How Veterinary Hospitals Can Evaluate Whether Expansion Is the Right Move

Whether your exam rooms are consistently booked or just occasionally strained, most veterinary hospitals eventually face a familiar question: Is it time to expand our physical space?

Expansion can be an exciting milestone but also a costly one. While more space may seem like the next logical step, the smartest growth decisions are grounded in data, not just demand.

Before committing to a build-out or lease, consider these four key questions:

1. Is your hospital maxed out in its current space?
   Before committing to construction or a new lease, take a closer look at your existing layout. Are all exam rooms used throughout the day or just during peak times? Could partial-use rooms be optimized? In some cases, rethinking workflows, adjusting appointment lengths, or reallocating underused spaces can help solve the problem more efficiently than building new ones.
2. How much additional revenue will the new space generate?
   It’s easy to overestimate the financial upside of expansion. But revenue projections should be based on historical performance (what each exam room generates today) instead of aspirational goals. And don’t forget to assess whether your market can support additional patient volume.
3. What are the associated costs?
   Expansion isn’t just about building costs. Consider staffing, equipment, utilities, technology, and debt service. Even with strong patient demand, new space often takes time to reach full utilization, so plan for that ramp-up period.
4. Will the additional revenues cover the costs?
   The most overlooked part of the expansion decision is cash flow timing. Will added revenue outpace costs within the first six to 18 months? What happens if patient growth is slower than expected? A break-even analysis can help determine whether the investment supports your hospital’s long-term goals or adds financial risk.

Need help thinking through your next move? Download Volume 8 of KSM’s Veterinarian’s Guide to Best Practices for a closer look at how to assess your hospital’s readiness for expansion. Or contact our veterinary consulting team by filling out the form below.