A Value Creation Plan (VCP) is how the consolidator defines the opportunity to create value for the enterprise. There are two parts to VCP: Arbitrage and Margin Expansion.

Arbitrage is the value that is generated through the acquisition of hospitals under one platform by offering a low multiple to the seller and after accumulation, a certain number of hospitals. The entire enterprise will be sold to another larger consolidator, usually with a bigger multiple.

Margin Expansion is a process of optimization of the top line, bottom line and scalability of the enterprise by using various tactics. Top line initiatives are often referred to as “Growth Levers”.

These may include: Marketing Improvements, Fill Rate Management, Appointment Reminder System, and Forward Booking.

Bottom line optimization is usually achieved through: Vendor Management, Procurement Optimization and inventory Management, Labor and COGs (Cost of Goods Sold), and Control.

Margin expansion tactics:
Top line:

  • Marketing Improvements
  • Fill Rate management
  • Appointment Reminder System
  • Forward Booking

Bottom line:

  • Vendor Management
  • Procurement Optimization
  • Inventory Management
  • Labor Control
  • COGs Control


In the absence of a well-defined Value Creation Plan (VCP), the organization is not focused on creating value beyond Arbitrage. The hospital’s opportunity to create additional value that will be acquired by the Business Development Team will not align with the VCP and the downstream impact will diminish margin expansion opportunities. Margin expansion is the most difficult part at the hospital level and if the VCP is not incorporated into Strategic Filter and not guiding the quarterly and annual planning, the enterprise will lack the discipline of executing on the goals set out by the board and most likely will follow multiple “Shiny Objects”.


  • Strategic Filter Establishment
  • Change Management
  • M&A
  • Incident Resolution/Retrospection
  • Prospect Hospitals Pipeline
  • Culture/People Integration
  • HR Process/Onboarding
  • Core Processes Implementation
  • Pre- and Post-Acquisition Assessments
  • Training
  • Implementation of VCP
  • Strategic Filter
  • Prioritization (WSJF)
  • New initiative Strategic Profiling
  • Horizon 2 Experiments
  • Horizon 3 Experiments


In many instances, organizations lack transparency with the front line staff about the focus of the Value Creation Plan (VCP). The marketing effort is to improve the life of the veterinary staff, but the board-level focus is on Arbitrage. When the organization reaches a certain size, it becomes evident that corporate overhead is not dedicating a budget to focus on the experience, and most processes are focused on rapid acquisitions with the goal of fitting into the PE (private equity) investment cycle.
Burnout triggers as a result: Lack of control, Value Conflict, Insufficient reward and Work overload.


A Value Creation Plan (VCP) in newly-built hospitals is generally easier to establish but requires the discipline to not make changes after the initial build without a focused and well-defined Change Management process. After the initial build is completed and all the VCP items are implemented, adding new growth levers is an identical process to the one in acquisitions and should go through a detailed initiative creation process with scientific thinking and lean approach: Build>Measure>Learn. Only after a proven hypothesis, it can be implemented as either a top-down approach or offered as one of the tool kits for an increased top or bottom line.