David Boguslawski, CEO of CityVet, reveals some details about their business model and their local ownership of clinics. We also discuss CityVet’s tool to increase transparency and trust levels within the company and ensure that concerns of team members are properly addressed, and recognition is given when due.
To end off this episode, David shares his thoughts on de-novo to acquisition.
Welcome back to Consolidate That! Ivan, good morning, I’m excited for us to have a great new guest today.
Good afternoon for me, I was up at three this morning, doing a course on product ownership.
That’s your own fault. You must have seen this big blue, or the big red solar, lunar eclipse moon?
You did, okay.
It was beautiful actually, yeah.
I was asleep, send me a picture.
I will. I’m very excited today. We have a very interesting guest, and Ryan, you tried to scare me with his last name but I think I can handle it, so our guest is David Boguslawski and he is the President and CEO of CityVet, a veterinarian led group of practices headquartered in Dallas Texas that has been in operations for more than 20 years.
Previously, he was the chief operating officer at Deca Dental, eight years in private equity experience, evaluating and integrating M&A transactions, recruiting executives and leading operational projects at portfolio companies to create value.
He is an engineer by trade, has an MBA and a Lean Six Sigma black belt with 15 years of experience leading strategic growth and operational improvements initiatives within both Fortune 100 and distressed environments.
He was Dallas Business Journal 40 under 41 award recipient. What a resume to be a CEO of consolidation. David, welcome to the show, thank you for finding the time.
Thanks Ivan, Ryan. I really appreciate you guys having me. I’m looking forward to this chat. I’ve heard a couple of your guy’s podcasts and I have a lot to live up to.
Well, you’re already in the right city. Every now and then I give Ivan another vet to have but you have the MBA to match with Ivan, but being in Dallas, we can be better friends that way too.
David, what an experience. I mean, lots of it also is my passion, you know, Lean is something that I was looking at last couple of years. Just understanding how they implemented that in healthcare and it was a very interesting experience, kind of learning about it.
In fact, my dissertation in MBA was about Lean in the healthcare domain. Just seeing if we can map it onto the veterinary sector. How did you end up in our industry? What was that sort of journey and how do you like it so far?
Yeah, it was kind of like a lot of my career, a little bit random. I was at a dental company, I liked it, we were growing rapidly. I was the first non-dental executive hire there and helped grow from 25 to 85 locations and it’s amazing how similar dental and vet are. I mean, the marketing is similar, the multi-site management is similar, a lot of the systems are similar.
Really the medicine’s not the same but a lot of the business is very similar.
I wasn’t looking for vets. I happened to be COO at the time. I had always wanted to be a CEO at some point but it just kind of came out of nowhere, I was introduced to the investment firm that actually is invested in City Vet.
Really liked them, I started doing some research, really dug into things like Google Reviews, dug into the veterinarians, just had a really good brand and I met the founder, Chip Canon. Great person. I met the chairman Andy Anderson. I just kept meeting more and more people that I really liked. I just thought, “Man, it’s really – when am I going to get another opportunity? Am I ready yet? I don’t know, but why not give it a shot and we’ll just see what happens and it’s on with great people.”
That’s when I did it and so that was about a year and a half ago and it’s been a great ride ever since, we’re growing like crazy and it’s been a lot of fun.
David, in the last year and a half, you guys have – where have you grown it? It’s been – where were you when you started and what’s the size grown to now?
Yeah, we were 15 clinics when I started. In the first year, and keep in mind, that was COVID, a lot of it was just kind of putting together a team, getting some things, getting kind of back office that’s scalable from a technology standpoint, HR standpoint. We got a lot of internal work that first year. This year we’re already dropped four on the ground and will probably get to seven or eight. We’ve done two acquisitions and two de-novo’s and I think we’ve got – we’re going on this week and another one in a couple of weeks.
It’s a blended model but yeah, excited about it.
Wow, almost doubled the size in your first – I guess, when you wrap up two years, you’ll double the size of the group.
I think we’ll be close to that, yeah.
I think we’ll be close to that.
I think you can rate yourself as a good transition so far, from COO to CEO. And if you could, talk to us a little bit about what some of the different ownership cycles that you have, how, you know, City Vet I think is unique in the sense that you guys are very regionally based in the Dallas Fort Worth area. Tell us a little bit about what that looks like and how you work with the veterinarians in the ownership capacity.
