Dr. Jasen Trautwein graduated from Texas A&M University in 2000 with a DVM.  Since 2003, Jasen has acquired 10 veterinary clinics with a combined revenue of over $20 million.  He is a member of the AVMA and previous president of the Capital Area Veterinary Medical Association from 2006-2010.

 Website: http://veterinarygrowthpartners.com/

 

Rebecca: Tell me a little bit of your backstory, when you graduated from veterinary school and how you got to where you are now.

Jasen: I graduated from Texas A&M in 2000, and I went to veterinary school with the intention of
being a marine mammal veterinarian. During college and veterinary
school, I’d done a lot of marine mammal work.

Jasen: In my senior year, I did my own curriculum where I did a lot of internships that were
marine mammal related. So I was working with the navy and their marine
mammal program, SeaWorld, and also, I always had an interest in
business. I went to school during the dot-com boom, and most of my
friends in college went to Wall Street, were making a lot of money, and I
was working at… vet salaries at the time I think was $33,000 or $35,000.

Jasen: I got some money and I was trading stocks and learning about businesses back
then. And everybody was a good trader because everything was just
going up.

Rebecca: Right, right. You couldn’t make a bad decision.

Jasen: I remember one day I was on an equine rotation and I had made a trade,
and Iiterally, in 30 minutes, I made three grand. I’m like, “When am I ever
going to make $3,000 as a veterinarian?” When I graduated in 2000, I
ended up coming to Austin.

Jasen: So I got a job as an associate, and after three years, right at three years, I
bought a practice with the partners, an emergency practice, and ended
up opening 24 hours. I ended up buying him out in 2005. At that time I
bought a second practice. At that point, I made the decision, I had a
wife, a second kid on the way. I had hired a couple of people to be the
manager person. Everything I had read in the Vet Economics, et cetera, was how you
should best use your time. You’re trained as a veterinarian, so don’t do
management stuff, don’t do whatever. Just do veterinary work. And so I
tried to stick to that principle, and the managers we had hired had kind of
blown up. So I made the decision at that time to either practice or not
practice, and so I stopped practicing in ’05 after just five years of
practicing.

Jasen: ‘05 is when I made the switch from working in the business to working on
the business, and have subsequently bought 15 practices.

Rebecca: Wow.

Jasen: And one of the things that we’ve done is we do a lot of mergers, we’ll roll practices in
together. Our industry is way, way under capacity, and there’s too many
clinics. I think that we’re just starting consolidation, and we’ll continue to
consolidate. I think that’s a real viable strategy.

Rebecca: The clients have been fine with all that?

Jasen: Yes. We have a system we’ve put in place, and we’re serious about
educating them and letting them know how and why we’re making it.

Rebecca: Right.

Jasen: Defining the benefits for them, why it’s going to be better.

Jasen: Yeah. So we’re growing. We’re in Texas, Arkansas, Kansas.

Rebecca: Yeah. Okay. Cool. Now, I’ve worked at one of your sites, and you have your
core values and mission and all that on your website, which is awesome.
Seeing that you have… so if you acquire a new hospital, you bring in the
core values and mission and all that stuff to the people in the team so that
that’s all pretty much the same between all the practices?

Jasen: No Actually, our model is a little bit different. What we try to do is help the current
practice achieve its mission, vision, and values.

Jasen: I just launched a new business this past year called Veterinary Growth Partners. One of
the things that we’re doing at Veterinary Growth Partners is called a
Pathway to Success. But it’s essentially training modules to manage a
successful practice, and the first module we released was the Mission,
Vision, Values module.

Jasen: It’s an online learning platform. Members of our group can go on, and essentially, it’s a
pathway or checklist to successfully manage a practice.

Rebecca: That’s great. So they can just do it at their convenience type of thing?

Jasen: Yes they can start and the first question is… it’s kind of like a “choose your own
adventure” book. It’s like, “Do you have a mission and values?” And if
they say yes, then it’ll say, “Great, enter them in,” and, “How are you using
them?” And if you say no, well, “Here’s why it’s important, and here’s how
you can create them.”

Jasen: “Here are the tools and the resources you need to create them for yourself,” or, “Here’s a
third-party vendor or consultant who can come and help you do it for
you,” so linking them with resources where they can implement
themselves or linking them with resources if they need to reach out and
can help do that as well.

Rebecca: that is great

Jasen: It’s $300 a year, but it’s free for the first three months.

Jasen: On a typical million-dollar practice, we’re saving them between $800 to $1,500 a
year just in merchant processing.

