The Hidden Profit Lever: What Inventory Is Really Costing Your Practice

Most practice owners know inventory is a problem. Few realize just how much it's quietly costing them.

In this episode, Martin and Peter sit down with Emmitt Nantz, co-founder of Inventory Ally, to unpack why COGS is the most overlooked profit lever in veterinary medicine and why fixing it doesn't require firing anyone or seeing more patients. Emmitt also makes a compelling case that veterinary medicine is a service business first, and that practices winning long-term lean into client relationships, not just transactions.

In this episode:

• Why COGS, not revenue or labor, is the biggest and most actionable profit lever
• How most practices carry 30–40% more inventory than necessary
• The hidden opportunity cost: staff counting pills instead of delivering care
• Online pharmacy as a complement to in-house inventory, not a replacement
• Client lifetime value vs. average transaction; the real measure of success
• The Stethoscope & Spreadsheet Seven: Emmitt answers Questions #1 and #4

Timestamps:
00:00 — Intro & welcome
00:53 — Emmitt's background: 20 years in vet med ops, Banfield, SmartFlow, IDEXX & Inventory Ally
04:25 — Breaking down the P&L: revenue, labor, and COGS
06:37 — The PE arbitrage opportunity and why COGS is the answer
08:53 — The emotional case for fixing inventory over cutting staff
09:43 — Inventory as an enabler of service, not the service itself
12:10 — Why practices over-order and the 30–40% excess finding
14:41 — Headwinds and tailwinds for independent practices
19:00 — The cost of inaction is getting exponentially higher
21:57 — The opportunity cost of staff time on inventory vs. client care
23:00 — Online pharmacy: complement, not replacement
26:52 — Does online pharmacy inflate your COGS percentage?
27:29 — It's not about the percent; it's about the dollar
30:30 — Client lifetime value vs. average transaction
32:25 — The Stethoscope & Spreadsheet Seven begins
32:54 — Question #4: What is your greatest joy in this work?
33:30 — Question #1: If not vet med, what would you have done instead?
37:31 — Emmitt's final thought: treat supplier relationships as partnerships
38:22 — Outro

Mentioned in this episode:

• Inventory Ally · inventoryally.com
• Veterinary Management Groups (VMG) · myvmg.com
• SmartFlow (acquired by IDEXX) · Banfield Pet Hospital · Galaxy Vets

New episodes every two weeks. Supported by Veterinary Management Groups (VMG) · myvmg.com

Transcript

SPEAKER_02 0:03

Running an independent veterinary practice takes an act of courage and carry the weight of the medicine and the weight of the business often at the same time. This show is for the proudly independent people who do that every day. I'm Martin Traveler.

SPEAKER_01 0:16

And I'm Dr. Peter Weinstein. And this is the stethoscope and the spreadsheet. Thank you to VMG for your support on this project. And the only thing that takes more courage than running an independent veterinary practice is starting up a podcast. We have a great guest today, don't we, Martin?

SPEAKER_02 0:37

We do, we do. I'm super excited that Emmett Nance from Inventory Ally has joined us. But before we jump in and ask you some questions, can you give us like a brief who is Emmett Nance and where you've been, where you come from?

SPEAKER_00 0:52

Yeah. I was gonna, I thought you were gonna say where you been, where you're going. I was like, I don't know where I'm going, but I can tell you where I've been for sure. So I've I've been in veterin for about 20 years, but not on the medicine side, always on the ops side. And a key component of that for me that I've really developed as a personal kind of trend line, I guess, in my career is veterinary medicine's a phenomenal industry, really great people. But what I've found is there's quite a disconnect between running the business and providing care, oftentimes. Not that it can't be done, but it it causes both sides of the brain to be working kind of simultaneously a lot. And usually that's a bit of a switch. And I found that my skill set is definitely in operations and uh efficiencies and improvements. So, my background, I've I've run a couple of hospitals. I worked at Banfield for about 13 years doing large-scale improvement projects, inventory projects, as well as just hospital flow. I then migrated after about a decade at Banfield to join Ivan Zach at Smartflow. I was the COO, CFO there. Love that product. It was all about making patient flow better, which creates time and space in the hospital. That was acquired by IDEX. I spent three and a half years there managing their customer success and onboarding teams for things like Cornerstone, Neo, DB Max. After about three and a half years, got the entrepreneur bug again and rejoined Dr. Zach to kick off Galaxy Vets before standing up inventory ally about five years ago. So constantly in the space. I really believe that this is a service business and the true value comes from the customers come back, refer their friends. It's all about the service, it's building the relationship. So anything that we can do operationally to reduce time, reduce inefficiencies, and add value adds to the long-term business success. So that's where I where I found my niche. Amazing. Yeah, so you can sit still, can you? No, no, I can't sit still. There's plenty of opportunity too when it comes to making things a little bit more efficient, kind of everywhere.

