative Process.  P provides the means for individuals or teams affected by change to work through their resistance and reach a point of acceptance.  The process includes communication, participation, and time.  Mistakes are usually made in top-down or bottom-up processing where the higher or lower levels of the organization try to influence each other.  Wherever time allows, the best approach is a cyclical P where different levels in the organization lay out M, then look for reactions from others who are affected.  Such involvement usually leads to acceptance.

If we look back to the original question, “Why the great difference?”, we can now see some possible reasons why.  It is in the “participative process” or in simpler terms, the people, not the program!  If the practice leadership or staff are not willing to change for any of the above reasons or elements, the consultation engagement will not always be successful.  Inversely, if the practice knows it is in bad shape and is willing to make changes immediately, most any management consultant can make some difference.

THE CONSULTANT’S ROLE

The potential trauma of traveling alone through the practice jungle of State requirements, national policies, regional practice habits, and complex business needs of veterinary medicine evokes the axiom of strength in numbers to any national consultant.  Why?  In this complex environment, it is virtually impossible to provide a wide range of consulting services as a sole proprietor consultant.  Healthcare delivery is so complex that you need a critical mass of talent and people to function well in a consulting capacity. This is illustrated in the wide range of co-authors found in my 17 texts, from 4 respected technical presses.

During a typical strategic assessment during an engagement, a competent consultant will discuss case management, demographics, finance, medical/legal sufficiency, budgeting, personnel management, patient advocacy, client relations, and the group process.  The strength in any consultant program is the professional skills and interactions that can be brought to bear to develop innovative solutions.  The consultant must be able to build a team to meet the specific needs of the veterinary practice that pays the engagement fee.  There are caveats; consultants can be specialists or they can utilize referrals.  While most aspiring consultants like to think “I can do this myself”, they do a disservice to clients if they fail to mobilize the necessary expertise.

The process of selecting consultants starts with developing a pre-qualified “long list”, sometimes using a Request for Qualifications (RFQ) process if you are seeking a ‘credentialed’ consultant.  While the http://www.vetpartners.org web site provides a long list of self-identified consultants with self-identified strengths, AVMA, AAHA, VHMA, and even State associations may have consultant lists, often from some arbitrary and informal referral procedure; at this point in time, hearsay is about the only method being used to “validate” veterinary consultants.  The experienced veterinary manager may be helpful in creating a list of candidates who have relevant practice/project experience and in determining who on the list should receive the RFQ.  The “long list” should be pared down to a “short list” of about three, the diversity depending upon the type of consultant being selected.  Keep in mind that everyone is in a marketing mode during the RFQ process.  It is important to remain objective, consistent, and true to the ground rules your practice has established.  An Evaluation Matrix can help qualitatively and quantitatively assess RFQ responses (see Table).

Scoring: ++ = noteworthy, + = positive, o = neutral, – = negative, – – = default elimination

Include a list of needs which stipulates that the candidates should note their exceptions.  Waiting to disclose the practice’s preferred outcome until a consultant or consulting firm is selected is NOT advised.  The degree of importance of including the proposed list of needs up front will vary, based on the practice, project, special expertise, and type of consultant being selected.  As with most endeavors, experience is weighted heavily when it comes to any consultant selection.  There is NO substitute for having done a similar project, having first-hand knowledge of the critical success factors, and having the foresight to mitigate risks.  The short list candidates may have very similar credentials, experience and qualifications, so the final selection may come down to intangibles, such as team chemistry.  All things being equal, people usually do business with people they respect.

REALIZING EXPECTATIONS

Consulting is perceived as a glamorous profession, but it is three percent glamour and 97 percent perspiration.  Any good consultant presentation will be backed by many hours of research, development and custom tailoring to the practice.  Yet, consulting is more than effort and high energy.

