Owning a veterinary clinic is a common dream for many veterinarians. However, owning a hospital is significantly more complex than just running someone else’s clinic. It starts with significant costs that can impact the short-term profitability and long-term success of the business.
In this article, we won’t discuss the initial output necessary to get started. Instead, we’ll just focus on the continuing costs associated with owning a veterinary clinic, including employee salaries, cost of medications and supplies, equipment purchases, insurance, and building costs.
Employee Salaries
One of the most significant expenses for a veterinary clinic is employee salaries. People cost money and good people cost more money. This of course is represented in the fees for the services you charge.
According to data from the Bureau of Labor Statistics, the median annual wage for veterinarians was $99,250 as of May 2020. In 2023, this number is around $120k. Veterinary technicians and technologists earned a median annual wage of around $40,000. Additionally, receptionists and administrative staff play a crucial role in the operation of a clinic and should be compensated appropriately.
Cost of Medications and Supplies
The cost of medications and supplies can also be a significant expense for a veterinary clinic. According to the American Veterinary Medical Association, veterinary drugs’ average markup is around 137% over the manufacturer’s cost. This markup can be higher or lower depending on the medication, the clinic’s location, and the supplier. Additionally, supplies such as surgical equipment, bandages, and cleaning supplies can add up quickly.
Some of the most commonly prescribed medications for pets include antibiotics, anti-inflammatory drugs, pain medications, and heartworm preventives, which you’ll need to purchase regularly, weeks or months in advance, but not so far in advance that they risk expiring.
Monthly spending on medicines, varies depending on the size of the clinic and the number of patients treated, but according to a survey conducted by the American Animal Hospital Association, the median monthly drug expense for a small animal practice was $2,367 in 2020. The survey found that medication costs represented approximately 7% of the average veterinary hospital’s gross revenue.
Medication costs can vary widely depending on the supplier, location, and type of medication being purchased. Some clinics may choose to purchase medications from a compounding pharmacy or a wholesale distributor, while others may purchase directly from the manufacturer.
In addition to medication costs, veterinary clinics may also incur other expenses related to drug management, such as inventory management software, storage, and disposal of expired medications. Proper management of medication inventory is critical to ensuring that the clinic has the necessary medications on hand to treat their patients while also minimizing waste and avoiding unnecessary expenses.
The most commonly prescribed medications are antibiotics, anti-inflammatory drugs, pain medications, and heartworm preventives. The amount spent on medication can vary widely depending on the clinic’s size, location, and the number of patients treated. Proper medication inventory management is critical to minimizing waste and avoiding unnecessary expenses.
Equipment Purchases
Another significant cost associated with owning a veterinary clinic is equipment purchases. Veterinary clinics require a range of specialized equipment, including x-ray machines, ultrasound machines, surgical equipment, and dental equipment. According to a report by the American Animal Hospital Association, the average veterinary hospital spends around $242,000 on equipment purchases.
Insurance
Running a veterinary hospital comes with many risks, and it’s important to have the right insurance coverage to protect the business and its employees. The following are some of the essential insurances that veterinary hospitals should consider:
- Professional liability insurance: Also known as malpractice insurance, liability insurance protects the veterinary hospital against claims of negligence or malpractice. It covers legal fees, settlements, and judgments resulting from a lawsuit.
- Property insurance: Property insurance protects the veterinary hospital’s physical property, including the building, equipment, and supplies, against damage or loss due to fire, theft, or other unforeseen events.
- Workers’ compensation insurance: Required by law in most states, worker’s comp provides coverage for employees who are injured or become ill due to their work at the veterinary hospital. It covers medical expenses, lost wages, and other related costs.
- Business interruption insurance: This insurance provides coverage in the event that the veterinary hospital is forced to close temporarily due to a covered event, such as a fire or natural disaster. It covers lost income and operating expenses during the closure.
- Cyber liability insurance: A rather new type of insurance, cyber liability insurance protects the veterinary hospital against data breaches, cyber-attacks, and other cyber risks. It covers the costs associated with notifying affected individuals, providing credit monitoring, and responding to regulatory investigations.
- General liability insurance: General liability is the most common type of business insurance. It protects the veterinary hospital against claims of bodily injury, property damage, and personal injury. It covers legal fees, settlements, and judgments resulting from a lawsuit.
It’s important to note that the insurance needs of a veterinary hospital may vary depending on the size of the business, the services offered, and the location. Working with an insurance agent who specializes in veterinary hospitals can help ensure that the business has the appropriate coverage to protect against potential risks.
Building Costs
Finally, building costs can also be a significant expense associated with owning a veterinary clinic. The cost of rent or a mortgage payment, utilities, and maintenance can add up quickly. It’s all but a guarantee that renovations or upgrades will be necessary to create a usable, comfortable, and safe environment for animals and staff.
Is Owning a Veterinary Hospital in Your Future?
Owning a business of any kind can be a rewarding experience, but it also comes with significant sacrifice. Many veterinarians quickly learn that if they want to own a veterinary hospital, then they can’t be a doctor. There just isn’t enough time to do both. Employee salaries, cost of medications and supplies, equipment purchases, insurance, and building costs are all expenses that must be considered and managed by someone in a full-time capacity. By understanding the commitment, as well as the costs, veterinary clinic owners can make informed decisions and ensure the long-term success of their business.