Yeah, absolutely, yes. If you look at the top, call it 30, privately owned vet companies, I think we’re probably, if not the only one, one of the only ones, that has local vet ownership within our clinics. We really like that for a lot of reasons but it’s largely, it was started by Chip a long time ago and I like it. It’s part of what attracted me here.
Not just for the psychology of having a vet owner that is looking at the P&L every month and getting actual equity distributions and knows that how they run their clinic directly, you know, whatever drops at the bottom falls to them. A lot of vets are not permitted that blessing when they’re in a large group. We like that, we will continue to endorse that as we grow.
Then if we do raise capital down the road, let’s say for recapitalization events or something like that, they get the multiple arbitrage that we would get. A single practice may trade at one multiple, as you guys know, a multi-site practice with a proven growth model and a kind of good back office and home office support is going to trade at much higher multiple, even maybe two times that single practice multiple.
It’s not just economic motivation, it’s psychological motivation for vets. And then, at the end of the day, five, six, seven years from now when we’re raising additional growth capital, I want the vets to be the ones telling our story out there. That’s going to be the most rewarding piece for me is if they can really talk about CityVet and how they grew just like I grow and just like our equity firm grew a good amount of wealth because of our growth.
That’s amazing. When you’re talking about the ownership at the local level, is that the hundred percent owner – well, it’s not 100% ownership but is there like a split and then it’s based on a model or is that sort of negotiable or is there like a cookie-cutter sort of approach that you offer to the new people that joined you?
We have some vets that have as low as, I think, probably 20% and many of them have up to 49%. CityVet still has to have 51, because we’ve gotta guarantee the lease and we’ve got to do, we’re putting a lot of the capital up and we will let them buy in to get their portion but also finance it and so they can get into one of our clinics for as low as 50 grand down and get good equity.
Wow, that’s great.
Yes, we think it’s a differentiating model. I think it’s driven a lot of our recruitment for people that want to go and open their own practice but maybe don’t – are nervous or don’t know what else is required so we’re right there to hold hands with them, partner to partner and bring all the back-office skill that we have but still let them practice the way they see fit. We don’t – one of our core values is freedom through trust; we don’t dictate how someone practices. We’re really there to help scale the back office and practice management, IT, all that kind of stuff.
This is sort of a debate that, I don’t know if you listen to enough of our episodes, but we always talk about, a lot of consolidation comes in and they do have that sort of mandate, “We allow you to do medicine the way you want.” But then there’s a lot of things that then come with the scale and economies of scale.
Some things you have to use as a network in order to really exploit all of those benefits. Do you find any sort of friction because of the specific vendor that you choose for your purchasing or things like that or is there a pretty good alignment around that or is it – how do you manage that, is it managed upfront or do you have that issue at all?
No, that’s a great question. We switched our distributor company last year, I won’t share with you who we went to but within, I think, two and a half months, we had 95% compliance.
We did not mandate it, we didn’t push it down. That’s the beauty of having a partner vet. We said, “Here’s the amount of money you can save by ordering the exact same stuff but we’ve negotiated a consolidated rate that is going to save you money and any rebates we get, we’re pushing down to you, to your P&L.”
Again, that partnership is what drives a lot of that buy-in at the field level. Now, if someone wants something that’s let’s say, not on the formulary, that’s fine. I mean, it’s your P&L it’s hitting, it’s not – we’re sharing in that and we’ll do our best efforts that if we get enough volume in that category to get it onto the formulary.
That’s great and you couple of times already mentioned the mysterious word to veterinarian, P&L. Where do you get – well, I think the taxes is the one that does do MBA program in parallel with the vet school and Colorado as well. If you get a vet that wasn’t exposed, what do you guys do, how do you get them familiar? Because it sounds like those that do know what P&L is and all those things, that usually already have experience in business and it sounds like this is a good opportunity for younger vets as well.
Do you bring them up to speed, do you help them to understand the financials and things like that?
Absolutely, yeah. We have a few things. One is the City Vet Leadership Academy, where we go through, I get a lot of training, how to lead people, how to have tough conversations, conflict management, we’re pushing out a lot of content there and that’s only about a year old so we’re still building some of that. We’re going to loop in some mental health, some other pieces. I think we’ve got a lot of good content that’s already been developed with our partner vets, we’re kind of building this platform.
