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The Ohio State University College of Veterinary Medicine Veterinary Medical Center

Companion Animal Wellness Clinic – Total Wellness Care Providing comprehensive, compassionate care for your pets as if they were our own

Business Plan – June 20, 2011

The College of Veterinary Medicine Companion Animal Wellness Clinic – Business Plan

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Executive Summary

Upon graduation from the College of Veterinary Medicine (CVM), approximately 70% of Doctors of Veterinary Medicine (DVM’s) will enter into a community-based companion animal general practice that typically provides wellness care to pets. Client visits to the Veterinary Medical Center (VMC) for wellness care have grown from 5,449 in FY06 to over 7,300 in FY10, but still remains insufficient in number and type of cases to provide the best possible educational experiences and clinical instruction for students. For a variety of reasons, it is challenging to foster a robust wellness caseload when the service is contained within a large, comprehensive, tertiary veterinary medical center with multiple specialty services and acute disease activity. In 2010, client visits for wellness services represented only 16.75% of small animal visits to the VMC. Business and practice management skills that are essential for community-based companion animal clinics are more challenging to implement within the confines of a large, comprehensive multi-specialist-based VMC. As a result, students do not receive optimal instruction, mentoring or role modeling, or obtain adequate skills regarding sound business and practice management necessary in a wellness practice setting. In addition, recent curriculum improvements have generated an increased student participation in the wellness clinical rotations. Leadership of the College of Veterinary Medicine has explored and developed plans to establish an off-campus Companion Animal Wellness Clinic – a clinic providing Total Wellness Care and has identified a facility that is ideally situated for its needs. This Companion Animal Wellness Clinic would be a “satellite” clinic of the VMC. The VMC will focus its marketing efforts on developing an ongoing “continuing care” relationship with clients of the existing clinic and on attracting new clients by educating campus-wide faculty and staff about the new facility and its accessibility, convenience and service offerings. Business practices will be implemented that are designed to increase return visits (continuity of care) and improve client acceptance of recommended standards for companion animal pet care. Our clients who complete a satisfaction survey routinely compliment our students with whom they directly interact during their pets’ visit to the VMC, and highly rate this aspect of their experience; clients actually view the students as their pets’ personal care advocates. We hope to build upon our clients’ connection with and appreciation for our students, and the role they play in our students’ clinical education and help prepare our graduates to be the society-ready veterinarians of tomorrow. The current Companion Animal Wellness Clinic (Community Practice Service) within the VMC offers a full-service wellness care clinic (Total Wellness Care) designed to provide preventive care and basic treatment for sick pets of faculty, staff, and students of the University and of the general public. Total Wellness Care for pets refers to our approach at The Ohio State University Companion Animal Wellness Clinic for providing comprehensive, compassionate care for dogs and cats throughout every life stage from puppy/kitten care, adult care, to senior care. At the Wellness Clinic, we care for your pets as if they were our own. This approach incorporates preventive medical and dental care with nutrition/weight management and behavioral wellness to optimize the health and well-being of pets, improve their quality of life, and help them live longer and fuller lives. This allows them to be fully integrated and well adjusted members of the household where they enrich the lives of families.

The VMC was first accredited by the American Animal Hospital Association (AAHA, www.aahanet.org) in 1975 and has been continuously accredited for over 35 years. In addition to providing each pet with leading-edge care, we anticipate the Wellness Care Clinic will serve as a “clinical laboratory” to teach senior veterinary students through experiential learning the most current and progressive practices in

http://www.aahanet.org/



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preventive medicine and wellness care, including behavioral wellness and low-stress handling, and to teach business practices that are necessary for a financially successful and sustainable community-based companion animal clinic. The experiential learning will involve active involvement in patient care, client interaction, and business practices combined with observation and participation in “faculty only” clinic days whereby efficient and effective client services, patient care and sound business practices are modeled.

Although a separate facility, the Companion Animal Wellness Clinic will organizationally and operationally continue as a service unit under the umbrella of the VMC’s Hospital for Companion Animals. The Clinic, which will be located in close proximity to the VMC, will have a dedicated staff that will provide operational oversight. It is anticipated that the majority of staff for the new Clinic will consist of current staff members of the Community Practice Service within the Hospital for Companion Animals. Faculty from the Department of Veterinary Clinical Sciences will have day-to-day responsibilities for clinical operations of the Companion Animal Wellness Clinic, and will be supported by Instructors, Registered Veterinary Technicians, an Applied Animal Behaviorist, and Veterinary Assistants. A Business Manager will be responsible for all administrative and fiscal activities of the Clinic and will be supported by a modest administrative staff. The Director of the Veterinary Medical Center and the Associate Dean of Clinical and Outreach Programs will provide overall administrative oversight for this Clinic and its operation. The financial projections prepared for the new Companion Animal Wellness Clinic discussed in this business plan indicate that revenue generated from the new Clinic will be more than sufficient to cover operating expenses of the Clinic and be sustainable long term.


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Table of Contents

Executive Summary ................................................................................................................................ 2 Table of Contents ................................................................................................................................... 4 The Project Description – Companion Animal Wellness Clinic .............................................................. 5

The Need – Companion Animal Wellness Clinic ................................................................................. 5 Off-site Companion Animal Wellness Clinic ....................................................................................... 8

Marketing Strategy ................................................................................................................................. 8 Market Analysis .................................................................................................................................. 9 Marketing and Promotion ................................................................................................................ 10 Pricing Services ................................................................................................................................. 12

Operating Plan (Service Offerings and Business Practices) .................................................................. 12 Companion Animal Wellness Care ................................................................................................... 13 New Puppy and Kitten Care.............................................................................................................. 14 Routine Dental Care ......................................................................................................................... 14 Routine Surgery (Spay and Neuter) .................................................................................................. 14 Nutrition and Weight Management ................................................................................................. 14 Senior Pet Care ................................................................................................................................. 15 Behavioral Wellness and Medicine .................................................................................................. 15 Emergency and Referral Specialty Services ...................................................................................... 16 Honoring the Bond Program ............................................................................................................ 17 Wellness Plans for Every Stage of Your Pet’s Life ............................................................................ 17 Description of Business Practices ..................................................................................................... 17

Organizational Structure - Personnel ................................................................................................... 19 Financial Summary ............................................................................................................................... 20

Balance Sheet 5-Year Projections ..................................................................................................... 20 Statement of Operations 5-Year Projections ................................................................................... 21 Statement of Cash Flow 5-Year Projections ..................................................................................... 22

Appendices ........................................................................................................................................... 23 Appendix A: 807 Kinnear Road Property Brochure & Purchase and Renovation Budget ................ 23 Appendix B: Detailed Financial Projections ...................................................................................... 25 Appendix C: Wellness Clinic Financial Projection Assumptions ....................................................... 31 Appendix D: VMC Caseload and Financial Projection Assumptions ................................................. 33 Appendix E: Summary of Process for Business Plan Development .................................................. 34


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The Project Description – Companion Animal Wellness Clinic

The Need – Companion Animal Wellness Clinic

Academic Reasons: Upon graduation from the College of Veterinary Medicine (CVM), approximately 70% of Doctors of Veterinary Medicine (DVM’s) will enter into a community-based companion animal general practice that typically provides wellness care to pets. Client visits to the Veterinary Medical Center (VMC) for wellness care have grown from 5,449 in FY06 to over 7,300 in FY10, but still remain insufficient in number and type of cases to provide the best possible educational experiences and clinical instruction for our students. Beginning in the spring of 2011, the CVM implemented a more flexible and career-oriented clinical curriculum for 4th year students. The Career Areas of Emphasis (CAE’s) allows students to focus a portion of their final year of education on their chosen area(s) of career interest. The current Community Practice Service is a required 2-week rotation for all 4th year veterinary students regardless of their chosen CAE, where students are exposed to and participate in the evaluation and management of cases that would typically present to a community-based companion animal (pet) private veterinary practice. Those students who choose the small animal CAE are required to spend additional time in this rotation and/or in internal medicine. The type of cases typically seen in a community-based private companion animal clinic involve puppy and kitten care, spay and neuter, general wellness and preventive health care, geriatric care, dentistry, nutrition and weight management, general surgery, behavior, minor illnesses and injuries, urgent care, and other related services. For a variety of reasons, it is challenging to foster a robust wellness caseload when the service is contained within a large, comprehensive, tertiary veterinary medical center with multiple specialty services and acute disease activity. In 2010, client visits for wellness services represented only 16.75% of small animal visits to the VMC. Furthermore, it is difficult to provide our students with a realistic and “real world” experience that prepares them to be society-ready graduates in this setting. For example, when graduates enter into a private practice, most will not have veterinary specialists within the same building where they can and often do obtain a “hallway consult”. This occurs frequently in the VMC. A separate location will help students to learn to think and problem solve without resorting to a consult so early in their work-up of a patient. In addition, students will learn the skills related to the decision to refer a patient to a specialist, including the communication with both the client and the veterinary specialist, and to get firsthand experience in the proper process for referring patients, complementing their experiences at the VMC where they routinely receive cases that are referred for specialty care. Another benefit of the robust and diverse caseload that can be fostered at the Companion Animal Wellness Clinic is that it will present unique opportunities to participate in funded clinical trials supported and sponsored by corporate/industry entities and foundations/agencies interested in evaluating efficacy of new diagnostics and treatments, disease prevalence, risk factors and other related questions and topics important for clinical discovery. Some of these trials will likely involved sponsor-provided financial incentive for clients to participate, which will also help contribute to return visits.