SPEAKER_01 2:54

Well, efficiency is also my middle name and systems as well. And so I think we, even though we just met for the first time about a month ago, I think we have a connection besides the veterin in terms of systems and efficiencies from that standpoint. And one of the greatest sources of inefficiency in a veterinary practice, and one of the most expensive components on the expense side and the profit and loss and the profitability are the inventory components. Everything from cotton ball to cancer therapy and everything in between. And so you, along with your co-founder Nicole Clausen, you're kind of the leaders in the inventory world. You're the inventory nerds. Maybe you should have been, instead of inventory ally, you should have been called inventory nerds. You could if you haven't done that already. We could tell you how not to do it. Everybody else is doing it. So what you you have a very diverse background and obviously touched on inventory in so many of the different roles that you played, but what is it about inventory that motivated, stimulated, and could coaxed you into taking on this role with inventory ally? And why is it that the rest of the profession, the 110,000 veterinarians, 35,000 companion animal practices, can't seem to figure out what inventory is all about?

SPEAKER_00 4:25

Fantastic question. I appreciate that. What I really bring is why did I do it is because it's one of the biggest inefficiencies that there is when it comes to the PL. You know, when I break down the PL, there's three primary drivers: revenue, labor, and cogs. Revenue is about more people, more average transaction, more over-the-counter sales, those types of things, right? It's transaction and it's price is revenue. Labor, we've got some tools to manage labor. It is a big opportunity. There's a ton of inefficiencies I could speak to when it comes to labor, but it's really about supply and demand when you think of a service business and matching those two things. But when we look at the opportunity for improvement and we look at those two pieces, revenue is really about adding capacity and adding doctors and making sure you can add demand. We've seen some things that suggest visits are down, there's a price ceiling, competition for doctors is high. So it's a really hard lever to pull. Similar with the labor side, it's very competitive. There's still a lot of moving parts, and it's it's not really a labor that you can pull as far as reducing cost, unless you get really efficient where you're assigning things. And so, what I recognized about five years ago, especially in the acquisition of hospitals and the real strong growth associated with that, that actually started to have a little bit of a flattening out as far as that growth curve. And what I had recognized as an opportunity, and it kind of goes into a couple pieces here, but I recognized as an opportunity for a business, is that there's a lot of acquisitions by private equity that doesn't understand the business. They've rolled it up with this idea of arbitrage. I can buy for 10, sell for 20, but that opportunity started to erode. That means they're going to have to contribute to EBITDA to offset some of that lost enterprise value. Because of what I just talked about with revenue and labor, I know that those are difficult and that's not the opportunity, but COGS is full of waste. And I've done it before. I did this for Banfield 14 years ago, still uses us the product today. So I know how to fix that part. And there's a just a ton of waste when it comes to inventory. So I'll go into that as to as to why is there a ton of waste there.

SPEAKER_02 6:35

And before you the basis of it, but before you before you do, before you do, I just want to just to double, I just want to double-click on the whole arbitrage opportunity and the need to focus on op to focus on ops. Like I think, I think what I heard you say was, you know, the opportunity to buy at a 10x and sell it at an 18x multiple has gone away. And therefore, you have to add value by improving the EBITDA, the EBITDA of the practice. You can do that by pulling a revenue lever, which is hard hard to pull, the labor labor lever, also hard to pull. And cogs is the is what in your estimation the the bigger the bigger opportunity, it just in terms of implementation, ease of implementation.

