Dr Jill Roberts owns a companion animal veterinary practice. Like all of us she is struggling with how to navigate the COVID-19 crisis. Her practice has introduced curb-side pickup to maintain a healthy workplace and minimize the risk of spreading the infection. Her clients have been very accepting of this new system and the team has the bugs worked out of the process, so it all works relatively well. Some doctors and staff actually prefer not having the client in the exam room. Jill plans on taking advantage of the 75% wage subsidy offered by the Canadian government but is wondering if that is enough to help her through this rough patch, or should she be thinking of laying some staff off to save some money.
March was a great month with clients stocking up on pet food, but April sales are about 20% lower than the same period in 2019. She is very concerned since April to June are her busiest months and the sales over the three months help overcome the losses over the winter during her slowest months. She needs to make a profit over the next few months to help pay down the losses over the winter and to give her a financial cushion to get through the slow months in the fall and next winter.
Here is some information about her practice.
- 3 FTE veterinarians including herself. One of the vets is an independent contractor while the other is a long-time employee.
- She has 8 FTE support staff, 3 of which are part-time. One of her RVTs has been a real challenge the past couple of years. She is an exceptionally dedicated worker but can bring a lot of drama from home to work. In spite of warnings this RVT hasn’t changed her behaviour.
- None of her employment contracts have any mention of seasonal lay offs.
- The practice is open from 9-6 Monday-Friday and 9-1 on Saturday.
- Emergencies are referred to a local emergency vet hospital.
Here is some financial information about the practice. Jill expects May to have the same decrease in revenue while June should be closer to normal if social distancing restrictions are lessened. On the left is what they expected their revenue and expenses to be based upon sales from April 2019 and to the right is what their profitability looks like with a 20% decrease in revenue.
Cost Of Goods Sold
$ 50, 400.00
Over the previous 3 months the practice lost $41,000 and they had total equipment leases of $13,500.
- Should Jill reduce her staffing levels for the next couple of months.?
- If she decided to reduce her staffing levels should she lay off some of the staff, or have them share reduced hours?