Business and practice management skills that are essential for community-based companion animal clinics are more challenging to implement within the confines of a large, comprehensive multi-specialist-based VMC. As a result, students do not receive optimal instruction, mentoring or role modeling, or obtain adequate skills regarding sound business and practice management necessary in a wellness practice setting. For our graduates who leave their educational program with approximately $150,000 in indebtedness, such business management skills are critical to their success and financial stability. The College of Veterinary Medicine leadership has developed plans to address these needs and believes that


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the students’ experience within a stand-alone well-managed Companion Animal Wellness Clinic that incorporates and focuses on sound business practices and immerses students in this environment will better equip our graduates to be successful in private practice. This experience will provide a fluid transition into their anticipated “real-world” environment and will better meet the expectations of employers upon graduation. These employers, many of whom are alumni of the College of Veterinary Medicine, recognize the need for students to be better prepared in the non-medical (communication, business and practice management) professional skills to complement CVM graduates’ already strong veterinary medical knowledge and clinical skills. The CVM already has an endowment generously provided by Dr. Harry Bartels, which delivers a core didactic program in practice management skills. The Companion Animal Wellness Clinic will provide the clinical laboratory in which the students can practice and perfect their medical and non-medical skills. The Business Manager of the Wellness Center will participate in the practice management education component of the student clinical experience. The students will learn through active involvement in patient care, client interaction, and business practices combined with observation and participation in “faculty only” clinic days whereby efficient and effective client services, patient care and sound business practices are modeled. Students will learn how to communicate and work effectively as a member of the veterinary care team, including how to most effectively utilize registered veterinary technicians to optimize their efficiency and productivity.

The applicant pool for admission to veterinary schools has been stable yet relatively robust for several years. The applicant pool at Ohio State has remained strong with a large number of highly-qualified applicants, including Ohio residents and non-residents. The Ohio State CVM provides a highly desirable academic program for students from the 23 states that do not have Veterinary professional programs. We have routinely received approximately 800 applicants for 140 seats. As state support for teaching continues to decrease around the country, most other veterinary schools are either increasing their tuition and/or increasing the number of students they accept into their programs. This year we increased the size of our incoming class from 140 to 162. With increased numbers of applicants accepted at other schools, we must continue to differentiate and distinguish ourselves from the ever-increasing competitive market for veterinary student applicants, by providing excellent educational programs and experiences. The proposed Companion Animal Wellness Clinic will be one such program that will be a competitive advantage in the successful recruitment of the best and brightest students to the Ohio State College of Veterinary Medicine since few other veterinary schools have robust Companion Animal Wellness services and especially not stand-alone satellite clinics that immerse students in a companion animal practice that provides “real world” experiences in veterinary medicine and practice management. Business Reasons: Convenient access to services is of paramount importance to pet owners when considering their options for veterinary care. The current location of the Community Practice (wellness care) Service within the VMC provides limited access to the general public. Way-finding and parking at the existing VMC facility are significant deterrents to potential clients. As a result, growth of the Community Practice Service caseload, which is needed for both the educational mission and revenue generation, is limited. A facility that is closer to the community, located outside of the VMC and more visible to the general public, will provide greater opportunity for growth of wellness services offered by the VMC. Pet owners looking for wellness care for their puppies or kittens as well as their adult or senior pets, are looking for a clinic that provides a low-stress and comforting environment. This environment is difficult


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to provide within the confines of the comprehensive VMC that often has a lobby filled with seriously ill and or emergency/urgent care cases. This situation is not conducive to providing the “ideal” environment most pet owners are looking for in their primary care veterinarian. An off-site satellite clinic, located near the VMC will reduce congestion, be more visible to the general public, provide easier access and better parking to clients, and provide a more comforting and welcoming environment to clients and pets. All of these benefits should improve the students’ experiential learning opportunities while providing an enhanced experience for clients leading to a greater likelihood of repeat visits and new client recommendations. A facility that is adjacent to the OSU campus will provide easy access to and from the VMC by students, staff and faculty; provide ease of referral and transfer from the satellite wellness clinic to specialty care personnel and services at the VMC; and will minimize concern and opportunity for conflict created among private practitioners in other communities in Columbus. We will provide easily accessible and adequate parking, drop-off day time services with easy pick-up at the end of the day, along with exceptional and compassionate veterinary care for these “Buckeye” companions. Moving the current Community Practice Service to this facility with existing clients and growing the practice by focusing marketing efforts on faculty, staff and students of the University should also help ensure support from private practitioners. Practitioners understand the need to provide a more realistic “real world” experience of companion animal practice with a focus on business and practice management. These employers embrace the added experience we can provide through the Wellness Center since our graduates will ultimately be better prepared to enter into and integrate in their practices and contribute earlier and more meaningfully toward their successful businesses and livelihoods. We routinely hear from practitioners that our students need to develop better practice management and other non-medical professional skills to complement their strong medical and clinical skills. The Companion Animal Wellness Clinic will be designed and constructed to promote the “Total Wellness Care” concept that will help to minimize stress and make the pet’s experience as pleasant as possible. This will include separate entrance, lobby, and waiting areas, exam rooms, and kennels and holding areas for dogs and cats as well as other environmental enrichment and design features. Behavioral problems are the number one cause of relinquishment of companion animals, and according to American Animal Hospital Association statistics, behavioral issues are the number one cause of humane euthanasia of dogs and second only to overpopulation in cats in the US. It is estimated that over one-quarter of a million pets are euthanatized annually at veterinary clinics alone due to behavioral complaints, causing veterinarians to lose 15% of their client base annually, and which translates into an estimated average loss of $17,000 annually in gross income per veterinarian. A secondary but pressing consideration for relocation of the Companion Animal Clinic is that space in the existing VMC facility is already limited and our caseload and practice are constrained by the availability and quality of space; these demands are expected to intensify as specialty services continue to grow in size and scope. In addition, the CVM has a comprehensive expansion and renovation plan for the VMC within the next 3 to 7 years. Continuing accreditation will require this major renovation and expansion to meet current and future standards of care. Moving the Companion Animal Wellness Clinic to an off-site (satellite) facility, will help to ease congestion and allow for better management and operation of the facility during renovations of the VMC. Failure to renovate and expand this existing facility, which is aged and obsolete in many areas, could jeopardize our accreditation by the American


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Veterinary Medical Association (AVMA) and our AAHA accreditation. Likewise, our plan for renovation and expansion is consistent with University policy to renovate and re-purpose existing space. Expansion of specialty services into the space vacated by the current Community Practice Service and related surgery activity will provide an additional revenue stream for the VMC. We will offer expanded appointment slots and services for behavioral medicine, neurology and neurosurgery, orthopedics, oncology, interventional medicine, internal medicine (perhaps in two years with additional staffing in place) among other services. This will be facilitated by the availability of additional exam rooms and parking at the VMC that would no longer be used for Community Practice clients/patients and operating room availability since the spay/neuter surgeries will no longer be performed at the VMC. The assumptions and revenue projections related to these expanded services are reflected in Appendix D.

Off-site Companion Animal Wellness Clinic

Leadership of the CVM has identified a facility that is ideally situated for its needs. The facility is located across from the College of Veterinary Medicine at 807 Kinnear Road near the interchange of SR-315 and Kinnear Road. It is a two-story building, built in 1996, with 27,617 square feet of space that is in excellent condition. The Wellness Clinic would be located on the ground level, which has a total of 14,711 SF. The location addresses all of the issues previously discussed. It has abundant parking, is conveniently located near the CVM, providing an easy commute for veterinary students, and is very accessible by clients, including University faculty, staff, and students, and the general public. It will provide a light and airy feel to facilitate a comforting and welcoming environment that is one of the prerequisites for caseload expansion. This location meets our important criterion of being in close proximity to the VMC for the previously stated academic and business reasons, and importantly should minimize any perception or reality of “competition” with our private practice colleagues.