SPEAKER_00 7:27

No, just from total dollars. When you're talking about EBITDA improvement, profit profit improvement with so yeah, think of it as a return on investment of effort. Yeah, the biggest dollar opportunity is in conks. Absolutely. That's a big statement. And I'll I'll talk through some more of the details, but also just to I'm I'm talking about the enterprise five years ago as kind of a recognized opportunity to fix a problem that would escalate on an enterprise balance sheet, right? A statement. But the same holds true for all. So you can look at that enterprise piece as its own thing, but you can also look at it as an opportunity for independence that is eroded.

SPEAKER_03 8:05

Yeah.

SPEAKER_00 8:06

The acquisitions really slowed down. The multiples that could be that could be sold for have gone away or have come down. And if you want to add value to your practice, whether it's retained or it's exited, you need to add EBITDA dollars. And if you're going to add EBITDA dollars, it's either increase your revenue or decrease your costs. And your two primary costs are labor and cost of goods sold. You need labor to provide service. You need labor to grow. You need to run efficient cogs. And you can add two to four percent to your bottom line. And that's massive because if you put two to four percent to the bottom line, that's profit for you. But when you go to sell it, it's EBITDA that's a multiplied. So the multiplier and the exit goes up just by not giving away stuff or not losing, losing dollars through cogs. Yeah, that's where I'm found the opportunity. Go ahead, Peter.

SPEAKER_01 8:56

Can I add a right brain component to this? I don't think most doctors are attached to cotton balls and atropine, but they do have an emotional attachment to the team. And it is much harder to cut hours or fire people than it is to order less, keep less in stock, or find other ways to adjust their EBITDA. So I think it would be much harder for me to ever want to have pushed my team when I can push product out and have more shelf space. So I I think there's an emotional component that makes inventory a much more tangible, fixable contribution to bottom line than people manipulation as well. And that's me acting, that's me replaying the leaders.

SPEAKER_00 9:44

100%. And one of the other pieces to that is again from a business mind. So shifting back, long-term success is through growth. And your growth comes from patient care delivery. And you need staff to do that. AI is not going to replace that. That's what I think is one of the great opportunities about a business like this. It's a service business that doesn't get replaced. The relationship doesn't get replaced. That's a really strong moat, if you will, for business success. And you need the team to be able to deliver on that and build those emotional ties that keep customers coming back and referring their friends. That's the bottom line, I think. So to your point, when it comes to cogs, that's actually something that's more you're you're you're less connected to it. But it's a one of the things I often say is inventory is an enabler of the value, which is service. It is not the value. If you're in a retail store, you're selling product, that's the value you're selling, right? It's a direct exchange of value in the product. Inventory in veterin is an enabler of the value or the product, which is service. And that's a key foundation for how I treat inventory and why it has a lot of opportunity. Because the way that we're taught, and the reason this has so much opportunity is we're taught to manage inventory like it's a retail store. I bought 10, I sold eight, I have two left. But it's not real. And that's why PIMS can't handle inventory very well. Because it's using transactional outputs as the math. But you need to understand consumption demands. So consump, you know, cotton balls and such still need replenished, but they don't hit a transaction, so they don't deduct. And what happens is when we when we take on that type of philosophy, we're trying to shoot for perfection for starters. And because we don't have data to impact perfect, perfect math, we spend a lot of time trying to correct for the imperfection. That's time that should be devoted towards clients and patients. What we really need is enough without too much, so that we can enable the service, the value that we want to deliver. And that's what's critical. And the way that we do that within a service business that is missing data is that we understand consumption demand, not transactional demand. And so when you add all this up back to what I was saying before, the reason there's two to four percent of revenue available in EBITDA is we actually find ourselves in a manual situation trying to be perfect and not run out. And the best way to make sure we don't run out and try to make things easier on ourselves in a manual system is to have more than I need. It's better to have too much than I need.

SPEAKER_02 12:11

I'm gonna overorder.

SPEAKER_00 12:12

That's right. I don't want to run out. I should probably just add an extra box. The ramifications are much worse to run out than to carry too much. It's it's natural. But what we find is that we increase that that cost of the inventory on the shelf by we consistently find 30 to 40 percent more inventory than necessary, and that is adding two to four percent of waste just through expiration, breakage, theft, whatever it is that's causing the waste. That's just a natural inflection. So back to what you're saying, Peter, as far as ease of solution, it's just eliminating waste. It doesn't have any pain associated with it if you do it right. Could I be obnoxious for a minute, or would that be uh I think I'm being obnoxious. I'm getting on a soul box for the rest of the ocean.

