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Financial wellness: Money matters

Oct 4, 2017
  • A sound financial plan can help manage educational debt and reduce affiliated stress and anxiety.
  • Practice ownership is achievable for young practitioners and can be a pathway to financial success.
  • Take advantage of available resources to increase your business knowledge and chance at financial wellness.

Equine practitioners experience many stresses, not the least of which is financial pressure. Whether the result of educational debt, difficulty paying practice bills, or personal income that fails to meet one’s needs, financial pressure can negatively affect both physical and mental health. As such, financial health is one of the pillars of wellness.

Monetary troubles can sometimes persist in a career as an equine veterinarian. Many new practitioners begin with significant student loans; some experienced practice owners struggle to grow their business profitably; and scores of retiring doctors have difficulty selling their practice equity at the value they expect. At each of these stages, challenges with money management can strongly affect life outcomes, mood and stress-related illnesses. Education and an intentional focus on financial planning can help mitigate these effects.

In 2016, the average educational debt of graduating veterinarians was $143,758, and the debt-to-income ratio was 2:1. Awareness of the non-sustainability of this situation has grown: A student debt summit was held at Michigan State University in 2016, a recap of which is available here; and multiple resources have become available to assist young veterinarians. At the AAEP’s 63rd Annual Convention in December 2016, Dr. Tony Bartels of Veterinary Information Network (VIN) gave an excellent presentation on managing student debt. Watch his presentation here.

The AVMA and VIN, through their respective websites avma.org and vin.com, also provide several tools for comprehensive assistance in navigating the loan payment options available through various governmental programs.

Overcoming educational debt

Creating a good life while burdened with high educational debt can be challenging. The normal activities that should be affordable for a highly educated professional—buying a car, buying a house, having children or buying shares in a practice—can feel out of reach. This can seem horrifically unfair and lead to despair and depression. The creation of a financial plan with the help of a financial advisor can often introduce a sense of control, provide hope and minimize these negative emotions. When uncertainty is reduced, anxiety is also lessened.

Incomes generally rise when veterinarians become practice owners, as they share in profits. Debt-burdened new graduates often feel they cannot afford practice ownership. In fact, if a practice is valued properly, the income a veterinarian earns for their effort as a practitioner should not be affected by a purchase, as the profit they gain should fully service the debt and tax burden. Young equine practitioners should strongly consider embracing practice ownership as a strategy for financial success.

Focusing on practice profitability

For practices to be profitable, they must be managed with intention. Veterinarians in mid-career often become so busy with practice growth that they do not have time to spend on management. Many have no idea of their profitability, as they monitor only their revenue growth. Since profit can be a significant source of compensation for the hard work of being an equine veterinarian, attending to creation of a healthy net return is essential. The middle decades are typically a time of wealth accumulation; having a robust stream of profit allows this to happen.

Profitable businesses manage expenses carefully, charge appropriate fees, minimize discounting and work diligently to avoid accounts receivable. Ambulatory practices with strong leadership, established policies and procedures, and a shared vision require much less day-to-day oversight.

Veterinarians who seek out business management education will enhance their abilities to have financial wellness. There are multiple opportunities to gain business acumen. The AAEP offers The Business of Practice sessions daily at the annual convention, and there are dozens of excellent articles archived at aaep.org.

The AVMA likewise has numerous practice management resources on its website, including comprehensive reports on the economics of the profession. In addition, various private organizations offer educational seminars and networking groups. By becoming versed in effective business strategies, veterinarians can become more valuable associates or more successful practice owners.

Typically, the process of preparing a practice for sale at retirement requires 3 to 5 years. With practice value strongly tied to profitability, aging practice owners must diligently apply best practices to maximize the value they receive from this asset. In the event of an unexpected sale due to illness or injury, the potential for lost value can be significant. If a practice is well-managed throughout its lifespan, this outcome is avoided.

Financial wellness supports both physical and mental wellness, and allows veterinarians to have full and contented lives despite the stressful nature of the profession. Throughout their careers, equine doctors can be well served by utilizing the resources available to increase their business and financial literacy.

Dr. Amy Grice serves on the AAEP board of directors and is a member of the Wellness Subcommittee.