Marketing Strategy

The VMC will focus its marketing efforts on developing a continuing care relationship with current clients of the existing clinic and with attracting new clients by educating campus wide faculty, staff and students about the new facility and its accessibility and convenience. Business practices will be implemented that are designed to increase return visits and improve client acceptance of recommended standards for companion animal pet care. Our philosophy at the Wellness Clinic is to be patient-focused, client-centered, and family-centric. We understand the importance of pets in our lives and we value the relationship between our patients and their caretakers as much as our clients treasure their cherished pets. Therefore, we focus on the patient-client unit as a whole and the relationship or bond in our approach to Total Wellness Care. Total Wellness Care for pets refers to our approach at The Ohio State University Companion Animal Wellness Clinic for providing comprehensive, compassionate care for dogs and cats throughout every life stage from puppy/kitten care, adult care, to senior care. At the Wellness Clinic, we care for your pets as if they are our own. This approach incorporates preventive medical and dental care with nutrition/weight management and behavioral wellness to optimize the health and well-being of pets, improve their quality of life, and help them live longer and fuller lives. This allows them to be fully integrated and well adjusted members of the household where they enrich the lives of families. We also focus on the importance of low-stress handling and facilitating optimal care for fractious/anxious pets.


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Our clients who complete a satisfaction survey routinely compliment students with whom they directly interact during their pets’ visit to the VMC and highly rate this aspect of their experience; clients actually view the students as their pets’ personal care advocates. We hope to build upon our clients’ connection with and appreciation for our students, and the role they play in our students’ clinical education.

Market Analysis

The latest data for client visits to the Veterinary Medical Center for services that would be included in the Companion Animal Wellness Clinic including community practice, daytime urgent care, elective soft tissue surgery (spay, neuter and declaw), dentistry and behavior services are presented below for fiscal years 2007 through 2010. It should be noted that the fluctuations in some of the numbers (i.e., surgery) are related to the fluidity of faculty members in some of these specialties resulting from retirements and departures, and the lag time for recruitment and hiring of replacement faculty. Likewise, these numbers are also limited by the aforementioned facility and parking constraints at the VMC, and we project these will grow with the additional space, parking, and other conveniences and amenities of the satellite Wellness Clinic.

The VMC has built a referral network with local private practitioners in the surrounding counties and in the State of Ohio and is sensitive to the conflict that an off-site wellness clinic might create. As a result, marketing efforts will be focused on the University community of 34,199 faculty and staff. Since traveling with pets can be traumatic, distance is an important consideration when choosing veterinary services. The table below shows the number of faculty and staff members that live within 10 miles of the VMC (19,217) and that might consider use of a Companion Animal Wellness Clinic if located nearby the University. A significant number of faculty and staff members live outside of a 10 mile radius (14,982) from the campus area and are not expected to utilize the services offered. However, some may choose to bring their pets to the Companion Animal Wellness Clinic because of their interest in participating in and contributing to our students’ education experience, and may choose to use our convenient “drop-off” service.


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Using the data presented in the table above from the OSU Framework Plan, and formulas provided by the American Veterinary Medical Association to estimate the percentage of pet-owning households and pet population in a community, the estimated number of pet-owning households within the community of faculty and staff is 14,124. Additionally, the estimated number of pets owned by faculty and staff is 27,723 and the number of potential visits to the new veterinary facility by faculty and staff is estimated to be 29,396. This presents an opportunity to grow the existing number of clients served and provide greater academic opportunities to students pursuing a career in a community-based companion animal veterinary practice. Based on the estimated number of potential visits to a veterinary facility by faculty and staff, the projections included in this plan assume attracting 0.5% in FY12, 0.8% in FY13 and growing to 2.5% by FY17. Daytime Urgent Care will be provided in both facilities. Clients of the Wellness Clinic will bring ill animals there whereas clients of the VMC and new urgent care clients will use the VMC Urgent Care Service.

Marketing and Promotion

The Companion Animal Wellness Clinic will leverage the world-class reputation the VMC has established to attract and retain clients. The College of Veterinary Medicine is consistently ranked as one of the top five veterinary professional programs in the United States in the US News & World Report edition of "America's Best Graduate Schools" rankings and has been ranked #5 since 2007. The Veterinary Medical Center is recognized for providing leading-edge, comprehensive and compassionate care for animals. When the Companion Animal Wellness Clinic is moved to a more accessible facility with ample parking, the world-class reputation of the VMC will attract faculty, staff, and students and their pets to the Wellness Clinic. The expertise and skill of care providers and the overall quality of their experience will result in subsequent visits by pet owners. Marketing efforts will focus on the two groups noted above, existing clients of the Community Practice Service and University faculty, staff and students. Some examples of marketing efforts will include electronic media (email, OSU Today, newsletters, website, etc), direct mail (flyers, postcards) and University publications (On Campus), new employee packets, and other current and future outreach and marketing efforts. Existing clients that have experienced the quality of care of the Community Practice Service (and their experience with students) will be the focus of a communication plan that will create a continuing care relationship with the client and a better understanding of the need for wellness care and regular return visits to the clinic. The communication plan will include development of medical


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standards of practice and facilitate consistency among the staff which will lead to consistent communication with clients. The communication plan will also provide training to staff members and students on how to effectively educate clients and ultimately, build an effective relationship and compliance program (client acceptance of recommended standards for companion animal pet care), including mailings and other forms of communication to inform clients of the need for wellness visits for their pets and thus to increase return visits. The high level of veterinary medical expertise at the CVM and its value should be understood by most clients. However, the value should also be understood by the entire staff and will be communicated consistently and frequently to each client. Wellness Clinic services will be promoted among University faculty, staff, and students to inform them of the new location, services provided and particularly the convenience of available drop-off services and appointments. The Clinic will have prominent, well-lit exterior signage that easily identifies it and facilitates new clients finding the facility, including “walk-in” clients/patients in need of service and care. Client-centric communication that helps to appropriately set and manage clients’ expectations will be practiced and modeled to instill confidence and trust and provide a consistently satisfying experience, which will lead to retention of existing clients and acquisition of new clients through “word-of-mouth” direct referrals. Several studies in human medicine have yielded similar results regarding the most important factors for client satisfaction in healthcare facilities, and these 7 relatively simple yet critically important steps can and will easily be used by the Companion Animal Wellness Clinic staff: (1) Introduce yourself, (2) Smile, (3) Make eye contact, (4) Ask how you can assist the client, (5) Actively listen to the client; (6) Explain what you’re doing, and (7) Ask if there is anything else the client needs. The staff at the Companion Animal Wellness Clinic will consistently use these techniques and by doing so will strive to provide clear, consistent and effective communication, and this combined with compassionate care of the pet will serve as the foundation of our client-centric and patient-focused approach to total wellness care. It is anticipated that relocation of our Community Practice Service and Dentistry Practice to the Companion Animal Wellness Center will positively impact our caseload both in the Wellness Center as well as the VMC’s Urgent Care, after-hours Emergency Service, and our leading-edge specialty services. With more convenient access, expanded parking, an inviting and comfortable facility with low-stress environment, increased number of exam rooms, and the Wellness Center’s other features we anticipate steady growth in caseload over the first 5 years. At this point it will likely level off at a level that is optimal from a business perspective and which will be sufficient for providing an excellent learning experience for students. Although some of the services currently offered at the VMC will be moved to the Wellness Clinic (spay and neuter surgery, dentistry, etc.), we anticipate a cross-fertilization effect with an increased caseload at the Wellness Center, leading to more referrals for urgent, emergency and specialty care at the VMC. Additionally, the space currently occupied by the Community Practice Service and related activities that will move to the new Wellness Care facility will free up seats in the client lobby and waiting area, exam rooms, and diagnostic and treatment space as well as related parking. This space will become available for caseload expansion by the emergency and specialty services, which will have a positive impact on the VMC’s business operations and revenue as well as the educational experience of our students, interns and residents.

There are also opportunities with a robust and diverse wellness caseload for the Companion Animal Wellness Clinic to participate in industry-sponsored funded clinical trials, many of which will involve sponsor-provided financial incentives. This is another marketing strategy that will be employed where applicable and appropriate, which may lead to new clients as well as return visits.


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Pricing Services

Pricing of services offered will be based primarily on two considerations: 1) pricing for services offered by private veterinary practices similar to those in the surrounding communities and, 2) cost of delivering services plus a minimal profit. Input on pricing from local veterinarians concerned about the Wellness Clinic competing with their services will also be considered. Pricing of services will be reviewed annually and adjustments made at least each fiscal year. Pricing will largely be determined by the pricing of services offered by practitioners in the central Ohio community for similar services. When pricing information is not available, pricing guidelines published by the American Animal Hospital Association will be used (see “The Veterinary Fee Reference”). Pricing for services will, at a minimum, cover the estimated cost of delivering the service. A small margin of profit will be added to the price for each service. Annual budgets will include the anticipated number of clients and the mixture of services requested. When establishing the price for each service, the minimum price will include consideration of the total operating expenses of the Companion Animal Wellness Clinic. It is vital that we operate this Companion Animal Wellness Clinic in a fiscally responsible manner and follow sound business practices. The intent is to immerse our students in an environment where they learn appropriate business, practice management, communication, time management (efficiency) and other non-medical professional skills through role modeling and deliberate practice. In order to provide an overall exceptional experience for clients and their pets, appreciation of the value of the service they’ve received in relation to the price they’ve paid for the service must be understood. Communicating consistently and frequently with clients and educating them on the value of the services provided during their recent visit is very important to create return visits from clients. The value of the high level of veterinary medical expertise at the Wellness Clinic should be understood by the entire staff and should be communicated consistently and frequently to each client. If the perception of value is greater than the price charged for the service, the client will be motivated to return and purchase future services. Given the perception of value delivered by the Clinic and the competitive pricing of its services, these factors should be more than sufficient to attract the necessary companion animal caseload for providing excellent clinical educational experiences for students of the CVM.