Two is we have monthly – we call them HTM meetings but it’s Hit the Mark meetings where we review the P&L, benchmark them to other clinics, kind of share with them how they’re performing. Again, it’s not to shake a finger at someone and say, “Hey, you can do better.” It’s more of a collaborative discussion because they know, at the end of the day, as a partner, I mean, their distribution depends on how well they’re doing as well.
It’s kind of a journey, it doesn’t happen overnight, we – a lot of our partner vets today that we get are homegrown. They come in as an associate, they work for us for two, three years and then they see all these other partners doing really well and say, “I want to do that,” and we love those clients. We love to get them and train them, have them work closely with other partner vets and spend a lot of time digging into the business side of vet med.
That’s really cool. These meetings, I understand, from what you’re saying is that that’s the – you look at the books of the entire organization and they all kind of review that, is that the idea behind it, or is it like individual clinics and compare?
Yeah, it’s clinic by clinic. My ops team goes around and we schedule it in advance and want some time to review and it’s not just the financials. We’re really big on that promoter score, we’re big on customer feedback. So if we have any negative MPS’s, customer feedback, we want to dig into that, try to get to the root cause and fix it. We look at staffing levels, we look at – we discuss maybe things we’re seeing in the industry if there’s any upcoming equipment needs. It’s just a full business review, you know, “Is it time to add a vet?” Just a full business review on all those topics.
I think, David, in one of our previous conversations that we had talked a little bit, just you and I, talked a little bit about some software that maybe you guys were using and some internal tools that were helping you perhaps run those meetings. I would call that a GSD, Get Stuff Done meeting, I’ve had those meetings before but is there some internal software or some things that you guys are using that’s really helpful for that?
We do, it’s a homegrown, it’s more than a BI tool, but it’s called MUTS and we developed it and it has real time tracking of vet payroll for example, where the vet, let’s say you’re halfway through the month and we have a [inaudible 0:11:57] structure and they’re not sure where their production bonus is, they can see it real time. They could drill into the invoice level, into a commission level, it’s got all their financials, their P&Ls, their staffing benchmarks. It’s as much detail as they want to get into and probably more, yeah, it’s all tracked in MUTS.
We also have a new feature in there, for example where, if another person or employee does something really good and you want to recognize them, we have, one of our other core values is Just Wag, you can give them a Just Wag, where you click on it and it sends them and their boss an email saying, “Hey, this person is doing an awesome job doing XYZ.” We try to loop everything in the MUTS, that’s what we drive a lot of the clinic level behavior with.
That’s awesome, it’s like an internal communication tool but as well as the metrics. I like it. That sounds great. It’s like we use internally on the Slack channel, in several companies that I worked at and we created channels for that, so a specific channel called Shoutouts and anytime someone does something, it’s like a central channel where everybody is like, “Hey, thank you for editing this podcast,” or it’s just like a culture and it really works. It creates the community.
I got best eyebrows when I started.
You did, you got a badge for that.
I wear it proudly every day when I get up in the morning but
Well look, like I have a lot of jealousy here. You can tell by me being bald.
Yeah, Ivan’s hair stops at his lower lip and it’s just from there up, there’s nothing.
Yeah, of course, yeah.
I think it’s pretty cool that you guys have put that together because if you look, going back to our consolidated maturity model, we talk a lot about the levels of where groups need to be to be able to implement and the early, early stages, we talk about having the right internal communication tools and measuring your metrics and looking at all of that and so it is pretty cool to – I know that was a big light bulb when you said you had built that internally, I think that was something cool and really in line with where your group, in our view, should be as you’re growing and scaling.
Yeah, absolutely and as a former engineer, Lockheed Martin guy where – I mean at Lockheed, you can literally track every bolt that went into every piece of every missile, all the way back to who worked on it. So my background has always been having the KPIs. I think that visibility helps a ton but a lot of that was already there and I did more tweaking as I got there. Chip had done a great job of building a lot of that, we got a great IT team and a full-time developer, but totally agree, I think to scale up you have to have those pieces in place.
That’s amazing and, you know, we’ve bumped into this a lot because one of the things that if you kind of dissect down what VIS does for consolidators, we really help them to stand up the metrics and if you look through, we actually were sitting through sort of like what we’re doing and instead of just saying, you know, our sort of slogan internally was “right metrics to the right people at the right time,” which is truth but today, I was sitting at 3 AM in that meeting and training in product ownership and we were putting in the value proposition together and we bumped into this, you really created the transparency.
