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The job market, economy mixed for private practices
The number of associate veterinarians expressing interest in veterinary practice ownership declined, again.
National Report — The number of associate veterinarians expressing interest in veterinary practice ownership declined, again.
Easing the burden: "We see a number of people who have lost their jobs," says Dr. Jennifer Hicks of Indianapolis. To accommodate them, her hospital looks for cost-saving ways to help them afford to treat their pets. (Photo: Kevin Foster)
Fresh data from DVM Newsmagazine's State of the Profession survey show that only 43 percent of associate veterinarians have aspirations to own a veterinary practice. The results are down from 53 percent posted in 2006.
That's not all. In contrast, 64 percent of the practitioners responding to the survey, say that they don't have plans to hire additional veterinarians in the next two years. Seventy percent of those practitioners believe they can find qualified associates in their area.
If the data signals a trend, it could mean a tighter job market in certain areas of the United States.
Survey data were collected in the midst of a deepening recession that triggered the banking crisis and sharp downturn in the stock market during the end of 2008.
Table 1: Most veterinarians intend to stay in private practice during their entire career
But the outlook for the veterinary profession remains mixed. While the profession was thought to be recession proof, veterinary practices have reported downturns in numbers of cases. But most vets agree, it could be a lot worse.
"We see a number of people now who have lost their jobs," says Dr. Jennifer Hicks, a small-animal veterinarian in Indianapolis. "They want to do these treatments, but we may need to adjust the length of the hospital stay or do the procedures as out-patient in order for them to afford them."
The cost of care
With that in mind, DVM Newsmagazine asked veterinarians to estimate the average dollar amount most clients spend before opting to stop treatment of a sick or injured pet. Examining the stop-treatment point offers insight about the human-animal bond and the economic end point of a client's willingness to continue treatment.
Table 2: Practice ownership aspirations have decreased slightly in 2009
The number: $1,407. That's down from an average of $1,451 in 2006, representing a 3 percent decline over the three-year period. But there are differences, and one contributing factor seems to be the size of the practice. In veterinary practices grossing more than $1.7 million, the stop-treatment point swelled to an average of $2,043, compared to just $1,359 for practices grossing between $250,000 and $499,000.
In contrast, the American Veterinary Medical Association (AVMA) reports that most pet owners spend just $356 a year in a $24.5 billion veterinary-services market.
In 2006, nearly three-quarters of veterinarians responding to the survey predicted revenue increases for the following year. In 2009, this group of optimists shrunk to just 31 percent of the respondent base.
Table 3: If you want to own a veterinary practice, tell us about your future plans?
About 74 percent believe practice revenue either will increase or stay the same as last year. Nearly half of those survey respondents say this year's revenue will "stay about the same." Only 24 percent of the respondents in 2006 predicted flat growth for the year.
As part of the survey, veterinarians were asked to describe their practice philosophy.
Sixty-seven percent said they accept all paying clients, providing them with whatever level of service they request/require. In 2006, 64 percent said that.
Likewise, one-quarter of the respondents said they "offer primarily high-quality diagnostic medicine and surgery, and tend to have clients for whom cost of treatment is not a major factor."
In 2006, 31 percent were in that group, representing a 6 percent decline in the three years since. Additionally, the number of practices "offering basic medical services, pricing it low to attract cost-conscious pet owners" jumped to 8 percent in 2009 from 5 percent in 2006.
Table 4: What is your greatest professional life concern?
The numbers of patients seen in an average week decreased slightly from past surveys. In 2009, veterinarians reported seeing an average of 66 patients a week (13 a day), down from a high of 76 in 2000.
The most significant decline was noted for those veterinarians in solo practices. In 1997, they saw 82 patients a week on average, but that number dropped to 63 in 2009.
The mean average client transaction (ACT) amounted to $108, up only $2 from 2006. ACT amounts increased by practice size on average. Almost 60 percent of four-plus DVM practices averaged more than $120, while nearly 31 percent of solo practitioners were between $70 and $99.
Most practitioners reported that their ACTs have increased "a little."
In general, veterinarians believe they will be more reliant on diagnostics and a little less on product sales. The revenue categories expected to grow are diagnostics, annual exams, surgery and non-invasive medical procedures. Revenue categories likely to decline are vaccinations and product sales.
In contrast, mark-ups are expected to remain about the same in key product categories in 2009. Vaccines/biologicals have seen a steady drop since 1997. So have heartworm preventives and flea-control products. Modest mark-ups of pet foods are noted since 2003.
Despite the recession jitters, veterinarians remain bullish about the future. In fact, 59 percent of them believe their practice gross will increase over the next three years — by about 3.5 percent annually, on average.
But their confidence about the economic picture has been shaken from previous surveys. When asked in 2006 about the prospects for the next three years, 85 percent said they anticipated growth.
This year, one third of practices believe revenue will be flat, and 14 percent are bracing for a dip in gross earnings.
A closer look at the numbers
The most pressing issue facing veterinary medicine is rising costs, according to 59 percent of respondents. That trumped employee retention (9 percent), competition (4 percent), specialization (4 percent) and government oversight (4 percent). Both male and female veterinarians shared the concern, with 64 percent of female DVMs citing escalating costs as the most serious issue facing the profession.
In 2009, 61 percent of veterinarians say their local economy has negatively influenced practice revenue. Only 8 percent report the influence was positive.
In addition, an anemic 31 percent predict that practice revenue will increase for 2009. However, 43 percent believe it will stay about the same, while about 26 percent believe revenue will decline.
When these data were cross-tabulated by practice size, veterinary practices grossing between $1.25 million and $1.75 million reported the weakest growth.
In fact, 32 percent of practices grossing $1.5 million to $1.7 million say that revenue from 2008 was down from 2007. About 28 percent of them said it was about the same and 40 percent reported revenue growth.