SPEAKER_01 12:58

No, but you know, Emmett, when you started talking about veterinary practices are full of waste, I just went to a completely different thought of waste when we were talking about waste and other terms from that standpoint, because really we are full of waste in in so many different ways. And yes, there is waste in the inventory side of things, but it's it's the other full of waste that has led to the problems with inventory from that standpoint, because we can't get out of our own way from that standpoint. So I think you should write a book talking about veterinary practices are full of waste.

SPEAKER_00 13:34

Veterinary practices are full of waste. And I it it is true, and I've that's why I said I could talk about labor, we could talk about revenue, we could talk about a variety of things. But the reality of it very consistently is there's a lot of passion in the veterinary hospital and worthy passion for the for the purpose that people are there. And that exchange of value that I talked about, or this the relationship is really it's it's beyond value. Like it's uh critical in society. It's very, very important. It's not just a product, but that what that causes, and we come back to the waste piece of it, it's because there's so much passion in delivering that that we accept significant amounts of pain, inefficiency, waste. We just accept it as normal so that we can deliver on this passion. But it doesn't have to be that way. That's why I come back to my career, it's always been about how can we simplify that stuff that enables you to do that, is where there's real opportunity fight financially, but also just in perpetuity of running your business and delivering that care.

SPEAKER_02 14:41

Hey, so you know, in enabling uh inventory as a as an enabler of care, right?

SPEAKER_03 14:50

Yeah.

SPEAKER_02 14:50

Uh I'm I'm fond of saying it's much more fun to work in a profitable practice than a non than a prof than a practice that's not profitable. So that two to four points of eBITEC can be pretty, pretty darn important. As you as you think about the independent veterinary landscape, we've seen a lot of change over the last decade, certainly to 20 that you've been here. What are some of the headwinds and tailwinds that you see? Both headwinds and tailwinds.

SPEAKER_00 15:17

On the headwinds, the thing that comes to my mind is really on that exit opportunities. We already started to touch on it a little bit, but it's kind of what I've mentally noted is it can be a headwind when you're looking for an exit, right? There's not as much acquisition going on. The opportunities from that side of things can be more difficult. But I like that it actually enables more of an owner-to-owner exchange versus a consolidation. Consolidation it had has had many positive impacts to the industry, but it's also had some negative impacts. And when I come back to my true north of this is a service business, I believe the relationship component of that service exchange has been eroded in consolidation. So it's a real opportunity for independent owners to we, I think we actually see a bit of a resurgence and a shift back towards independent ownership. And it's because I take my dog to the vet. I take my dog to the vet is I'm meeting with a person that I trust to take care of my pet. And that's really the basis of it. And I think that is lost. But but it does mean if you're looking for an exit, it can be more difficult than it was five to ten years ago. But that's really the primary headwind I I believe I see. You know, what we we'll talk about online pharmacy maybe in a little minute, too. But that can be a headwind, but it can also be an opportunity. So I want to dig into that. Now, when we look at tailwinds, though, one of the things that I see is that independent owners have uh decision-making ability. And we're in an environment right now that is changing very rapid, just everybody, right? Everything is changing rapidly. When you're stuck in the in with the inability to make a decision and move forward and take advantage of opportunity, you get left behind. So I think independents have the ability to accelerate and lean into opportunities that are if they recogni if they recognize that, right?

SPEAKER_02 17:13

If if they recognize that they can make good not even good, quick decisions, right? Quick decisions. Hey Peter, do you think making a quick decision less optimally is better than making no decision at all? I'm not sure.

SPEAKER_01 17:29

Um that's just something that's there's a great quote that talks about more businesses fail from not making a decision than from making a wrong decision. And the veterinary ostrich image that I have of so many of our colleagues with their head in the sand and their butt in the air, hoping nobody notices them, reflects on our hesitancy to change and hoping that nobody will notice, but that is not healthy for them and it's not healthy for the profession. So I think the major audience that will be listening to this are looking for change and they're looking for help and they're looking for guidance because those that are in ostrich mode aren't looking or listening.