The metrics and the KPIs, some people can look at it and say, “Oh you’re putting a leash on me as a veterinarian and you want me to do XYZ,” but really it’s not that. It’s creating transparency into how the organization is doing and giving the real time access to data where you can course correct and help the entire organization to grow.
I think that that’s very valuable what you do and doing it internally is really cool because a lot of consolidators struggle with that. What is your sort of taken experience, when you have these vets and you provide them with these metrics? Do they resist? Do they feel like they’re monitored or does it actually promote? Because there is a lot of controversy around it and some people just retaliate.
I do think they like the information. I have been on the fence on whether or not to show vets versus other vets, like a full dashboard.
That’s interesting too.
My engineering background says I should absolutely do it but the human side of me says, “You know what? That’s actually probably going to make some people upset.” So I have not done that. I can see it but they can’t see it and we do at our annual reviews, we kind of let everyone know where they stand but we do also, the way that we handle kind of comparative person is basically by looking at things like net revenue for visit or visits per day or production per doctor a day and we show them where they are and kind of where the company averages and see.
I think it has driven a lot of good behavior and a lot of buy-in and now we have some vets that actually email me and say, “Hey, where do I stack? I’m just curious, where do I rank versus the other vets?” Some of them actually are wanting the information but I’m a big believer in pushing that transparency as far as we can without creating an atmosphere where people feel like it’s super competitive. I definitely don’t want that and so I’m trying to strike that balance.
Well, it’s interesting because we again, we are sort of building the application that does that and creates the balance and the way we approach it, it’s not only based on financial data. That’s where we’re kind of starting to understand that yes, if you are going to start comparing only money to money, that might become kind of competitive and maybe even in the medicine, regardless which medicine you are talking about, in some cases can become unethical and I have seen it in the big hospitals.
When I was working in the emergency and my first year out of school, I worked in emergency on commission. That’s the only year that I’ve done on commission because it became competitive and people were just – I can say unethical. I didn’t like that so I have never done, since that year I always work per hour rate and nothing kind of phase my mind on what I’m doing.
But it’s interesting, one of the things that we looked at is creating a competition, hospital to hospital competition. You’re as a part of a team but within the friendly competition between the two different hospitals and how can I contribute to get there? And the other thing is balancing out the doctor not based on the KPI to KPI, so I’m comparing my average transaction to your average transaction or my NPS score to your NPS score, but take three or four metrics and merge them into an index and it’s a weighted index and then as you merge the main to it, it’s just out of a hundred.
Out of a hundred, I’m 86, or I am 55 or I’m this, so that approach doesn’t really point a finger into, you know, “You don’t charge enough, people don’t like you enough.” It’s a weighted index and there is a certain way to a certain area of work basically and then that way to compete. I don’t know, what do you think about that?
I do like that and we have something similar for our practice managers, we call them our practice manager scorecards but we haven’t brought our vets to that level. I think that’s certainly a takeaway that I’ll take from here. I like that a lot.
Yeah, there is another interesting thing that you can weave into it. Certainly NPS from the owners, based on this experience with the veterinarian, because it’s always balanced. Some vets that have amazing production, not very much liked. Those that have less production, they are very liked because they give a lot of discounts so there’s that but then there’s also employee NPS and how the employees like to work with that veterinarian, how much they are team players.
That’s sort of another one that we’re kind of working trying to assess whether that’s a factor and whether we should have it in the scorecard.
Totally and I’m glad you brought that up, so just like we ask all of our customers for NPS, we actually ask our staff to rate their leaders, so their practice manager and LP, and they get to rate me and my team and so we actually take home office feedback and NPS and look at that and see how we’re doing to support them and so it’s great. It’s a good way for me to manage my team and make sure that we keep our eye on the prize, which is kind of supporting the vets out in the field.
Yeah, one of the best ways to manage is to get naked in front of the team and basically make sure that they can assess you as much as you are assessing them. One thing that we kind of – when we work with consolidators, some of more successful ones, they have the structure sort of, some people call it support, it’s a help desk. Is there anything that you use sort of to communicate with practices so it is not every time a phone call or an email? Is there any sort of scalable tool that you implemented that can address that?
We do. We have kind of a homegrown help desk ticket system and each department has a different basically bucket that it goes into and we track average first response, which is how fast do we go back to their first response, yeah and we also track closure time and once it’s close, it goes to whoever submitted the ticket to say, “Thumbs up or thumbs down, I’m happy or I’m not happy,” because we do track that and measure it.