Jasen: Some even higher than that. So it’s just a cash flow positive deal. And then we have
deals with IDEXX, Zoetis, Patterson, and then we’re coming out with these
learning modules. We have another relationship we just created with a
company called CallSource, which in my opinion is going to be a gamechanger
in our profession. I was the first veterinarian in Austin using
Google AdWords, and I just watched how that has changed over the
past 10 years, how the Yellow Pages has disappeared.

Rebecca: [laughs] Yeah.

Jasen: CallSource effectively brings Fortune 500 call center management to mom and pop and
we have the exclusive license in the animal health space. So you have to
be a member of VGP to get the service. You can go on the website and
look at it. Every practice should have it.

Jasen: It’s a huge revenue generator. In addition to a training opportunity to get customer
service right, it has a marketing component. Any marketing effort that
you do at any clinic is tracked, and so you know how many calls are
generated per effort, and then how many of those calls are actually
converted into appointments.

Rebecca: How do you feel about the state of the profession-where we’re at and where
we’re headed.

Jasen: Yeah, I mentioned earlier just the oversupply. We’re over capacity.

Jasen: I think it’s this combination of an oversupply of veterinarians and the small animal market.
Some studies will say, “Oh, there’s a shortage,” but there’s really not a
shortage of veterinarians. There’s a shortage of veterinarians who want to
do some rural practice or food inspection type jobs.

Jasen: Now it’s three to one and double applicants, so you have the talent pools decreasing,
more kids going into the profession, less jobs in the profession. Client
transactions are decreasing every year.

Jasen: Prices are going up, and so there’s pressure on a lot of fronts. I think it’s a good time to
be an owner in the industry, in a position where you’re consolidating. I
think it’s a rough time to be an associate. I don’t think it’s going to get
better before it gets worse. I think it’ll be worse.

Jasen: I think that’s part of what I try to bring to our practice is actually run them like a business
as opposed to run them like kind of a mom-and-pop operation.

Jasen: And unfortunately, I have this saying where 10 years ago in our profession, if you had the
right location, you were good with medicine, you were good with people,
or you had good business sense, if you had one of those four you could
be successful.

Jasen: It just took one of the four and now I think you need to have at least two; and to be really
successful, three to four out of the four.

Rebecca: Yes, I definitely agree.

Jasen: And that really shifted during the recession. And I don’t see it ever going back to being
able to be successful with one of the four.

Jasen: I think it’s going to be interesting, what happens, as these new associates are coming
out.

Rebecca: It’s crazy. Sad.

Jasen: Yeah, I agree with you. I think there’s going to be a big… it’s kind of what’s happening in
our society as a whole. The split between the haves and the have-nots is
getting bigger, and there’s nothing in the middle. And I think that’s what’s
happening in our profession. And it shows by the No-Lo Practice study
and whatever papers that came out that most practices really aren’t
profitable.

Rebecca: I know.

Jasen: And that’s part of our mission at Veterinary Growth Partners is to help. Our
goal is to help to maximize profits in the practice.
A lot of practices don’t even know how profitable they are, and don’t use
that as a measure, and don’t even know how to get that measurement
accurately. And that’s part of what our learning modules will help you learn, to
understand how to financially manage your practice or point you to the
resource to get them to do it for you if you don’t have the inclination or
the desire to do it on your own. Because if you’re not doing that, going back to the four things, you need to financially manage your business to be successful, I think. For most
veterinarians, their practice is their number one asset. I get a lot of calls
for one, little, two-doctor practices that people are wanting to sell, and
I’m just like, “There’s nothing to buy.”

Rebecca: I know. It’s crazy.

Jasen: Yeah, and that being said, it’s a 40-billion-dollar industry. People love their
pets, we’re more fragmented as a society, and people are getting more
and more bonded. I think the level of care is increasing, which is a good
thing–

Rebecca: Absolutely.

Jasen: … but in some ways a bad thing because it drives up the price.

Rebecca: Yeah. I know. It’s a double-edged sword.

Jasen: Really understanding your market segment, who your clients are… and I think that’s one
of the things that’s going to challenge the consultants that want
everybody to be a Rtiz Carlton practice.

Jasen: Know your market and cater to your market.
We have a practice in Arkansas that’s in a transitioning neighborhood,
and I had a manager go in there and try to make a Ritz Carlton practice,
and it is not what is going to be successful in that area.

Jasen: And it’s hard, because in veterinary school, we’re preaching to all the students, “Practice
top-notch medicine. Do this, do that,” In some ways, we try to model
human medicine, but we’re really in a luxury service.