SPEAKER_02 18:13

Yeah, it's funny, you know, we we we talk about VMG support of this podcast, and I've just recently with over the last year or so, we became pro VMG preferred providers and we're spending a lot of time with VMG practices. And I think that's what I really see from the VMG practices is the sort of the encouragement, the the encouragement that they they give each other and and sort of uh not ostrich, not not allowing themselves to be ostriches and working in the study groups. So I think it's it's pretty and and yeah, I mean, I think there are lots of opportunities the you know, there's lots of opportunities in the industry for that that kind of stuff.

SPEAKER_00 18:57

So I wanna I wanna uh go ahead and I was just gonna say the idea of sticking your head in the sand and and resisting change is going has always been to what you're saying. It's it's detrimental to do that, but the reality of tomorrow in the in the future that's that's to come and is coming, the the impact of that is exponentially larger than it has been in the past. Yeah, you will be it's almost worse.

SPEAKER_02 19:22

It's all it's almost worse, it's almost harder today. It's a the the cost of not making decisions, of not looking at what's coming, of not you know, making changes is exacerbated by the uh by by the by the just the sheer tsunami of of opportunity and speed at which changes are being made. Which, you know, entrepreneurs love I mean love. I don't know that we la I don't know that we I don't know that we love it, but we're sort of able to deal with it. I worry, I worry, uh, I worry about some of our clients and friends who are operating veterinary practices and who who have not sort of accustomed themselves to the pace, the pace of change.

SPEAKER_01 20:11

There are some great quotes about inaction. I'll go to John Kennedy to start. There are risks and costs to action, but they are far less than the long-range risks of comfortable inaction. And we have a lot of colleagues with pebbles in their shoe that have become boulders, but they don't want to take them out.

SPEAKER_02 20:29

So we have we also have a lot of colleagues who have really who have really stepped up and and crushed it. Absolutely.

SPEAKER_01 20:37

Absolutely. Absolutely. Well, we we will celebrate those all the time. But what we're trying to do is get people to take the pebble out of their shoe. Yeah. And so I want to do a lead into a topic Emma just mentioned. So you're talking about inventory cogs, and you're talking about more of the tangible impact by controlling input and output, you know, first in, first out type stuff. But there's an immeasurable component that most practices do not take into consideration when it comes to inventory. And that is the time of the people that are involved with ordering, stocking, counting, updating. I mean, I would suggest that there's multiple percentages of payroll that go to inventory that as you help to, and this goes to your profit solver business, I believe, as well. And from that standpoint, I think that there are additional points in Ebada that go down when you are more efficient in your inventory as well, which maybe allows them, the staff, to focus away from counting pills to engaging in relationships with clients. What's your take on that? And then talk to me about how an online pharmacy can also impact A, inventory and B, staff utilization.

