2012 and beyond: Economic outlook clouded by a myriad of new challenges for veterinary practices
NATIONAL REPORT — Small-animal practices have a numbers problem.
Patient visits are dropping, pet health is declining, client incomes are down and unemployment is up. With all of these challenges going into 2012, it's easy to become disheartened.
"Someone asked me the other day: 'If you knew what it would be like now, would you do it again?'" recalls Dr. Lee Stuart of Safe Haven Veterinary Hospital in Palm Coast, Fla. "I said, I'm not so sure it's worth it anymore."Stuart, like so many other veterinarians—and Americans—is operating his business in an area engulfed with a foreclosure crisis and high unemployment. During the boom, his practice was growing, and construction was king, prompting Stuart to move his business to a larger space —from a leased office to a building he purchased. The local area had three small-animal practices in the early 2000s and now has eight. But as residents' incomes have dropped or people have moved out of town, business at Stuart's clinic is down some 40 percent. "Somehow we're finding a way to keep our doors open," he says. "We're trying to recreate the practice as we go."
Retooling the client experience, reinforcing the importance of preventive care and tweaking a practice's focus may be just the ticket for veterinarians to combat the increasingly strong industry headwinds next year and beyond, experts say. "Veterinarians are not at the top of their game in terms of monitoring business metrics and managing practices as well as they could," says John Volk of Brakke Consulting, which, along with Bayer Animal Health and the National Commission on Veterinary Economic Issues, conducted the Bayer Veterinary Care Usage Study released earlier this year. "Veterinarians have relied too heavily on fee increases and not improving the performance of the practice from an efficiency standpoint. Now it's starting to come back to bite them."
Enhancing business efficiency will be a key to future success, agrees Karen Felsted, MS, CPA, DVM, CVPM, chief executive officer with the National Commission on Veterinary Economic Issues (NCVEI). She says that while the recession certainly has hurt veterinarians, simply blaming the economy isn't productive. "Just because there's a recession doesn't mean veterinary practices can't do well financially," she notes. "Doctors will have to see more patients, staff will have to work more efficiently and (practices) will have to watch prices. Significant price increases are not sustainable, and (veterinarians) have to link price more closely with value."
To that end, Volk notes that if a pet owner truly understands the importance of taking a pet to the clinic and what exactly occurs while the animal is there, consumers may be more willing to spend money with a veterinarian. Dr. Mike Cavanaugh, executive director of the American Animal Hospital Association (AAHA), agrees. "Look at the bottled-water industry," he says. "People spend millions of dollars (on it) because people think it's better and convenient. People are willing to spend money, even during tight economic times, as long as they feel like there is value there."
At the heart of the value proposition is emphasizing the physical exam, Cavanaugh says. "In doing so, you're able to emphasize that vaccinations are important, but an examination is where you're buying a veterinarian's expertise."
Although a veterinarian knows she is examining a pet's skin and hair or checking the health of internal organs during a physical exam, it may appear to a client as a doctor holding the animal or petting it. Communicating what exactly is occurring during an exam while it occurs will help clients appreciate the importance of bringing a cat or dog to the clinic and having a veterinarian examine its health. Veterinarians also should tell clients "what constitutes finding signs of good health and potential problems," Volk notes.
He further explains that many veterinarians think they are doing this well and, when surveyed, say they are talking through the exam with a client. However, when pet owners were questioned on this topic, they say they don't know what is happening during the exam.
"Veterinary medicine is a mystery to people," adds Felsted. "We need to communicate specific kinds of veterinary care and why it is important." That, she says, will help create a high-value experience.
In-depth explanations are also essential to recommending a procedure and communicating why it is important. Instead of simply telling a client that Fluffy needs a dental, Felsted recommends explaining that Fluffy has a lot of plaque and that the procedure will enhance her breath and reduce the chance of an infection or other systemic problems. Cavanaugh adds that veterinarians should make firm recommendations and emphasize their professional expertise. "A lot of veterinarians," he says, "will give (a client) five or six options, but are not firm in saying, 'Here's what I think we should do.'"