It is broken into 12 or 13 categories, there’s payroll, there’s IT tickets, there’s facilities, so yes, we do look at that quite a bit and whenever there is one that pops out, you know my team is normally all over it.
Dave, the other interesting thing that you mentioned is that you guys are putting more emphasis right now on de-novo’s rather than acquisitions. Is this the environment that we’re in right now, or are you just seeing more success, or are you tired of buying broken cultures, or all of the above? What is the driving force and what are you seeing?
Yeah, I think it is more our strategy of us wanting to control our culture, wanting to control the way we grow. What makes us different than the largest, like I said, probably one out of 30 that does de-novo first. Most people are doing acquisitions. So we would much rather do a scalable platform, has the same software. We’re recruiting leader vets where they have ownership. We still do M&A but it’s selective M&A, normally with a partner that is going to go open additional clinics with us or who we see a lot of growth with.
I will say as the M&A aggregators continue to build their presence, I think de-novo will become more and more attractive. And my background in dental was almost all de-novo’s as well. I certainly know the site selection and all the pieces that can make a successful de-novo.
That makes sense. Yeah, you’re right, you’re not acquiring all the baggage that comes with it but I think that the – it almost feels like acquisitions are coming to an end, like with these multiples, or maybe it is a wave before the large ones recap and then it kind of will go down and up again. So it’s interesting. You mentioned software, maybe this is something for closure, but is there anything that in particular at the clinical level?
Because I usually think about the software in consolidation there at sort of the corporate level, you mentioned the MUTS and other systems, but then in the clinic level, are there any particular software products that you like more than others and that you guys choose as a product for, whether it’s an integration capabilities or workflow or anything like that?
Yes, so we’re using ezyVet as our PIMS system, cloud-based, the vets loved it. I think it was part of the reason, and it has good billing triggers and things like that and then in terms of, let’s say we’re looking at an acquisition that we’re not plugged in yet, so we’re not up to diligence, we can’t plug in MUTS, we use Vet Success or something like that to get some preliminary data and kind of ease the burden off diligence, off of the selling vet.
Then you connect MUTS on the back of it with the KPIs that they can produce. It makes sense. I can’t believe we blew through 20 minutes very quickly. It was very interesting.
One of the things that we always like to wrap up, I know as Ivan said, we’re coming up on time. We like to ask two questions to wrap up with our guest, one is, if there is a book that you would like to recommend, something that you’re listening to, even a YouTube video talk, or just a standard book that means a lot to you, is there something you’d recommend?
There is and normally, I don’t love the blind recommendation. It’s normally totally geared towards the person I’m talking to but the book that I think anyone listening to your podcast, a high charging person that’s probably pretty motivated is The Daily Stoic by Ryan Holiday. You guys have read that? But just a lot of good self-care and mental fortitude and just perspective in that book, so I really love that book.
Yeah, my favorite phrase, is it from that? The obstacle on the way is the way? Yeah, that’s very deep – I love him. He’s a very interesting author and a bunch of interviews that I’ve seen with him are very interesting.
Then the second question that we always like to ask is, who would you recommend that we have as a guest on the show?
I know you guys have talked a little bit about mental health. I mean we’re seeing, our visit volumes are up 25, 30, 35% year over year. I’ve had enough vets, one for every clinic over last year. That’s how many – so I’ve hired over 17 vets and I still feel like people are stressed. There’s a lot of volume that I think something around mental health, not necessarily just for a vet, which I think is great, also for me, like for a CEO, how can I promote this? What can I do as a CEO to really speak to my vets and get them in that frame of mind taking care of themselves, using their actual PTO?
That’s great. Yeah, perfect. We did our episode with Olivia, which was great so I’ll make sure we direct folks to that and then Ivan, you did that webinar recently, “Why are vets unhappy?” and that’s a fun one but I do think there’s a lot of great things that we can dive into that and probably look at it on the executive side of things too.
Well, I’d like to additionally put in a plug for what matters for you David, so cityvet.com. If anyone is in the Dallas Fort Worth area, definitely check them out. There’s tons of options. They’ve got fantastic veterinarians as well as boarding. I know my big guy, Walter, loved going there for daycare a lot and he always came home tired and happy, so a great company to work with and David, as always, we appreciate having wonderful guests and thank you so much for joining us.
Thanks Ryan and Ivan, it’s been my pleasure. We have to do it again.