Rendering technical know-how effectively and profitably is a challenge.  Like diagnostic medicine, consulting is a science.  But it is also an art, especially when it involves consulting to management.  The consultant must be competent, understand the industry, maintain an independent position, protect confidentiality, and persuade the practitioner to face reality.  If that sounds like a tall order, be assured that these tasks grow more complex as the consultant gains clients.

The experienced consultant will be able to tailor the recommendations into a set of alternatives that fit the tone of the practice and the style of medicine practiced.  The consultation will be a hands-on, value-driven, action-oriented, problem-solving experience.  Rather than just offer a series of written generic reports, the consultant assists the veterinarian with capitalizing on opportunities for growth.

The strategic planning so often publicized as a consulting benefit will rarely take place without strategic assessment and management implementation.  The consultant will take on strategic tasks that are critical to practice productivity and performance AFTER their own PEST assessment (please – never do a SWOT plan without PEST assessment first).  The bottom-line emphasis should integrate business goals with practice goals and link them to the human resource goals.  All practices have virtually the same market opportunity and similar capital availability so the savvy consultant will utilize the people power of the practice to achieve the prime competitive edge.

AFFECTING THE PROFIT LINE

Using a qualified veterinary practice management consultant is only productive and profitable if the practice is willing to change.  A consultant should not cost much more than one percent of the annual gross (or biennial if the efforts span two years). For example, our consulting partners have averaged 8% to 36% growth in the first year of the consult (i.e., high variance is due to number of practice programs already in effect when we start the consult). There are no secrets to the hard work that leadership and vision require.  While the elements of the change management formula can be easily written, they are much harder to embrace.  In healthcare, the realization has been that quick fixes are not productive nor do they change the profit in the long run.

The Bitterness of Poor Quality remains long after

The Sweetness of Low Cost has disappeared.

The changes must be continuous, and for most of the veterinary medical profession, quality based.  The term “Continuous Quality Improvement” (CQI) has begun to be accepted as a three- to five-year healthcare program for innovation and change in the delivery systems.  More accurately, the paradigms of the healthcare providers must be ready to embrace new technologies and new wellness surveillance methodologies.  The concept that “quality is the outcome” to put “pride into the task at hand” is revolutionary for most American workers.  This concept is taken for granted by most veterinarians and therefore never quantified or promoted within their healthcare delivery programs.  Training is a critical element of this concept, and should require at least one percent of the practice gross each year.

The consultant who produces more available time for the veterinarian causes an increased profit only if the practitioner is willing to use the new available time for a habit change.  The consultant who creates an environment of greater team harmony within the existing operations may help, but may also cause harm by removing the dissatisfaction required for change to occur.  This factor is especially practice dependent and requires the consultant to physically spend multiple days within a practice to get the real feel of the daily operations and staff interaction.  These things cannot be phoned into a practice from another State.

The bottom-line, or more accurately the top-line, before a practice consultant is engaged for practice profit and productivity enhancement reasons, you must be able to answer the following questions with a “yes” reply:

1. Am I willing to submit to scrutiny by an outsider?
2. Can I tolerate peer review and dissatisfaction with past performance?
3. Do I know where I am, technically as well as in business?
4. Am I willing to go somewhere new with the practice philosophy?
5. Am I willing to give up some control while increasing staff/client feedback?
6.     Will my practice philosophy allow us to commit the time to change?
7. Am I willing to change personally?

If there are any “no” replies from the above seven questions, consider using a free consultation from a SCORE consultant.  SCORE is the Service Corp of Retired Executives, a volunteer-based, not-for-profit group of successful, but retired, business executives.  Any Small Business Administration (SBA) office can direct you to the nearest Chapter (listed in the Government pages in the telephone book).  The “SBA listing for their 320 SCORE chapters” are at https://www.score.org/find-location, and they will also provide the closest SCORE chapter.  The free SCORE consultation may provide the veterinary practice leadership with enough small business resources to by-pass a consultant, or may provide a good set of parameters to use in selecting the right consultant for the practice.  In the final assessment, a SCORE Chapter is the safest place to start looking for a consultant.