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Shortage of veterinary professionals may be blessing in disguise for the profession
Practice efficiency and professional development can help make a practice financially sound
In the mid-1990s, I embarked on a journey to add an MBA degree to my credentials, to pair it with my DVM degree. Back then, it was an odd thing to do; my classmates seemed to think so. My interest was largely based on finding ways to make a veterinary career more economically feasible. Frankly, I struggled to accept the projected income I would make compared with the time, effort, and expenses required to become a veterinarian. A negative return on investment (ROI) didn’t sound any better in the 1990s than it does today.
With an MBA degree in hand, I thought I would be able to help solve some of the profession’s economic woes or at least work in that direction. A major theme in my MBA thesis centered on the supply and demand of veterinarians and veterinary services. At the time, a surplus of veterinarians existed, and management articles talked about the inefficiency of a veterinary practice on every street corner. Most of these practices were equipped with an x-ray machine, surgery suite, and full in-house laboratory. Additionally, unlike most medical and dental practices, veterinary practices were not booked in advance 2 to 3 weeks or more. The reality was that most of these 1- and 2-doctor practices were booked to maybe 75% capacity. Inefficiency abounded, directly correlating to poor veterinary compensation.
The argument espoused in my thesis paper was that we needed to turn the tables on the supply and demand for veterinary services. Until that occurred, veterinary compensation for the entire team would remain very low. To me, it boiled down to the simple math of splitting the pie. For example, if the revenue for veterinary services in the United States was $5 billion and there were 50,000 veterinary practitioners, the average practicing veterinarian would have a compensation of $100,000. If the demand for veterinary services rose to $10 billion and the number of veterinarians held steady, each veterinarian’s income would rise more appropriately to $200,000.
Flash forward to the 2020s. Many in the profession argue there is a shortage or severe shortage of veterinarians. Others do not fully agree, arguing there is widespread inefficiency within the profession. This inefficiency leads to the redundancy of veterinary facilities and ineffectiveness of doctors’ practice habits, which fail to fully use team members or leverage technology.
Supply and demand for veterinary services have fundamentally changed over the past 5 to 10 years. This presents its share of challenges and opportunities. Yes, it is difficult to find and keep team members, doctors, and staff. Yes, it is painful to turn clients away because you can’t fit them into the schedule. Yes, it’s difficult to skip continuing education opportunities because you don’t have time to attend. Yes, it is as difficult as ever to deny services to clients who don’t have sufficient funds. These are just a few challenges that have become reality.
If the veterinary health care system weren’t broken, then you could argue against changing it or celebrate the past. The reality is that it has not been an overly viable system for a long time, if ever. What other health care professions have had an ongoing negative ROI for their practitioners? Being a veterinarian is wonderful. But it is less wonderful when you understand that you are paying for the right to be one.
However, painful as it may seem, the perceived shortage of veterinary services has the potential to shape the future of veterinary practice in positive ways, leading to an overall better pet health care system for all stakeholders. The high demand for veterinary services is fueling the rapid evolution of the profession. Areas of major impact, when handled properly, can lead to greater practice efficiencies, more accessible pet care, and more appropriate compensation for the veterinary care team. The result is a more viable and enticing profession, which is long overdue. Areas of major impact will be as follows.
Veterinary practices will not be flush with staff in the foreseeable future, so focusing on efficiency in all areas of practice management is a top priority. It won’t involve simply creating a few time-saving steps but rather developing a culture of efficiency. Systems that allow doctors to see more clients promptly will be key to meeting the needs of clients and their pets.
The structure of the profession will change with more large, multidoctor practices and fewer small practices. A wave of practice mergers, part of the overall consolidation of the profession, will help enhance practice efficiency and profitability. For example, 1 practice of 6 to 8 doctors rather than 4 practices of 2 doctors each reduces redundancy in many areas, starting with fixed costs such as rent, utilities, and the general occupancy cost. Equipment costs are another key area of savings. Sharing an x-ray machine, ultrasound machine, and in-house diagnostic laboratory, rather than having 4 sets of the same technology, provides a significant boost to the bottom line.