SPEAKER_00 21:56

Sure. Well, I'll come back to that, to that root, which is the services, the value. And the people deliver the service. It's critical. And so when you have people counting pills or otherwise engaging inventory that are also technicians or customer service reps, it's an opportunity cost, not just a cost. So it's a double that. You are not spending money paying somebody to do something, but you're also not generating revenue off of them doing what they should be doing. So I'll just anchor in that. The the impact is significant as well because then you take that. One thing I try to educate a lot on in veterinary medicine is it's not about the transaction. It's about the lifetime relationship. And so what you do today is not just what's on the invoice today. It's about do they come back? Do they tell others? Do they trust you? Is really what it comes down to. And you can pull that right into whether it's inventory or any other operations that's distracting your team from delivering that value and engaging those people. Because if I have someone that is counting pills or otherwise distracted, and it puts more stress on my team that is interacting with them, or it causes people to wait in the lobby, or it causes your day to get backed up so the entire team gets stressed out, because you're not allocating the hours towards the engagement of the service delivery. It compounds not only in that day or that person, but the team and the customer and the long-term value you have to offer to your client community. So you really got to be thinking of it that way. And I think that that's actually one of the other tailwinds I wanted to talk about is the opportunity for independence is to lean into the service, really deliver that value and differentiate yourself and enable your team to do so. So operational efficiencies will help you with that. But it's the long-term return that you will sustain by focusing that. And also will then pull it into what we were just talking about, like AI and other solutions that's accelerating, you know, evolve or get left behind. If you anchor yourself, and I say this intentionally because I a lot of the hospitals I talk with that are reluctant, you have to anchor your anchor yourself in what is the true value you're trying to enable, because then it's easier to decide what you want to optimize or improve or let go of. And if if you really say my true value is delivering exceptional care to my patients so they come back and such, then you look for ways to improve it. So sorry, go off a little bit on that one, but I really would like to anchor in this is not about the day-to-day activities. It's not about the administrative tasks that make us valuable. It's about the service. So you had asked about online pharmacy and how that plays into this. So, in general, inventory is about how do you make sure you have enough without having too much. Have enough so you deploy to provide care, not too much so you don't waste a bunch of money because that money could be put to better use, whether it's profitability or it's investment in this equipment team, facilities, whatever that is. Online pharmacy gives us another level, but it's it's one of those things that we have to kind of think about. It's a trend that we're seeing a lot, and we've got people on both sides of that trend. And it's a complement to the inventory in your hospital, it's not a replacement. So there's a couple pieces to this. So inventory ally that we have is really focused on the in-business inventory and making sure you replenish that in an efficient, productive manner. And the reason you need that is to provide that service, to provide convenience, which is another key element of service. So if it's easier for your for your customers to buy from you, or you need to provide it to be able to provide the care, you need it in the hospital. But if things don't have that demand, online pharmacy is a good option because it can do two things, in my in my opinion. It can expand your offerings for those one-offs or the things your customers want, but you don't have to actually incur the cost of buying it, storing it, shipping it. You don't have to incur all those costs. So you can expand your offering with online pharmacy as a complement to what you have in the hospital. But also things we see a lot of a lot of teams have a lot of high preference. They want it on the shelf, but they don't really sell it. So online pharmacy gives them, gives you the ability to say, hey, when we need to, we can do this versus always having it at the risk of expiration, those types of things. So that's how I tend to coach on the online pharmacy. It's an extension of your in in-house pharmacy.

SPEAKER_01 26:18

I concur. I like to think of our pharmacies in 2026 as a labradoodle. It's a hybrid of online and brick and mortar. And, you know, I think you have to decide whether it's got more labra or more doodle, but um, I don't think you can go one direction or the other. I think you have to look at a hybrid way of approaching things because consumer demand, again, service is what we're looking at. And if your ego gets in the way of your common sense, then that's when you get into trouble as well.

SPEAKER_00 26:52

Well, let me ask a question of you two when it when we're talking about online pharmacy and see see where we're lying on this. I have a lot of conversations with folks that have online pharmacy, but their cogs have gone up. And so they get stuck in this, but my cogs need to be 20%, but my margins are low on my online pharmacy. I always come at it and say, it's not about the percent, it's about the dollar. If you're able to extend at a lower margin, you don't have those costs that waste anything else. But if you're putting another $10,000 to the bottom line, even though your cogs might have gone up 2% because of the mix of your sales, isn't that preferable? Do you guys have those conversations too?

SPEAKER_01 27:29

My conversation starts with what number is larger, one or zero? Like that. And if you have an online pharmacy and you can make a dollar, you're ahead of that dollar that's going to Costco, CVS, or any of the other four-letter words that are out there competing on the internet from that standpoint. And so I think we have to. We also have to be realistic now that we have competition. When you don't have competition, you can take advantage of the environment economically. But when you do have competition, you have to decide what's better a relationship and making a dollar, or no relationship and making zero. That's that's my message, Martin?

SPEAKER_02 28:30

Yeah, my perspective is there's a and and this is a much bigger topic for another day, but but there's some discussion about where should pharmacy how do you classify and characterize pharmacy revenue and where does it belong on the on the income statement? And so, you know, is it truly all pharmacy revenue, or is it, you know, you're making 15, 20, 30 points on the sale of product, that should be other revenue that goes to the but that goes below the line of your of your of eB, even after even potentially, you know, pre pre-EBIT dot post-EBITDA. Right. Uh so it's a it's somewhat controversial and it's sort of coming up as a as a as a conversation more often now, is a is you know, imagine reimagine your reimagine your your practice where your online pharmacy is, extra revenue, like you said, that supports product choice and minimizes cogs, but it's not a core part of what you do.