Operating Plan (Service Offerings and Business Practices)

The Companion Animal Wellness Clinic offers a full service wellness care clinic designed to provide preventive care and basic sick appointments for pets of faculty and staff of the University and of the general public. The VMC has been continuously accredited by the American Animal Hospital Association (AAHA) since 1975, and the Wellness Clinic will also be AAHA accredited. In addition to providing each pet with state-of-the-art care, the Wellness Care Clinic is used to provide exceptional learning experiences for senior students regarding the most current and progressive practices in preventive medicine and wellness care and to teach business and practice management skills that are necessary for a community-based companion animal clinic. Clients and pets will always be seen by a licensed veterinarian who will oversee and provide guidance to a senior student who has been assigned to the pet's case.

The website and marketing materials for the Wellness Clinic will include a detailed description of the full menu of services available. The tone will be welcoming and informational. For example:


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The Companion Animal Wellness Clinic is proud to offer a variety of services for dogs and cats. We operate as a satellite clinic of the Ohio State University Veterinary Medical Center, offering comprehensive wellness and sick care to your pets, no matter what their stage of life. At the Wellness Clinic, we care for your pets like they were our own.

Drop Off Appointments – Everyone leads busy lives. Thus, we are pleased to offer our clients a drop-off service. Here's how it works…Drop your pet off between 7:30 and 9am. When you arrive, one of our staff will greet you and assist you in completing a checklist of your concerns and obtain your contact information for the day.

A senior veterinary student or the veterinarian on service will call you after we have completed a thorough physical examination and assessment of your pet. We will discuss our findings and recommendations over the phone. If your pet is ill, we will discuss how additional testing (blood work, x-rays, or ultrasound) may help us determine the problem. We will also discuss with you our recommendations regarding medications and other ways you can help to keep your pet healthy. We will never perform any testing or treatments without giving you an estimate and getting your consent, therefore, it is essential that we be able to reach you by phone during the day.

You can arrange a time to pick up your pet before 6:00 pm Monday, Tuesday, Thursday and Friday and before 7:30 pm on Wednesday. We will have prepared a written summary of our findings and recommendations for you, and your pet will be ready to join you for your journey home!

Companion Animal Wellness Care

Physical Examinations – During a pet's wellness examination they will receive a thorough physical exam by veterinary students and a licensed veterinarian. This allows us to examine all body systems and detect potential problems with each pet. Pets age much faster than do people (5-7 years for every person year), which suggests health problems can progress 5 - 7 times more quickly in pets. Therefore, we recommend all adult pets (ages 1-7 years) receive annual exams. The sooner a problem is detected the greater the likelihood of effective treatment.

Vaccinations – During a visit we will discuss a pet’s lifestyle, and determine which infectious diseases he or she is at a risk of being exposed to. We will then tailor a vaccination plan specifically for each pet. Vaccination is a key component of disease prevention in companion animal medicine.

Parasite Prevention – Even healthy pets are at risk of acquiring an infection with internal (digestive or heartworm) and external (fleas, mites and lice) parasites. Most of these are easy to prevent and we recommend that pets are kept on parasite prevention year round. We also recommend testing for certain parasites yearly in our healthy patients. A parasite surveillance and prevention program also helps to reduce risk of disease transmission from pets to family members and others.


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New Puppy and Kitten Care

A new puppy or kitten should be seen as soon as possible after they are adopted. Visits to the Wellness Clinic will include a complete physical exam, an educational puppy/kitten kit that includes a Vaccine/Health Record with tips on puppy/kitten care and behavioral concerns, flea and tick control, heartworm prevention, fecal examinations for intestinal parasites and appropriate deworming, vaccination schedules and necessary vaccine boosters.

Routine Dental Care

We offer routine dental care for our patients, including dental cleaning, dental radiographs along with simple and complex tooth extractions. As part of our wellness appointments, we will evaluate your pet's teeth and will recommend an oral healthcare plan. If a dental cleaning and oral examination are necessary, general anesthesia is required. More complex oral and dental treatments can be referred to the Veterinary Medical Center’s Hospital for Companion Animals. Anesthesia is performed by a combination of veterinary clinicians, residents, registered veterinary technicians and senior veterinary students using anesthetic protocols approved by our board-certified anesthesiologists.

Routine Surgery (Spay and Neuter)

Both male and female dogs and cats can start reproducing between the ages of six to nine months. Therefore, we recommend neutering between 4 and 6 months of age.

Female dogs generally go through an estrus or heat cycle every six months. Female cats come into heat cycles every three to four weeks during certain times of the year. Surgical neutering (spay) of female dogs and cats, called ovariohysterectomy, completely eliminates all heat cycles and the accompanying unwanted bleeding cycle, nervousness, and desire to mate. Neutering your female dog or cat will also protect your pet from uterine infections and other diseases as well as difficult or dangerous pregnancies. Studies show that by neutering your female dog before her first heat cycle, you can greatly reduce her chances of developing mammary

cancer later in life. Deciding when the best time to neuter your pet is a decision you should discuss with your veterinarian.

Nutrition and Weight Management

The Companion Animal Wellness Clinic will offer weight management services for dogs and cats with weight-related health problems. The goal of our healthy weight program is to help clients achieve a healthy weight for their pet. The most successful outcomes result from combining follow up (e.g. visits, weigh-ins, and phone consultations) and ongoing communication. We will offer both pay-as-you-go and package programs to meet different client/patient needs. Services include the following:

Initial doctor and technician evaluation includes complete physical exam, extended environmental history, evaluation of current dietary intake, therapy recommendations, and lab evaluation as indicated.


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Follow-up consultations by phone and office visit. Take home packet including weight management information, at-home environmental

enrichment, and expected goals/progress for each pet.

Senior Pet Care

Pets age much faster than people do. It is said that dogs and cats age about five to seven years for every human year. In fact, older pets age even more rapidly than this so seeing the veterinarian yearly is equivalent of an older person visiting a doctor once in a decade. This suggests health problems can progress five to seven times faster in your pet. The average dog or cat seven to 10 years of age and older qualifies as a "senior." There is a progressive decline in organ function, immunity, and physical and mental abilities as pets grow older. While some age-related diseases may not be preventable, early detection and intervention are keys to successful management. Therefore, senior pets need just a little bit of extra care and attention to free great and to live long, healthy and productive lives.

We recommend that all adult pets receive annual examinations and that senior pets receive a thorough physical examination every six to 12 months. During these exams, we will assess your pet's body condition and make dietary and exercise recommendations to help your pet maintain its ideal body weight. In addition, we will carefully assess the health of your pet's teeth and gums, as dental disease can be a significant problem for senior pets. We will also update your pet on any vaccinations he/she may require.

We recommend annual blood work [complete blood count (CBC), chemistry profile and thyroid function tests], urinalysis, and fecal examination. These tests will enable us to detect changes that indicate a disease is present and may allow us to slow or stop its progression. Depending upon your pet and our findings we may recommend blood pressure monitoring or other diagnostics to help improve your pet's health as well.

Just as we focus on maintaining excellent health of your pet throughout life, we also understand the importance of end-of-life care and making sure to keep your pet’s comfort and well-being foremost in our treatment planning whether it is for age-related changes and/or a serious illness or injury.

Behavioral Wellness and Medicine

At the Wellness Clinic, we are committed to improving the quality of life of all animals through medical and behavioral wellness and strengthening the bond between animals and their caretakers. We are pleased to work with our clients to develop behavioral and environmental modification techniques to decrease the occurrence of behavior problems. We can recommend local dog trainers for appropriate


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continued training, as well as help rule out any medical conditions that may be playing a part in behavioral problems. Animals with complicated, multiple or non-responsive behavioral conditions can be referred to our Board Certified Veterinary Behaviorist.

For a pet that does not cope well with visits to a veterinary clinic/hospital or has had a “bad” experience at other hospitals, we provide short “Happy Visits” to our Companion Animal Wellness Clinic with lots of fun, food treats and affection and nothing scary. These happy visits are either provided free of charge or at a nominal fee during low-traffic times so that you don’t have to wait, your pet won’t be afraid, and we will have plenty of time to give special attention. We provide this service because we are committed to your pet’s total wellness, including both medical and behavioral. It is more difficult for us or any veterinarian to help a pet if they are afraid. We want pets that are brought to the Wellness Clinic to receive the best medical care and to do that we need to assure they are comfortable and not afraid.