The fight for veterinary team members is real and intense. It is partially fueled by the plethora of multipractice groups that want to avoid dark days and need to pay a premium to keep their doors open during business hours. The reality of wage inflation is difficult for practices to keep pace with, but it does drive practices to be more efficient and raise prices, supporting higher wages.
Cost of care
Cost of care is always a challenging topic, but fees need to be at a level where staff can be appropriately compensated. Veterinarians should be on par with similarly educated health care professionals. Over the near term, look for large increases in prices, which demand for services will support.
Expect to see an increase in veterinarian production of revenue and correlated compensation due to the supply and demand pressures. Although $500,000 to $600,000 has been standard production for the full-time veterinarian over the past 5 years or so, this will likely rise to $750,000 to $1,000,000 per year, driven by the need to see more patients to meet the needs of current clients.
Significant strides are being made with client communication tools that cut down on staff interaction time with clients. Reminder systems, preappointment information, questionnaires, 2-way texting, and more robust pet portals are examples that free up valuable team time.
Cloud-based practice software programs can enhance and speed up the pet exam and associated medical notes, invoicing, and prescription writing processes. Remote management of cases is another tremendous advantage realized by doctors and hospital management.
Telemedicine came into its own during the COVID-19 pandemic. Providing a percentage of virtual clinic appointments and follow-ups creates great efficiencies for both practices and clients.
The creation of certified midlevel veterinary practitioners, equivalent to nurse practitioners and physician assistants in human medicine, is a must. These highly trained assistants can take a portion of the caseload off the doctor-only schedule and effectively increase veterinary services to the public. This efficiency will help keep pet health care costs down, because many cases and procedures can be handled by midlevel practitioners. Expect pressure to be put on the veterinary community to develop this position; it’s conceivable this will take place over the next 3 to 7 years. The formation of this position will be an extremely important step in the evolution of veterinary care.
Insurance, care packages, and compassionate care
Pets are part of the fabric of American society. Money spent on pets has traditionally been deemed discretionary, but that perception has largely changed. Pet parents are increasingly grasping the idea that it’s not a matter of whether a pet will get sick or need urgent or emergency care but more a matter of when. More than ever, pet parents are considering the best ways to prepare for unexpected events.
Supply and demand pressures are forcing veterinarians to price services where they need to be to maintain a viable, profitable practice. Clients are quickly reaching a threshold where they realize they need to budget for pet care the way they do for human health care and automobile and home insurance.
Over the next 5 to 10 years, wellness care packages and pet insurance will grow substantially in this country. There are more than 25 pet insurance companies in the United States, and they feel the tide coming. Europe is a good model for the future, with many countries having 25% or more of their pet population insured compared with approximately 3% in the United States.
A sign of positive change in this regard is that US companies of various sizes are starting to offer payroll deductions toward discounted wellness and insurance plans. They understand how important pets are to their employees and encourage them to budget for this care.
Health care for humans and pets is costly. At the same time, pets are good for the health of humans. Rising costs make it more difficult for many individuals to own pets, which is a major responsibility. Enhanced efforts of shelters and low-cost care groups help bridge this gap to a degree. Donations to groups that provide grants for pet care are on the rise, and these groups will be an important source of funding for the future. Veterinary hospitals can also join in this effort by providing compassionate care funds to help offset some expenses for the client who needs it.
In this regard, clinics can provide a degree of funding to assist clients in dire need of financial assistance. They can also help raise additional funds and donations from their general clients and partner with pet charity groups.
There is no lack of challenges or changes in the foreseeable future for the veterinary profession and veterinary professionals on the front line. How we respond to these challenges, however, will have a big impact on the profession and pet care in the future. Fortunately, with persistence and planning, meaningful positive changes can take place. These changes can help build a stronger, more viable profession for future generations of veterinary professionals and the pets and pet parents we serve.
Jeff Rothstein, DVM, MBA, is the founder and copresident of Mission Veterinary Partners, headquartered in Novi, Michigan, which operates more than 250 veterinary hospitals in more than 30 states. He is a frequent presenter at veterinary conferences and veterinary schools and can be contacted at jeff.rothstein@ mvetpartners.com.