SPEAKER_00 29:43

Right. And the main thing I wanted to get out of that part of it too was it does extend extend your offering, which improves service. It adds dollars to the bottom line, but it may inflate some of the metrics, especially when you're looking at percentages and you can't. It inflates your metrics for sure.

SPEAKER_01 29:59

It can't get lower. It inflates our metrics if we look at metrics from 2020, 2010. But maybe we need to change our metrics as we get into the future from that standpoint and look at things differently, because I am not sure where the science was behind any of the effing metrics that we have, except the magic eight ball that said cost of goods 20 to 25 percent. But it's a bit hazy.

SPEAKER_03 30:26

It's a bit that the answer is unclear.

SPEAKER_01 30:29

Right. So, Emmin, I gotta I gotta do a shout out. You said it earlier, and I we didn't pick up on it, but I I think one of the measuring sticks of success in a veterinary practice is average client transaction. That is the well, I'm taller because I have a higher average transaction. But I think you said it and I talk about it, and that is patient lifetime value. It's not about the transaction, it's about the relationship. And I think the difference in an independent hospital versus a well-managed, thoughtful, independent hospital is that they live based upon relationships and lifetime of care versus transactions and not to say optimizing, maximizing a transaction. You can make $1,000 a year with $1,000 transactions, or you can see the same client four times a year at $300. One's a relationship, the other's a transaction. And you said it early, and I will I will stand behind you 100%, and I'll get the flag and we'll wave it together with a big foam finger. Veterinary medicine is a service industry, it's about the relationship.

SPEAKER_02 31:43

Well, Peter, we don't have time, we don't have time today to get into it. And but as we get deeper into this podcast, we're gonna have to have a conversation about ProSal, which incense higher ACP.

SPEAKER_00 31:54

That's where I was going too. Right? Yeah, we can go there. I'd I'd like that one. But one thing I'll say, Peter, is is I'll I'll correct it in my opinion, at least. It's not patient, patient lifetime value, it's client lifetime value. Because our clients decide to bring their pets to us and they will have multiple pets.

SPEAKER_03 32:14

Yeah, right.

SPEAKER_00 32:14

So it extends beyond a a single pay, uh single patient. And it's important that that folks think that way. It's it's the lifeline of it.

SPEAKER_01 32:22

Are you ready for curious seven?

SPEAKER_02 32:24

Yeah, I wanna, I wanna, I wanna make sure that we respect your time. We're super super super grateful for it. We it's gone fast. To to to close the episode, we've been uh trying to ask ever every guest a few personal questions. And we we have seven standard ones that we draw from, but we can't get through all seven. So we'll try, we'll we'll do one or two to see how we do here. So give us a number from from from one to one to seven. Four pops in my head. All right, Peter.

SPEAKER_01 32:55

Number four, Emmett. What is your greatest joy in this work?

SPEAKER_00 33:00

Well, I often wrap it up in I I define myself as I'm passionate about people who are passionate about pets. I like to make things work for people who have a true passion, and that's why I love this industry. Most of the people here know why they're here and what they're doing, but they have some things that they struggle with that I can help with, and that's that's where I find the most joy. I like making things easier that don't need to be hard.

unknown 33:23

Cool.

SPEAKER_00 33:25

Yeah, let's do one more. Number one.

SPEAKER_01 33:27

Any number between one and seven besides four.

SPEAKER_02 33:30

Number one. Number one. If you if you weren't working in veterinary medicine, what would you have been doing instead? In the if you if you weren't working in the vet med industry.

SPEAKER_00 33:41

Well, I would have followed my my original passions as uh a younger guy. I grew up farming and ranching in eastern Oregon. Oh I spent three years working on a 30,000-acre cattle ranch building direct marketing beef and lamb and wool products. And I really like agriculture. My brother's still very engaged in agriculture, but there's it still kind of comes back to similar things. It's vertically integrated solutions that kind of condense some margins, but do for the greater good. I'll just give him a quick shout-out because he's working on carbon sequestration and with intensive grazing and ways to make things better for the environment and still produce food. And that's my roots. I I would have ended up doing farming ranching type activities for sure.

SPEAKER_01 34:23

So you don't have any calluses anymore, huh?