One of our major goals at the Wellness Clinic is to ensure that our patients receive total wellness care, which includes utilizing methods to create a low-stress environment and optimizing the experience for the pet. Thus, we regularly utilize “low-stress handling” techniques and restraint methods to make your pet’s visit as pleasant as possible. Senior veterinary students receive instruction and training from our behavioral wellness and medicine personnel with regard to low stress handling and they implement these techniques and enhance their skills during their clinical experiences at the Companion Animal Wellness Clinic. Low-stress handling and other behavioral wellness techniques will be incorporated into every physical examination and other procedures to facilitate optimal care of all pets, including those that are fractious or anxious, to make their experience pleasant and the client satisfied with their pet’s care and well-being. We have been seeing an increased number of clients who have been “fired” by their family veterinarian because their pet is too fractious, aggressive or anxious, and thus using low-stress handling and other techniques has become increasingly important in our practice for providing effective and efficient care for these pets. We feel it is essential that we can provide an alternative for these pets and their caretakers.

We all love our pets and value the quality and richness they bring to our lives, but our lives are busy and most of us need to spend hours away from our companions during the day. We can help you to increase your companion pets' quality of life by suggesting many ways for you to enrich their environment. This will increase their mental stimulation, prevent boredom and behavior problems, and has been shown to help them maintain a healthy weight. This will ultimately contribute to their overall health and wellness and will facilitate them being a fully integrated and well adjusted member of the household or family.

Emergency and Referral Specialty Services

The Companion Animal Wellness Center is fully integrated with our Emergency and Critical Care Service and numerous other specialty services provided through the Veterinary Medical Center’s Hospital for Companion Animals. Our Emergency and Critical Care service operates 24/7/365, and includes on-site veterinarians, registered veterinary technicians and students along with clinicians (faculty and residents) in the specialty services on call to provide consultation and assistance. Pets that are registered at the Companion Animal Wellness Center will also be listed in the Veterinary Medical Center’s electronic medical record system so that if the pet presents to the VMC for daytime urgent care or after-hours emergency care, VMC clinicians will have instant access to the pertinent medical history. This will



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facilitate the pet’s admission and timely care, which is particularly important during an emergency or urgent care visit.

The specialty services offered at the VMC include Dermatology and Otology, Cardiology and Interventional Medicine, Oncology and Hematology, Ophthalmology, Internal Medicine, Surgery (general, orthopedic, oncologic, and minimally invasive), Neurology and Neurosurgery, Behavioral Medicine, Emergency and Critical Care, Anesthesiology and Pain Management, Diagnostic Imaging, Reproductive Medicine, Anatomic and Clinical Pathology, Microbiology, and Canine Rehabilitation. These and other services are available by appointment or by transfer if urgently needed. The Companion Animal Wellness Clinic will provide a shuttle service for those patients requiring or needing immediate transfer or referral.

Honoring the Bond Program

Pets and animals serve as a central and vitally important figure in family structures and provide many beneficial social, psychological and physiological effects. Approximately 2/3 of US households have pets whereas only about 1/3 has children. Thus, the human-animal bond has a powerful impact on people and families. The mission of the Honoring the Bond Program is to actively participate in the multi-disciplinary team to provide an integrated service that recognizes, honors and strengthens the human-animal bond. Our primary role is to provide emotional support and information to companion animal owners that are experiencing the illness, injury, loss or death of their companion animal. We have a number of resources that we use to assist people and families such as coping with the loss of a companion animal, difficult decision making, and helping children cope with a serious illness or death of a pet, among others. The program is coordinated and overseen by a licensed social worker who is an integral part of our veterinary care team.

Wellness Plans for Every Stage of Your Pet’s Life

Proactive care improves the quality and length of your pet’s life through disease prevention and early diagnosis and treatment. Because your beloved pet requires different levels and types of care throughout life, we have developed Wellness Plans to meet the total wellness care needs at every stage of life of your dog or cat, including but not limited to puppy/kitten care, adult care, and senior care. These plans include a complete array of preventive care services, which can be customized or tailored to an individual pet’s needs. Our Wellness Plans help make providing optimal care easy through proactive scheduling and affordable through prepaid packages during every stage of your pet’s life and associated healthcare needs. Our veterinarians will discuss the appropriate Wellness Plan with you so you can make the right choices for optimizing your pets’ health and wellness.

Description of Business Practices

Upon graduation from the College of Veterinary Medicine (CVM), approximately 70% of DVM’s will enter into a community-based companion animal general practice that typically provides wellness care to pets. Many of these new graduates are not sufficiently exposed to sound business practices during the course of their clinical training and are introduced to it for the first time when they join a companion animal practice. According to the AVMA – Pfizer Business Practices Study in 2004, 62% of companion animal practice owners don’t use financial concepts to manage their businesses. However, the study found those practice owners that do implement business practices, earn two-thirds more than those that don’t.


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Business practices focused on increasing revenue have the greatest potential to improve profitability. The 2007 US Pet Ownership & Demographics Sourcebook indicates that 23.9% of pet-owning households did not spend any money on basic veterinary care during 2006. Another 27% spent less than $200 for basic veterinary care for their pets. These statistics would indicate that companion animal veterinary practices, including The CVM’s Companion Animal Wellness Clinic, could improve profitability by implementing and following business practices that educate pet owners about the basic healthcare needs of pets. The following list of business practices (identified in the NCVEI Business Practices Study) have been identified to increase revenue and profitability and will be implemented in the Companion Animal Wellness Clinic.

1. Develop business metrics and build awareness of key performance indicators (KPI) among staff a. Track KPI monthly (visits and other metrics)

2. Build relationships and educate clients about the importance of regular exams and following recommendations regarding their pet’s health and wellness. Develop a consistent message regarding the need for exams and other care and communicate this message to staff

a. Pet owners don’t understand the need for periodic exams. b. Pet owners are satisfied with providing pets with appropriate vaccinations only c. Need to educate pet owners about why exams and wellness care are important:

i. Prevention of future health problems ii. Happier/healthier pet

iii. Longer life d. Educate pet owners on where they can find reliable sources of information about

healthcare for pets and the need for wellness care e. Communicate message to pet owners using a multi-media approach – practice

brochures, invoices, reminder cards, go-home instructions, medical handouts, website, posters, etc.

f. Provide a consistent and clear message g. Expand reminder systems

i. Include a variety of items for which reminders are sent – vaccinations, scheduling of wellness exams

ii. Communicate value iii. Formats of notices – e-mail, phone calls, snail mail iv. Use of practice website and refer to other trusted websites

3. Manage pricing and value issues: a. Manage pricing - pet owners have not identified improved pet care with increased fees.

Pricing of services should be based on: i. Practice niche

ii. Value perceived iii. Competitive strategy

Partner with financing entities and insurance companies to provide specific payment options and present referrals to clients. Develop alternate pricing options for clients such as the following:

1. Routine care plans with monthly billing and specific services included 2. Targeted incentives for lapsed clients in slow months – promotions to

bring pets in that haven’t been seen for some time.


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3. Reduce barrier to entry – lower exam fees. Some insurance programs offered don’t charge for exam fees and as a result, visits have increased substantially.

4. Offer premium prices at peak times and lower prices during slow times (February – Dental services)

b. Train all staff to communicate value of services provided – Clients may not be able to judge the quality of medicine, and as a result, they will judge the service provided.

4. Cats represent a minority of patients in most practices, yet there exists 13% more cats than dogs in the US. Become a cat friendly practice. Identify all cats owned by clients – staff should be trained to ask questions about other pets at home.

5. Make it convenient for clients to schedule and keep appointments a. Book next appointment before leaving the practice b. Reminders – postcards, e-mail, phone calls c. Make scheduling available online d. Extended hours to accommodate schedules e. Communicate drop off services available to clients – high level of convenience for

clients.

Organizational Structure - Personnel

Although a separate facility, the Companion Animal Wellness Clinic will organizationally and operationally continue as a service unit under the umbrella of the VMC’s Hospital for Companion Animals. The clinic, which will be located in close proximity to the VMC, will have a dedicated staff that will provide operational oversight for the new Clinic. It is anticipated that the majority of staff for the new Clinic will consist of current staff members of the Community Practice Service within the Hospital for Companion Animals. Faculty from the Department of Veterinary Clinical Sciences will have day-to-day responsibilities for clinical operations of the Companion Animal Wellness Clinic, and will be supported by Instructors, Interns, Registered Veterinary Technicians and Veterinary Assistants. An Office Manager will be responsible for all administrative and fiscal activities of the Clinic and will be supported by a modest administrative staff. The Director of the Veterinary Medical Center and the Associate Dean of Clinical and Outreach Programs will provide overall administrative oversight for this clinic and its operation. The following is a list of staff members, and anticipated compensation levels, that would be required based on current levels of client visits to the existing wellness clinic:

Assistant Professor –four veterinarians at the outset, including a behavioral medicine specialist

Veterinary Residents – one behavioral medicine resident

Veterinary Technicians – three to four technicians at the outset

Applied Animal Behaviorist – one applied animal behaviorist

Veterinary Assistants – two assistants at the outset

Reception and Cashier Staff – two reception and cashier staff at the outset

Business Manager – one business manager


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Financial Summary

The financial projections prepared for the new Companion Animal Wellness Clinic discussed in this business plan are presented below. The financial projections indicate that revenue generated from the new Clinic are sufficient to cover operating expenses of the Wellness Clinic and are sustainable over an extended period of time. The projections have been prepared based on growth rates of historical revenue of the Community Practice Service for the previous three years. Revenue projections include a modest increase in client visits to the Wellness Clinic as a result of actively marketing services to faculty, staff and students.

