How is Veterinarian Production Calculated?

In the veterinary industry, the Pro Sal method is used a lot, which basically takes a percentage of the collection. So, whatever the practice received that is specific to the veterinarians personally performed services and then the vet will get a percentage of that. Many are just on straight-based salary, so there is no productivity necessary or at least they don’t get paid more for seeing more patients. Let’s just take a net collections percentage and talk about that. As I said before, if you’re on productivity-based compensation model, there are two ways of doing it, at least as far as most vets go.

One would just be pure net collections, meaning, you only get a percentage of what the practice receives from your services. And almost all those agreements will have a fee schedule. These are the things that you can bill for. And then these are the other things that will not count towards yours. Maybe like any food that’s bought from one of your patients would just go to the practice and not be attributed to you or maybe ongoing prescriptions after the first one. You need to look into that, obviously, that varies based upon the specialty, but they’re usually very specific about the services that count towards the collections of the vet. If you’re on pure net collections and you’ll get a percentage of what comes in and then that’s what you get paid.

Usually, it’s monthly. They would just do an inventory of what the practice received that month, then the percentage would be taken. And then that’s what the vet would get. Another way of doing it would be they would have draw. Let’s just say they made 120,000 a year, so it’s 10,000 a month, they would say any of the net collections received above 10,000 a month after you reached your salary threshold, then you would get, I mean for vets, 18% is kind of a standard amount. Then you get 18% of any of the collections received monthly above 10,000 a month. Or maybe they would do it quarterly. Then you’d get the 10,000, 10,000, 10,000, and then they would take any amounts received over the 30,000, and then you’d get 18% of what those net collections are.

In that model, usually, if you have a negative balance, meaning, you didn’t bring in 10,000 per month, that negative balance would be carried forward. And if you’re only generating 10,000 a month, you’re getting paid 10,000 a month, something is very wrong as far as the practice goes. Normally, somewhere between like 35 to 40% of the revenues generated by a provider would go to the provider. The rest contributes to overhead. That’s kind of the normal productivity model. Veterinarians don’t generally use just encounters or RVUs. It’s just usually a straight net collections base. Now, a couple of things you need to think about if you’re injured handing an offer would be, especially in the vet industry lately, just a lack of staffing. So, do they have an appropriate amount of vet techs to assist the vet in providing quick and efficient care?

I know many vets who must do everything. They have to room the patients; they have to do the initial assessments and all that kind of stuff that a vet tech normally would do. They have to do that in a day in addition to providing care for the animal. And that makes the vet less efficient. You need to make certain that they are staffed appropriately, and that they are efficient. In that way, it doesn’t affect you if you are on one of these productivity-based models. If you’re kind of entertaining a new job and the employer is not explicit about either what they’re going to do to make sure they’re appropriately staffed or is kind of wishy-washy as far as, oh yes, we’ve had problems, but you need hard data to determine if a job is worth taking or not.

And if an employer is unwilling to give you any of that, you need to move on, you need to just find a better opportunity. The places that are kind of, I don’t know if sneaky is the right word, but secretive about their numbers or staffing or anything like that. That is a huge red flag. And that would be some place that you’d most likely want to avoid. I think the vet industry is probably simpler than some of the others because it’s usually just a straight base net collection, pure net collections, or a hybrid of that. And I mean, in my opinion, it is easy to understand, but you need to make certain that the negative balance part is usually the biggest concern for most vets. And so, you need to make certain how much you’re at risk of a negative balance caring forward.

And especially, this is the most important thing in this blog, if you’re joining a practice and your net collections from the very beginning and they’re carrying forward negative balances and again, if you make 120,000 a year, if you’re just establishing a patient base, it will take you time to get up to speed. And whatever that threshold is, you may carry a negative balance forward and you might be in the hole, tens of thousands of dollars in the first couple of months. You want to make certain that there’s like a guaranteed base draw that won’t be held against you for those first few months while you’re building up a practice. Usually, it takes 12 to 18 months for practice to reach maturity. Now, if you’re coming in and replacing a vet that’s just left. Well, obviously, you have an established base. Therefore, it’ll kind of get you up to speed quicker, but if you’re just building from scratch and you’re on pure net collections, it’s going to be lean in the first few months.