SPEAKER_00 34:26

No, yeah, they're kind of soft these days. Yeah. Yeah. I have I have a few acres here that I just kind of maintain so far, but I like getting my hands dirty. Love the garden and the and the ranching.

SPEAKER_01 34:36

And and before we wrap, where is here?

SPEAKER_00 34:38

I live in Vancouver, Washington.

SPEAKER_01 34:40

Oh, nice. All right. So you and Martin can throw rocks at each other, pretty much.

SPEAKER_02 34:48

They need to stop at passport control on the way that way.

SPEAKER_00 34:51

They do, they gotta get checked at the border, but uh that's right. Yeah, yeah. I'd rather not throw rocks at you, Martin. I always enjoy seeing you.

SPEAKER_02 34:59

Yeah, well, we we sure sure appreciate you, and uh, and uh, you know, there are a few people nerdier. I mean, inventory creek inventory, the the the the the class of inventory nerds is a very special nerdy class.

SPEAKER_00 35:13

Special one. I like to nerd out on a lot of different things.

SPEAKER_02 35:16

There are a lot, there are a lot of them, but but but you and Nicole certainly seem to lead the charge. Hey, Emmett, if people are so inspired, where where did they find you? How can they learn more about inventory ally?

SPEAKER_00 35:28

Yeah, inventoryally.com is a great place to start. Okay. We've got great partnerships throughout the industry, strong integrations on suppliers and pimps side. So we're really working hard just to simplify the way that inventory is managed. So again, so you can focus on client-patient care and know you have what you need and that your financials are in good shape. So really just encourage everybody to take a look at it. It's it's a huge opportunity for most hospitals, but come at it from how can I grow, improve, and stay ahead of the curve as things evolve and change, maintain your success as an independent. We're very much behind you. We want to support you in that. So let us be your ally, if you will, when it comes to inventory.

SPEAKER_01 36:07

And that's A-L-L-Y for those people who have not don't have spell check.

unknown 36:11

That's right.

SPEAKER_01 36:12

So let's uh let's just kind of summarize my thoughts from Emmett today is number one, COGS is a significant component of an inventory related with COGS, are a significant component of your profit and loss. Probably the most significant. It is one that can be managed. It can be managed without emotion and can drop significant numbers into your EBITDA, which down the road will allow you to either pay your staff more, control your costs and possibly your fees to your client, or lead to a higher return on your practice when you go to sell it. That's my take-home. Martin?

SPEAKER_02 36:51

Yeah, for me, the thing that I hadn't thought about was the opportunity cost of having teammates actively involved in an inventory. So, you know, yes, they're counting your inventory, but they are not at the same time, you know, serve delivering service, which is the second thing that you know I took away from our conversation today. And it is encouraging independents to lean into the service side of their business and delivering great client, a great client experience and great and great service, because that's super hard to replicate and keeps people coming back for that lifetime value of the of the of the client. So love that. Thank you. Excellent.

SPEAKER_00 37:32

Excellent. And if I can leave one more thing for you guys to chew on as we take away inventory ally and just inventory conversation, we're talking about it in the hospital, but honestly, it's the tip of the spear. Because the inefficiencies and the lack of predictability in this reactive manual behavior leads to in unpredictability when it comes to your distributor partners or your manufacturer partners. It actually contributes to significant waste up the supply chain when it's inefficient and unpredictable in the hospital. So I really encourage everybody to take advantage of your GPO partnerships, take advantage of your partnerships when it comes to suppliers. Think of your business as a service business, not only the way you enact with custom interact with customers, but who you choose to participate to make your business successful. Commit to them. There's a mutual exchange in value in who you partner with because they partner with you, and really, really lock into that, take advantage of that relationship as well.

SPEAKER_02 38:22

That is really good advice as well. Yeah. Thanks. Emmet, really enjoyed the conversation today. Thank you.

SPEAKER_01 38:29

Thank you. What he said. And Emmett, thank you as well. Thank you to VMG for your support in our efforts. And uh thanks for listening to the stethoscope and the spreadsheet podcast. I'm Dr. Peter Weinstein with Martin Proudborn, and we look forward to having you join us next time. And we'll be even more professional then. Don't make problems you can't promise.

SPEAKER_00 38:53

Thanks everyone.