Balance Sheet 5-Year Projections

Companion Animal Wellness Clinic

5 Year Financial Projections

Balance Sheet

FY2013 FY2014 FY2015 FY2016 FY2017

Assets

Cash (36,347)$ (19,731)$ 75,350$ 302,846$ 672,939$

Accounts receivable 21,569 24,096 26,696 29,869 33,242

Less: allowance for uncollectibles (2,157) (2,410) (2,670) (2,987) (3,324)

Accounts receivable, net 19,412 21,686 24,026 26,882 29,918

Prepaid expenses 3,000 3,000 3,000 3,000 3,000

Total assets (13,935)$ 4,955$ 102,376$ 332,729$ 705,857$

Liabilities and equity

Accounts payable 10,101$ 10,273$ 10,361$ 10,539$ 10,721$

Accrued salaries and wages 6,529 6,692 7,156 7,335 7,518

Sales tax payable 579 634 685 748 815

Total current liabilities 17,209 17,598 18,201 18,621 19,054

Total equity (31,144) (12,643) 84,175 314,107 686,803

Total liabilities and equity (13,935)$ 4,955$ 102,376$ 332,729$ 705,857$


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Statement of Operations 5-Year Projections



Statement of Operations

FY2013 FY2014 FY2015 FY2016 FY2017

Revenue

Behavior 191,824$ 220,092$ 257,777$ 298,476$ 342,567$

Community practice 787,751 838,011 927,914 1,013,178 1,103,291

Urgent care 46,646 50,699 58,081 66,061 74,088

Soft tissue surgery 124,579 136,699 162,228 186,353 211,115

Dentistry 148,523 166,357 195,749 228,090 263,451

Total revenue 1,299,324 1,411,858 1,601,749 1,792,157 1,994,513

Operating expenses:

Compensation 768,954 803,062 858,676 880,143 902,146

Benefits 271,760 282,871 310,120 317,873 325,820

Cleaning service 22,339 22,897 23,470 24,057 24,658

Cleaning & Maint support 2,519 2,582 2,646 2,712 2,780

Water & Sewer expense 11,401 11,686 11,978 12,278 12,585

Electric 44,995 46,120 47,273 48,455 49,666

Gas 3,163 3,242 3,323 3,406 3,491

Build repairs & maint 13,530 13,869 14,215 14,571 14,935

HVAC 15,905 16,302 16,710 17,127 17,556

Mowing and landscaping 6,780 6,950 7,124 7,302 7,484

Misc facility expense 14,961 15,335 15,718 16,111 16,514

Equipment lease 64,757 64,757 64,757 64,757 64,757

Ancillary service expense 125,675 133,693 148,036 161,638 176,015

Other exp (including Univ o/h) 181,093 190,272 204,154 218,128 232,884

Total operating expenses 1,547,832 1,613,637 1,728,200 1,788,558 1,851,291

Operating income (248,508) (201,779) (126,451) 3,599 143,223

Other income (expense):

Rental income 100,715 100,715 100,715 100,715 100,715

Other income (expense) - - - - -

General funds - teaching support 116,649 119,565 122,554 125,618 128,759

Total other income (expense) 217,364 220,280 223,269 226,333 229,474

Net income (31,144)$ 18,501$ 96,818$ 229,932$ 372,696$


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Statement of Cash Flow 5-Year Projections



Statement of Cash Flow

FY2013 FY2014 FY2015 FY2016 FY2017

Net income (31,144)$ 18,501$ 96,818$ 229,932$ 372,696$

Adjustments to reconcile net income to net

cash provided by operating activities:

(Increase) decrease in operating assets:

Acccounts receivable (19,412) (2,274) (2,340) (2,856) (3,035)

Prepaid expenses (3,000) - - - -

Increase (decrease) in operating liabilities:

Accounts payable 10,101 172 88 178 183

Accrued salaries and wages 6,529 163 463 179 183

Sales tax payable 579 54 52 63 67

Total adjustments (5,203) (1,885) (1,737) (2,436) (2,603)

Net cash provided by (used in) operating (36,347) 16,616 95,081 227,496 370,093

Beginning cash balance - (36,347) (19,731) 75,350 302,846

Ending cash balance (36,347)$ (19,731)$ 75,350$ 302,846$ 672,939$


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Appendices

Appendix A: 807 Kinnear Road Property Brochure & Purchase and Renovation Budget


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Appendix B: Detailed Financial Projections



Balance Sheet

Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Total FY2013

Assets

Cash (1,112)$ 3,872$ 6,297$ 13,060$ 5,092$ (6,959)$ (19,123)$ (31,454)$ (31,622)$ (28,613)$ (31,686)$ (36,347)$ (36,347)$

Accounts receivable 21,569 21,569 23,388 24,427 19,750 19,750 19,750 19,750 23,388 23,388 21,569 21,569 21,569

Less: allowance for uncollectibles (2,157) (2,157) (2,339) (2,443) (1,975) (1,975) (1,975) (1,975) (2,339) (2,339) (2,157) (2,157) (2,157)

Accounts receivable, net 19,412 19,412 21,049 21,985 17,775 17,775 17,775 17,775 21,049 21,049 19,412 19,412 19,412

Prepaid expenses 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000

Total current assets 21,300 26,284 30,346 38,045 25,867 13,815 1,652 (10,679) (7,573) (4,564) (9,274) (13,935) (13,935)

Total assets 21,300$ 26,284$ 30,346$ 38,045$ 25,867$ 13,815$ 1,652$ (10,679)$ (7,573)$ (4,564)$ (9,274)$ (13,935)$ (13,935)$


Accounts payable 9,934$ 9,934$ 9,934$ 9,934$ 9,934$ 9,934$ 10,101$ 10,101$ 10,101$ 10,101$ 10,101$ 10,101$ 10,101$

Accrued salaries and wages 5,803 5,803 6,529 6,529 6,529 6,529 6,529 6,529 6,529 6,529 6,529 6,529 6,529

Sales tax payable 579 579 628 656 530 530 530 530 628 628 579 579 579

Total current liabilities 16,316 16,316 17,091 17,119 16,993 16,993 17,161 17,161 17,258 17,258 17,209 17,209 17,209

Total equity 4,984 9,968 13,255 20,926 8,874 (3,178) (15,509) (27,840) (24,831) (21,822) (26,483) (31,144) (31,144)

Total liabilities and equity 21,300$ 26,284$ 30,346$ 38,045$ 25,867$ 13,815$ 1,652$ (10,679)$ (7,573)$ (4,564)$ (9,274)$ (13,935)$ (13,935)$


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Balance Sheet

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total FY2014 FY 2015 FY 2016 FY 2017

Assets

Cash (26,189)$ (25,086)$ (29,937)$ (19,731)$ (19,731)$ 75,350$ 302,846$ 672,939$

Accounts receivable 24,096 23,154 22,778 24,096 24,096 26,696 29,869 33,242

Less: allowance for uncollectibles (2,410) (2,315) (2,278) (2,410) (2,410) (2,670) (2,987) (3,324)

Accounts receivable, net 21,686 20,839 20,500 21,686 21,686 24,026 26,882 29,918

Prepaid expenses 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000

Total current assets (1,502) (1,247) (6,437) 4,955 4,955 102,376 332,729 705,857

Total assets (1,502)$ (1,247)$ (6,437)$ 4,955$ 4,955$ 102,376$ 332,729$ 705,857$


Accounts payable 10,101$ 10,101$ 10,273$ 10,273$ 10,273$ 10,361$ 10,539$ 10,721$

Accrued salaries and wages 6,692 6,692 6,692 6,692 6,692 7,156 7,335 7,518

Sales tax payable 634 609 599 634 634 685 748 815

Total current liabilities 17,427 17,402 17,564 17,598 17,598 18,201 18,621 19,054

Total equity (18,929) (18,649) (24,000) (12,643) (12,643) 84,175 314,107 686,803

Total liabilities and equity (1,502)$ (1,247)$ (6,437)$ 4,955$ 4,955$ 102,376$ 332,729$ 705,857$


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Revenue

Behavior 15,921$ 15,921$ 17,264$ 18,031$ 14,579$ 14,579$ 14,579$ 14,579$ 17,264$ 17,264$ 15,921$ 15,921$ 191,824$

