Buying a veterinary practice in Florida

Most practices for sale are small animal general practices. They see dogs and cats (sometimes exotics, sometimes horses) for wellness exams, vaccines, dental cleanings, spays and neuters, sick visits, surgery and diagnostics. Clients pay at the visit. Pet insurance, where clients have it, usually reimburses the client rather than the practice, so you aren't waiting on claims the way a human medical practice does.

Revenue comes from professional services, in-house lab work and imaging, and the pharmacy and food the practice sells. Some practices sell wellness plans, where clients pay monthly for a year of preventive care, which smooths cash flow. The work is recurring by nature: pets come back every year for vaccines, more often as they age, and prescriptions for chronic conditions and parasite prevention get refilled. Some practices add boarding, grooming or after-hours care. A typical team is one to three veterinarians, technicians and assistants, front desk staff and a practice manager.

• More than one veterinarian, so revenue doesn't depend on the owner's own appointment book.
• A growing number of active clients (those seen in the last year or so), with reminders that bring them back.
• A full schedule of dental and preventive work, not only sick visits.
• Equipment that's current and maintained: digital x-ray, in-house bloodwork, dental x-ray, anesthesia monitoring.
• Fees reviewed every year, and every service actually charged for. Missed charges are common in busy practices.
• Technicians who stay, and a practice manager who runs the front desk and inventory.
• A lease or building with room for another exam room.
• A good working relationship with the nearest emergency hospital for after-hours referrals.

The Board of Veterinary Medicine at the Department of Business and Professional Regulation (DBPR) licenses veterinarians under chapter 474, Florida Statutes. Every establishment where a veterinarian practices, permanent or mobile, needs a premises permit, and each application must name the licensed veterinarian responsible for managing it (section 474.215).

You don't have to be a veterinarian to own a practice. Under the same section, an owner who isn't a veterinarian applies to the board for the premises permit, names a licensed veterinarian to supervise the practice, and goes through a state criminal records check. If that veterinarian changes, the permit holder has 10 days to tell the board.

Premises permits don't expire, but DBPR says they stay valid only while the clinic keeps the same owner and location. When a clinic is sold, the new owner applies for a permit in its own name and the clinic is inspected again. DBPR issues a temporary permit to operate until the inspection is done. If you're buying the company that holds the permit, ask the board whether that counts as a change of owner. Veterinary licenses belong to the individual veterinarians, and DEA registrations for controlled drugs can't be transferred without the DEA's written consent.

• Doctor dependence. Look at how much revenue each veterinarian produces. If the seller produces most of it, the practice's value depends on a long handover and on hiring another veterinarian, which can take a long time.
• The permit record. Look up the premises permit and any discipline on DBPR's license search, and ask for the last inspection report.
• Associate agreements. Read the other veterinarians' employment contracts, pay formulas and any noncompete terms.
• Controlled drug records. Logs, inventories and storage should be in order before you take over.
• Medical records. Complete records back up the client list you're paying for.
• Equipment. Note its age, service contracts and any equipment leases you'd take over.
• Pharmacy and food sales. Online pharmacies have pulled this revenue from many practices, so check the trend.
• Local competition. Practices owned by large groups may be nearby and hiring from the same pool of veterinarians and technicians.
• The seasons. In some areas, clients leave for the summer with their pets.

• How many active clients do you have, and how do you count them?
• How much of the practice's revenue comes from your own appointments, and how long would you stay to introduce clients to the other doctors?
• Do your associates have contracts, and is anyone planning to leave or hoping to buy in?
• Which equipment is owned and which is leased, and what will need replacing soon?
• How do you handle emergencies and after-hours calls?
• How have pharmacy and food sales changed over the last few years?
• When did you last raise fees, and how did clients respond?