Veterinarians have a bleak outlook of their current state of financial affairs and of their future prospects, according to a 2013 landmark study* that presented financial health data of practitioners at different ages and phases of their careers. The study’s objective was to look at the personal side of the changing economics of veterinary practice and ask, “How is this affecting individuals in our profession?” according to Carol McConnell, DVM, MBA, chief veterinary medical officer for Nationwide pet insurance provider.
A serious situation
The main reasons for this negative attitude are all too familiar: declining patient visits, stagnating veterinary salaries, and the crushing burden of student loans and other debt.
While many attribute the decline in patient visits to the economic downturn of 2008, in fact, it began during the relatively good economic climate prior to the financial upheaval of the late aughts. Even as the economy stumbled, pet spending hit an all-time high of $55.5 billion in 2013, according to the American Pet Products Association. Veterinarians’ accounts, however, did not reflect such gains, despite increased overall pet owner expenditures. In fact, this lack of spending at veterinary offices reflected negatively in regard to practitioners’ salaries and practices’ bottom lines.
Out of 1,193 veterinarians surveyed, less than half were comfortable with their financial situation. More than one-fourth of practice owners and associates described their financial condition as “poor.” While practice owners are the healthiest financially, taking home an average annual income of $109,000 versus $84,000 on average for associates, the majority are older and working longer hours to maintain their standard of living.
Almost 70 percent of practice owners said that they would like to work less but that they needed the income. In addition, more than 25 percent of veterinarians said they planned to delay retirement because of their practices’
poor financial condition. About half of colleagues reported working more hours to boost practice revenue.
Almost 25 percent of practice owners surveyed carry student debt averaging $66,110. Meanwhile, about 50 percent of associate veterinarians were carrying loan debt averaging a balance of $112,082. Servicing such debt for some associates requires nearly 40 percent of their monthly income.
With this glaring evidence of financial struggle, it’s no mystery that many associates who dream of someday owning a practice consider the prospect unrealistic. In addition to student loan debt, roughly half of all practice owners also are paying off an average of $362,240 in business loans.
The authors of the study concluded that all of these hurdles in the financial landscape of veterinary medicine are not only inevitable, but also likely permanent.
While the future may look bleak, it’s up to the veterinary community to adapt so that it can continue to practice high standards of medicine that benefit both our patients and their owners. Associate veterinarians must strive for a better understanding of personal financial choices, and practice owners must re-evaluate traditional business techniques that may have become outdated.
So how does the profession overcome these significant obstacles and this grim outlook?
In 2014, the American Animal Hospital Association (AAHA) performed a study of more than 200 hospitals and highlighted three practice categories:
- 27 percent “Decliners,” negative growth;
- 50 percent “Growers,” 0 to 10 percent growth; and
- 23 percent “Outgrowers,” more than 10 percent growth.
Almost 45 percent of the Outgrowers actually were “Consistent Outgrowers”—hospitals that displayed consistent economic growth of more than 10 percent for two years in a row. What were those practices doing differently?
Consistent Outgrowers revealed shared success factors across four key relationship bonds that support economic growth. Understanding those relationships can help other practices emulate the Outgrowers and reach a higher level of professional success.
Pet and owner bond
Consistent Outgrowers view the pet and owner bond as “very important” to the success of their hospital. They believe they play a critical role in strengthening this bond. They also describe their clients as “partners in providing the best care possible for their pets.”
Practice and client bond
Consistent Outgrowers are more likely to hold community events, use client-marketing software, and offer payment plans. They give something to the client after each visit to show value, such as a report card. These practices try to schedule the next preventive care visit before the client leaves the hospital. They always follow up with the client after the visit with a phone call or an email.
Practice and patient bond
Consistent Outgrowers strive to provide a stress-free environment for patients. They review a pet’s complete diagnostic history while trending diagnostic results in order to detect changes relative to the established baseline values.
Veterinarian and staff bond
Consistent Outgrowers set goals for the practice and measure progress toward these goals. These practices conduct daily rounds and stand-up meetings, which facilitate sharing and alignment, promoting closer working relationships. They invest in technology related to practice management and, overall, commit their team to higher standards of care, such as AAHA accreditation.
Beyond these relationships, Consistent Outgrowers emphasize the importance of preventive medicine. Ironically, even these best-in-class hospitals believe there is room for improvement.
So what can you learn from these studies? Actionable areas for improvement include:
- Increasing the value of services provided to pet owners;
- Educating pet owners about the benefits of complying with preventive care guidelines; and
- Ensuring that each patient has at least one preventive care appointment every year.
Achieving growth of more than 10 percent is an accomplishment in this economy. Yet it seems that any hospital can develop the bond with patients and clients, focus on education, and foster a stress-free environment. Providing exceptional service will very likely translate into increased revenue and better job satisfaction.
Dr. Phil Zeltzman is a board-certified veterinary surgeon and serial entrepreneur. His traveling surgery practice takes him all over Eastern Pennsylvania and Western New Jersey. Visit his websites at DrPhilZeltzman.com and VeterinariansInParadise.com.
Zee Mahmood, a veterinary student at the St. Matthew’s School of Veterinary Medicine, contributed to this article.
1 VPI-Veterinary Economics Financial Health Study, Veterinary Pet Insurance (now Nationwide), Brakke Consulting
2 AAHA 2014 State of the Industry, American Animal Hospital Association, the IDEXX Institute, IDEXX Laboratories Inc.