Community practice 65,383 65,383 70,898 74,049 59,869 59,869 59,869 59,869 70,898 70,898 65,383 65,383 787,751

Urgent care 3,872 3,872 4,198 4,385 3,545 3,545 3,545 3,545 4,198 4,198 3,872 3,872 46,646

Soft tissue surgery 10,340 10,340 11,212 11,710 9,468 9,468 9,468 9,468 11,212 11,212 10,340 10,340 124,579

Dentistry 12,327 12,327 13,367 13,961 11,288 11,288 11,288 11,288 13,367 13,367 12,327 12,327 148,523

Total revenue 107,844 107,844 116,939 122,136 98,749 98,749 98,749 98,749 116,939 116,939 107,844 107,844 1,299,324

Operating expenses:

Compensation 58,029 58,029 65,290 65,290 65,290 65,290 65,290 65,290 65,290 65,290 65,290 65,290 768,954

Benefits 20,892 20,892 22,998 22,998 22,998 22,998 22,998 22,998 22,998 22,998 22,998 22,998 271,760

Cleaning service 1,839 1,839 1,839 1,839 1,839 1,839 1,885 1,885 1,885 1,885 1,885 1,885 22,339

Cleaning & Maint support 207 207 207 207 207 207 212 212 212 212 212 212 2,519

Water & Sewer expense 938 938 938 938 938 938 962 962 962 962 962 962 11,401

Electric 3,703 3,703 3,703 3,703 3,703 3,703 3,796 3,796 3,796 3,796 3,796 3,796 44,995

Gas 260 260 260 260 260 260 267 267 267 267 267 267 3,163

Build repairs & maint 1,114 1,114 1,114 1,114 1,114 1,114 1,141 1,141 1,141 1,141 1,141 1,141 13,530

HVAC 1,309 1,309 1,309 1,309 1,309 1,309 1,342 1,342 1,342 1,342 1,342 1,342 15,905

Mowing and landscaping 558 558 558 558 558 558 572 572 572 572 572 572 6,780

Misc facility expense 1,231 1,231 1,231 1,231 1,231 1,231 1,262 1,262 1,262 1,262 1,262 1,262 14,961

Equipment lease 5,396 5,396 5,396 5,396 5,396 5,396 5,396 5,396 5,396 5,396 5,396 5,396 64,757

Ancillary service expense 10,431 10,431 11,311 11,813 9,551 9,551 9,551 9,551 11,311 11,311 10,431 10,431 125,675

Other exp (including Univ o/h) 15,065 15,065 15,611 15,923 14,519 14,519 14,519 14,519 15,611 15,611 15,065 15,065 181,093

Total operating expenses 120,974 120,974 131,765 132,580 128,914 128,914 129,193 129,193 132,044 132,044 130,619 130,619 1,547,832

Operating income (13,130) (13,130) (14,826) (10,443) (30,166) (30,166) (30,445) (30,445) (15,105) (15,105) (22,775) (22,775) (248,508)


Rental income 8,393 8,393 8,393 8,393 8,393 8,393 8,393 8,393 8,393 8,393 8,393 8,393 100,715

Other income (expense) - - - - - - - - - - - - -

General funds - teaching support 9,721 9,721 9,721 9,721 9,721 9,721 9,721 9,721 9,721 9,721 9,721 9,721 116,649

Total other income (expense) 18,114 18,114 18,114 18,114 18,114 18,114 18,114 18,114 18,114 18,114 18,114 18,114 217,364

Net income 4,984$ 4,984$ 3,288$ 7,671$ (12,052)$ (12,052)$ (12,331)$ (12,331)$ 3,009$ 3,009$ (4,661)$ (4,661)$ (31,144)$


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Revenue

Behavior 56,344$ 54,143$ 53,262$ 56,344$ 220,092$ 257,777$ 298,476$ 342,567$

Community practice 214,531 206,151 202,799 214,531 838,011 927,914 1,013,178 1,103,291

Urgent care 12,979 12,472 12,269 12,979 50,699 58,081 66,061 74,088

Soft tissue surgery 34,995 33,628 33,081 34,995 136,699 162,228 186,353 211,115

Dentistry 42,587 40,924 40,258 42,587 166,357 195,749 228,090 263,451

Total revenue 361,436 347,317 341,670 361,436 1,411,858 1,601,749 1,792,157 1,994,513

Operating expenses:

Compensation 200,766 200,766 200,766 200,766 803,062 858,676 880,143 902,146

Benefits 70,718 70,718 70,718 70,718 282,871 310,120 317,873 325,820

Cleaning service 5,654 5,654 5,795 5,795 22,897 23,470 24,057 24,658

Cleaning & Maint support 637 637 653 653 2,582 2,646 2,712 2,780

Water & Sewer expense 2,885 2,885 2,958 2,958 11,686 11,978 12,278 12,585

Electric 11,388 11,388 11,672 11,672 46,120 47,273 48,455 49,666

Gas 800 800 820 820 3,242 3,323 3,406 3,491

Build repairs & maint 3,424 3,424 3,510 3,510 13,869 14,215 14,571 14,935

HVAC 4,025 4,025 4,126 4,126 16,302 16,710 17,127 17,556

Mowing and landscaping 1,716 1,716 1,759 1,759 6,950 7,124 7,302 7,484

Misc facility expense 3,786 3,786 3,881 3,881 15,335 15,718 16,111 16,514

Equipment lease 16,189 16,189 16,189 16,189 64,757 64,757 64,757 64,757

Ancillary service expense 34,225 32,888 32,354 34,225 133,693 148,036 161,638 176,015

Other exp (including Univ o/h) 48,076 47,229 46,890 48,076 190,272 204,154 218,128 232,884

Total operating expenses 404,291 402,107 402,091 405,149 1,613,637 1,728,200 1,788,558 1,851,291

Operating income (42,855) (54,790) (60,421) (43,713) (201,779) (126,451) 3,599 143,223


Rental income 25,179 25,179 25,179 25,179 100,715 100,715 100,715 100,715

Other income (expense) - - - - - - - -

General funds - teaching support 29,891 29,891 29,891 29,891 119,565 122,554 125,618 128,759

Total other income (expense) 55,070 55,070 55,070 55,070 220,280 223,269 226,333 229,474

Net income 12,215$ 280$ (5,351)$ 11,357$ 18,501$ 96,818$ 229,932$ 372,696$


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Net income (loss) from operations 4,984$ 4,984$ 3,288$ 7,671$ (12,052)$ (12,052)$ (12,331)$ (12,331)$ 3,009$ 3,009$ (4,661)$ (4,661)$ (31,144)$

Adjustments to reconcile net income to net cash

provided by operating activities:


Acccounts receivable (19,412) - (1,637) (936) 4,210 - - - (3,274) - 1,637 - (19,412)

Prepaid expenses (3,000) - - - - - - - - - - - (3,000)


Accounts payable 9,934 - - - - - 167 - - - - - 10,101

Accrued salaries and wages 5,803 - 726 - - - - - - - - - 6,529

Sales tax payable 579 - 49 28 (126) - - - 98 - (49) - 579

Total adjustments (6,096) - (862) (908) 4,084 - 167 - (3,177) - 1,588 - (5,203)

Net cash provided by (used in) operating activities (1,112) 4,984 2,425 6,763 (7,968) (12,052) (12,164) (12,331) (168) 3,009 (3,073) (4,661) (36,347)

Beginning cash balance - (1,112) 3,872 6,297 13,060 5,092 (6,959) (19,123) (31,454) (31,622) (28,613) (31,686) -

Ending cash balance (1,112)$ 3,872$ 6,297$ 13,060$ 5,092$ (6,959)$ (19,123)$ (31,454)$ (31,622)$ (28,613)$ (31,686)$ (36,347)$ (36,347)$


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Net income (loss) from operations 12,215$ 280$ (5,351)$ 11,357$ 18,501$ 96,818$ 229,932$ 372,696$

Adjustments to reconcile net income to net cash

provided by operating activities:


Acccounts receivable (2,274) 847 339 (1,186) (2,274) (2,340) (2,856) (3,035)

Prepaid expenses - - - - - - - -


Accounts payable - - 172 - 172 88 178 183

Accrued salaries and wages 163 - - - 163 463 179 183

Sales tax payable 54 (25) (10) 35 54 52 63 67

Total adjustments (2,057) 822 501 (1,151) (1,885) (1,737) (2,436) (2,603)

Net cash provided by (used in) operating activities 10,158 1,103 (4,851) 10,206 16,616 95,081 227,496 370,093

Beginning cash balance (36,347) (26,189) (25,086) (29,937) (36,347) (19,731) 75,350 302,846

Ending cash balance (26,189)$ (25,086)$ (29,937)$ (19,731)$ (19,731)$ 75,350$ 302,846$ 672,939$


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Appendix C: Wellness Clinic Financial Projection Assumptions

Balance Sheet Assumptions: 1. Accounts Receivable – assumes 80% of revenue is paid at the time of service, prior to leaving

the Clinic. The remaining 20% is billed to clients. Higher rate of collection for services is based on the smaller fees for the Clinic services.

