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01-01-The Current Veterinary Business Model PDF
01-01-The Current Veterinary Business Model PDF
[No part of this material may be reproduced or copied in any manner without express
written consent of author. Some of this material has been abstracted from Five-Minute
Veterinary Practice Management Consult, 2nd Edition]
Is it possible to predict the changes that will impact veterinary practices in the years
ahead, or are we destined to deal with potential calamities with little warning?
Surprisingly, most of the elements that will affect our future are already discernible now,
so the real question is whether we, as a profession, are prepared to read the writing on the
wall, and proactively deal with these issues before they negatively impact us. Are you
prepared to heed the call to action?
While many veterinarians focus on the impact of the economy on financial metrics for
their hospitals, it is clear that while the economy might play some role in the current
lackluster performance of many veterinary practices, the root cause of these problems
likely preceded any recent economic changes by many years.
Some of the most profound findings of these marketplace studies have been the
following:
If the contention is correct that the economy is not the root cause of the current veterinary
marketplace situation, then it is likely also correct that things will not automatically self-
correct as the economy improves, even though any increase in discretionary spending
will ultimately benefit small businesses, including veterinary practices.
It appears clear from marketplace studies that veterinary practices need to take more of an
interest in business practices, especially reviewing financial data with some regularity,
improving client communication skills, and focusing on customer service initiatives. We
also need to re-visit our pricing, our marketing, and our payment options to better
articulate our role as “solutions providers” rather than just purveyors of veterinary
services.
The situation with dispensing is in the process of change, and veterinarians will likely
need to consider other profit centers that are more likely to be both profitable and
sustainable.
As with most businesses, veterinarians need to compete strongly on the basis of their
least-substitutable service, which is their knowledge of veterinary medicine and their
ability to advise pet owners on the basis of this expertise.
When examining practice revenue opportunities, the best prospects are associated with
personalized medicine in terms of preventive care (wellness), earlier detection of disease
and pre-disease states, better management of chronic conditions, improving
communication with clients (and thereby compliance), and enhancing customer service
initiatives and making it easier for clients to do business with us.
Profit centers that have been very important to the profession in the past (such as
dispensing) can continue to be important if basic changes are made to the business model.
Changes will be needed such that veterinarians charge appropriate professional fees for
professional services and appropriate retail fees for dispensing services, better capturing
value where it is provided. This will become more and more important as additional
alternatives enter the marketplace, pushing practices towards limiting their inventory to
products that best support their desired standards of care.
Since much veterinary and peer advice is available for free online, veterinarians might
find it difficult to stay ahead of the curve, compared to clients with specific information
needs. In fact, crowd sourcing of medical information has been commonplace in both
human and veterinary medicine for many years.
When examining practice revenue opportunities, the best prospects are associated with
outpatient care in terms of preventive care (wellness), earlier detection of disease and pre-
disease states, better management of chronic conditions, improving communication with
clients (and thereby compliance), and enhancing customer service initiatives and making
it easier for clients to do business with us.
To be successful going forward, veterinary healthcare teams are going to need to change
their focus from managing disease once it has occurred, to the pre-emptive approach of
prevention and early detection. While pet owners might appreciate when a disorder is
competently diagnosed and treated, there is actually more value in anticipating problems
before they occur, and intervening even before the client is aware of a problem.
Exploiting untapped potential (headroom) has great upside for practice growth. Creating
new opportunities is the best option for increasing headroom and the willingness of pet
owners to be compliant and follow recommendations is actually directly related to the
bond they have with their pet. In turn, facilitating that process relies on communication
skills of the veterinarian, to reinforce the value of pets, and the urgency and necessity for
their proper care. Clearly, appropriate health care is in everyone’s best interest – the pet,
the owner, the veterinary practice, and society.
Recommended Reading
Brown, JP; Silverman, JD: The Current and Future Market for Veterinarians and
Veterinary Medical Services in the United States (MegaStudy). J Am Vet Med Assoc,
1999; 215(2): 161-183. http://www.avma.org/reference/mega715c.pdf
Jone: L: Current trends in the veterinary practice market. Veterinary Team Brief, 2016:
September: 25-27.
Lue, TW; Pantenburg, DP; Crawford, PM: Impact of the owner-pet and client-
veterinarian bond on the care that pets receive. J Am Vet Med Assoc, 2008; 232(4): 531-
540.
Veterinary Pet Insurance: The VPI®-Veterinary Economics Financial Health Study, 2014
http://vpivetchannel.com/download-white-papers/
Volk, JO; Felsted, KE; Cumming, RF; et al: AVMA-Pfizer Business Practice Study. J
Am Vet Med Assoc, 2005; 226(2): 212-218. http://www.ncvei.org/article.aspx?id=39