Jasen: We’re not a necessity. And even human medicine, the standards are different. And
because we don’t have third-party-payer system and because animals
are property, and because people are paying out of pocket, there are a
lot of differences. And so, from a medical and clinical standpoint, we
want to emulate and mimic them, but from a financial reality, it’s not
going to be that way.

Rebecca: What do you like about veterinary medicine? Obviously, I know you like the business
part of it, but what is one of those things that gets you up every day to do
what you do? Besides the spreadsheets, of course.

Jasen: Besides my spreadsheets? That’s a good question. For me, it’s been a great
opportunity to create the life and the lifestyle that I want. I’ve always
loved animals, growing up. I think that helping people and helping pets
has been fun. I always enjoy the relationships that I create with clients
and patients. Now my relationships are more with the people in my
organization, which is also fun.

Jasen: I’m also a member of a group practice in the Caribbean, the Turk and Caicos Islands,
and so I do practice there two weeks out of a year. It’s pretty fun,
because it’s… we have a really well-equipped clinic but super casual. I
go to work in my shorts and flip-flops.

Rebecca: That’s a good way to do it.

Rebecca: What is one piece of advice that you would give to a practice owner?

Jasen: Learn the difference between accrual and cash accounting.

Rebecca: I still struggle with that one.

Jasen: If you can understand the matching… and even a better way to put it is the matching
principle that when you’re recording expenses, they’re recorded in
conjunction with the revenue that’s generated from those expenses.

Rebecca: So then you actually have an idea of profitability

Jasen: Because without that, you have no idea of profitability, and so then you
can’t make any decisions. So if you don’t keep your books using
the matching principle, which is effectively accrual accounting, then
you’re just kind of flying blind. At the end of the year, on a yearly basis,
you’ll have the information that you need, but the problem is, I think,
that’s too long of a period of time to be making financial decisions.

Rebecca: What about advice for an associate, somebody that’s been out now three to five
years?

Jasen: I think if you’re an associate and you want to get into ownership, that you
really need to do it within the first three years. And if you find yourself out
five, six, seven, eight, years, you probably don’t have the entrepreneurial
drive that it takes to get into ownership.

Rebecca: Right.

Jasen: And so I would encourage you, at that point in time, not to make that
leap solo. I think you could do it with someone who does have that drive,
so tag along. But I wouldn’t necessarily take that on myself.

Rebecca: Right.

Jasen: The banks I work with have sort of said the same thing. Long-term
associates… what happens is they plateau, and so they want to get into
ownership to make more money. But you don’t own a business because
you want to make more money; you want to own a business because you
want to own a business.

Rebecca: Right. Very true. Very true. What about advice for new grad?

Jasen: Just try and get yourself on a pathway into an ownership position as soon
as you can, if that’s your interest. And if not… really, like something that
you said, look for a practice where you have some mentorship. I think at
veterinary school, you’re trained to be a technician, and so when you get
out into the field practicing that, being in an environment that is nurturing
and will cultivate your growth would be ideal. I think, unfortunately, the
job market’s so tight now that you don’t always have that choice.

Rebecca: Right.

Jasen: Those would be the things I’d be looking for. Look for a practice that has location, has
someone who’s good with people, someone who’s good with medicine,
someone who understands business, and then just try to learn as much as
you can.

Rebecca: what do you think veterinary medicine will be like 10 years from now?

Jasen: there’s going to be continued consolidation. I get calls almost a couple
of times a month from private equity folks wanting to get into the space.

Rebecca: Wow. Really?

Jasen: There’s a lot of opportunity, and there’s a lot of inefficiency. And so I think
that the market’s… if you believe in the Efficient Market Theory, markets
will get more and more efficient. And we have not done a good job of
protecting our profession for us ourselves, and we’re in the process of
losing it.

Jasen: Looking at dentistry and what they went through, I think, in the ‘60s, when they had to
shut down some schools and really kind of take back the profession, I think
getting the beans and the AVMA, getting everybody on the same page
around how many vets do we really need and shutting schools down or
adjusting class sizes so that we’re able to really create a sustainable
profession for future veterinarians.

Jasen: Because right now, the path isn’t sustainable.

Rebecca: No. It’s really not.

Jasen: It’s our own fault.

Rebecca: Yes it is.

Jasen: There was a study done in the ‘80s that basically said exactly everything
that’s going on now, and the AVMA commissioned it, and basically all the
recommendations were ignored.

Rebecca: Wow.

Jasen: There’s going to be oversupply.

Rebecca: No doubt, well thanks for your valuable time and we will definitely have
people check out your website.