2. Allowance for uncollectible accounts – Assumes that 10% of accounts receivable will be uncollectible.

3. Accounts payable – Assumes that 60% of non-compensation related operating expenses are paid within 30 days of expense.

4. Accrued salaries and wages – Professional staff members are paid monthly – no accrual is necessary. Non-professional staff members represent approximately 35% of total monthly payroll. Assumes an average of 10% of compensation (excluding benefits) will be paid in subsequent month due to overlap of pay periods.

5. Sales tax payable – Assumes 75% of pharmacy sales, which are dispensed, will be subject to Franklin county sales tax at 6.75%.

Statement of Operations Assumptions:

1. Revenue – Current Clients: Year over Year growth was calculated for each service offering using historical data for FY 2007 through FY2011 (for FY11 - annualized actual revenue based on FY11 amounts through April). A three-year historical average was used for periods FY13 through FY17 with minimum expected growth of 1.5% per annum. Used 6.5% of soft tissue surgery total to represent revenue from spay, neuter and declawing - services that would be transfer to the new Clinic.

2. Revenue – Faculty and Staff: (1) Using data provided from OSU Framework Plan, we determined the number of faculty and staff that are within a 10 mile radius of the campus. Assumes that only this group would consider using on-campus veterinary services. (2) Using the methodology and market research statistics provided on the AVMA website, we estimated (a) the number of faculty and staff households that own pets; (b) the number of pets owned per faculty/staff households that own pets; and (c) the number of visits/year per/pet. (3) We estimated the # of faculty and staff that would utilize on-campus services – in FY13 0.8%, in FY14 – 1.0%, in FY15 – 1.5%, in FY16 – 2.0% and in FY17 – 2.5%. After calculating the # of faculty/staff utilizing the service applied revenue/visit data for each service offering from current clients to calculate revenue for service offering for faculty and staff.

3. Compensation expense – Beginning in July 2012, staffing includes 14 FTE's. Assumes Assistant Professor - Clinical (3 FTE's), Behavioral Specialist (1 FTE), Behavioral Resident (1 FTE), Registered Veterinary Technicians (3-4 FTE's), Applied Behaviorist, Veterinary Assistants (2 FTE's), Business Manager (1 FTE) and administrative staff (2 FTE). Applied a 2.5% rate of inflation per year. Assumes Veterinary Technicians can assist with 6 and assistants can each assist with 12 cases per day. Veterinarians will see 10 cases per day, however this model assumes clinicians are utilized 70% in the Clinic (30% labs and lectures), or the equivalent of 7 cases per day average. Increased staffing based on the expected visits per month and average cases per day. The remaining 30% of time related to teaching is reflected in the general funds support. These assumptions are based on clinicians having some “faculty only” days/times whereby they role model efficient and effective client service, patient care and business practices whereas other


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days/times the students will be actively involved in these activities will affect efficiency because of greater time required for teaching.

4. Benefits – Professional staff included at 29%, residents included at 8.9%, Business Manager at 34.1%, veterinary technicians, veterinary assistants and office staff at 43.3%. Includes additional $15,800/year for each resident.

5. Rent expense – None – assumes property is gifted to the University. 6. Facility costs (including cleaning, water, sewer, electric, gas, building repairs and maintenance,

HVAC, mowing and landscaping and miscellaneous facility expenses) – All have been based on actual 2010 expenses provided by current owner and adjusted for inflation – 2.5% per year.

7. Equipment lease – Assumes a 7-year operating lease for equipment with a purchase price of $500,000. Assumes useful life of equipment is 10 years.

8. Ancillary service expense – Assumed that expenses of ancillary services would be consistent with current direct costs of delivering services within the VMC. Used the April 2011 YTD P&L's for each ancillary service unit and calculated the direct cost for delivering service (pharmacy, microbiology and anesthesiology) as a percentage of revenue. For diagnostic lab ancillary services, all operating expenses (direct and indirect) were used to calculate a percentage of revenue, as this is anticipated to be more representative of the costs in the new Wellness Clinic. Used this % of revenue to project expense associated with revenue.

9. Other expense – Used historical financials from the five service offerings provided in the wellness clinic and added 2.5% inflation factor. Includes miscellaneous expenses such as supplies (including office, drug and other medical supplies), telephone equipment and services, Equipment R&M, marketing, other purchased services and university overhead charges. Used only 6.5% of expenses from soft tissue surgery, which is the same percentage of revenue used for projections. Includes $1,000 per month for admin supplies, $12,000 per year for promotional material, and 6% OSU overhead.

10. Rental income – Assumes that 50% of the upstairs office space is subleased at 80% of the quoted lease rate for the building. The agent for the building owner provided the following quotes - asking $12.95/sq. ft. net and $7.00/sq. ft. for CAM/property tax. Subleasing 6,904 sq ft at $10.36/sq. ft. plus $4.23/sq. ft. for CAM expenses.

11. Maintenance reserve – Once the business is firmly established, beginning in year 6, we plan to set aside $40,000 per year in a Major Maintenance Reserve for replacement of critical building components.

12. General funds – Teaching support – Assumes 30% support for the three faculty clinicians (Assistant Professor – Clinical) and 20% support for the Business Manager.


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Appendix D: VMC Caseload and Financial Projection Assumptions

Below is the projection of the impact on the current Veterinary Medical Center (VMC) of relocation of the Community Practice Service to the offsite Companion Animal Wellness Center. It should be noted that although the Community Practice Service is being moved offsite, the associated revenue will remain part of the VMC since this offsite Wellness Clinic will be a VMC satellite clinic and will have organizational oversight by the Director of the VMC. Thus, although the Wellness Clinic revenue is removed from the VMC in the table below, it will still remain part of the overall VMC operation and budget. The projected new revenue from the Wellness Clinic, and from growth of the VMC specialty services as a result of movement of Community Practice Service, net of the original Community Practice Service revenue, will be available for strategic investment across the breadth of the Veterinary Medical Center.


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Appendix E: Summary of Process for Business Plan Development

The College of Veterinary Medicine (CVM) and Veterinary Medical Center (VMC) has been exploring the concept of an offsite Companion Animal Wellness Clinic for a few years, and more recently with some “planning funds” provided by a major donor, we initiated a process to further evaluate the feasibility and financial implications of such a facility. Part of this planning was to engage and seek guidance from University leadership, and as such we have involved a number of individuals and had several meetings and discussions. We have worked closely with Amanda Hoffsis, Amber Buening and Peggy Varrone from Physical Planning and Real Estate throughout the process and have involved others as directed, including Business and Finance, Academic Affairs and Facilities Operations and Development. The Business Plan was developed through a process involving multiple people using a variety of data and resources. The CVM engaged John Schroepfer, Principal in CFO Partners, LLC to assist. John is highly experienced in developing business plans for start-up companies, especially those involving medical fields. Previously he worked for Battelle in business development. The CVM provided John with information and best practices regarding well-managed and profitable private companion animal veterinary practices. Much of the data and resources came from three sources, the American Animal Hospital Association (AAHA), National Commission on Veterinary Economic Issues (NCVEI), and Wutchiett Tumblin and Associates, a private veterinary practice management consulting company based in Columbus, Ohio that has been helping veterinarians across the US improve the management and value of their practices since 1984. The CVM also provided historical data from the VMC with a focus on the services and functions of the Hospital for Companion Animals regarding cases, revenue and expenses over the past five years. In combination, these resources and data were used to make conservative projections regarding future growth of cases and revenue for the offsite Companion Animal Wellness Program as well as the subsequent growth of the VMC’s specialty services with movement of the Community Practice Service to the offsite location. The CVM also hired Copich & Associates, Inc., an architectural firm based in Youngstown, Ohio that is well known and experienced in designing and building companion animal veterinary practices, to evaluate the building at 807 Kinnear Road and to provide us with an accurate estimate of the likely costs associated with renovation of the building to meet the needs of a state-of-the-art Companion Animal Wellness Clinic. In addition, we obtained independently-derived estimates from Faye Bodyke with Design and Construction (FDC) of the Ohio State Facilities Operations and Development. The CVM has also engaged numerous external constituents, including the VMC Small Animal Practitioner Advancement Board, a group comprised of 20 small animal private practitioners that meets quarterly to provide input and advice to the VMC; the Ohio Veterinary Medical Association and its leadership; alumni and private practitioners throughout the state; among others. We have sought and received meaningful advice and guidance regarding the Companion Animal Wellness Clinic from a highly experienced and successful small animal veterinarian/alumnus who has successfully built and operated several small animal veterinary clinics in Ohio in order to make sure our planning and projections are realistic and consistent with long-term success and sustainability. We believe that with the involvement of multiple people and groups from the VMC, CVM, University, and veterinary profession along with the hired consultants, we have optimized the detailed planning to ensure we meet our educational, service and financial goals and objectives.

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