arrow-right cart chevron-down chevron-left chevron-right chevron-up close menu minus play plus search share user email pinterest facebook instagram snapchat tumblr twitter vimeo youtube subscribe dogecoin dwolla forbrugsforeningen litecoin amazon_payments american_express bitcoin cirrus discover fancy interac jcb master paypal stripe visa diners_club dankort maestro trash

Shopping Cart


The economist's view: Embrace the chaos


We will get through this. We will be better as a result of this. We've got a tremendous opportunity to reimagine what we do, to rethink every assumption and put others first.Matthew Salois, PhDDecember 2020
The economist's view: Embrace the chaos

Matthew Salois, PhD
Chief Economist, AVMA

Matthew Salois, PhD, is chief economist and head of the Veterinary Economics Division for the American Veterinary Medical Association (AVMA). He worked in private industry, government and academia before joining the AVMA in 2018.


Opportunity to Be Better

Spring 2020: Treading

COVID-19 is the largest disruptor we've seen in our profession. We were already living in a time of disruption with conversations around the role of telemedicine and artificial intelligence in our industry. The demographics of our industry are changing with boomers retiring in droves and millennials joining in equally large droves every year. We're well past the tipping point of becoming a female-dominated profession. We knew we were living in this sea of change and then COVID-19 came along and made all that change look small.

Fall 2020: Swimming

With change comes the opportunity to ask, "What can I do better?" A lot of practices continue to answer that question very successfully. COVID-19 has put veterinary practices to the test and they've passed with flying colors. Other industries and sectors like travel, entertainment, transportation are really struggling, and once again, veterinary medicine has shined. There are some war wounds, but by and large, we're coming through this a more successful and brighter profession.

Consumer Spending

Spring 2020: Anticipating a fall

I'm closely watching income and unemployment, because they affect consumer spending, which comprises the bulk of our economy, including veterinary care. More than 40 million Americans and nearly one in four households have had a disruption in their financial security. We don't yet know the long-term impact to our industry.

Fall 2020: Enjoying temporary increases

The pet and veterinary sectors are thriving, but the surge – and its primary causes – will not last. First, increased discretionary income will plateau. In the summer, a number of households found themselves with more cash from the one-time stimulus and increased unemployment benefits coupled with reduced spending on other things like entertainment and travel. Next, pent-up demand will soon be fulfilled. Pet owners will soon be caught up on the veterinary appointments they deferred through the first four months of the pandemic. Finally, pet adoptions increased, which sent new pet owners into an initial spending mode that will level off.

Leading indicators point to challenging times ahead. Food pantry lines are getting longer. Foreclosures and evictions are increasing again. The unemployment rate is high. Back-of-the-napkin math says 65 percent of the unemployed are pet owners. If they're not facing financial uncertainty now, they may soon be facing difficult decisions about how to put a roof over their heads and pay for food.

Income, Labor & Efficiency

Spring 2020: Hurry up and wait

Practices have made a tremendous pivot to be successful in an environment where they're eliminating or mitigating the physical presence of clients in their practices. However, with offering curbside care, leveraging virtual medicine options and putting precautionary measure in place, practices have become less efficient, which makes them feel more busy. With practices seeing fewer patients due to quarantining measures and lower productivity, many practices are worried they need to let staff go. I advise against that unless you absolutely have to, because business will come back.

STATS

Average cash shortfall for April: $17,000

Average anticipated cash shortfall for May: $23,000

Source: COVID-19 Veterinary Survey, AVMA, April 2020.

Fall 2020: Be patient – for the most part

Economic recovery from COVID-19 will take our industry through a series of peaks and more valleys, so now is the time to build a reserve of cash. I suggest delaying large capital investments. If you want to remodel your veterinary practice, for example, make that a future project once we get through the economic uncertainty. I also advise caution when making long-term decisions, such as staffing. When a practice hires a veterinarian or team member, that's a long-term decision that affects the practice's finances and ability to be nimble. If you make hiring decisions based on the volume your practice is experiencing right now, your situation could look very different in six months. Business must be set up to adapt to changing economic trends.

Don't wait to examine your operations. Try to improve efficiency and productivity with existing resources. If your practice is still using curbside care as a band-aid, you must pivot again and optimize that workflow. Make those processes work as effectively and efficiently as possible, because they're likely here to stay for at least a year – if not forever.

STATS

Average client wait time: 12 minutes

Average client wait time since COVID-19: 14 minutes

Source: COVID-19 Veterinary Survey, AVMA, April 2020.

Regional Effects

Spring 2020: Coasts most compromised

The economic impact of COVID-19 correlates with where the virus is hitting. In the March to April timeframe, California, New York and northeastern states like Connecticut and New Jersey were hit hard. That translated directly into negative impacts on veterinary practice revenue and visits. Part of it was state measures intended to protect people, but there's also a behavioral element. People are aware of the news, so they're less likely to go out and spend money. The other aspect is unemployment, especially in areas where entertainment and tourism are at the heart of the economy. Job loss affects people's pocketbooks, and a lot of the unemployed are pet owners.

Fall 2020: Normalization across the U.S.

The hardest-hit areas are still limping, but they're through the worst. New York, in particular, has stayed the course with a slow and steady recovery. California on the other hand has been dealing with virus flare-ups then the fires came along. We don't yet know how those two aspects will affect the veterinary sector. For some states, like Arizona, we have a solid picture of the COVID-19 impact on the veterinary sector. By the time the virus started impacting Arizona, the situation was more known. People were less afraid and even somewhat desensitized.

The Future

Digital practice

E-commerce and automation are here to stay. We're going to see an increased value placed on physical distance, because the virus isn't going to magically disappear. Even when we have a COVID-19 vaccine and more efficacious treatment options, there will be struggles with distribution and people will remain concerned and cautious.

What does that mean for veterinary practices? You must adapt to consumer behavior. If you don't have an e-commerce option, you must implement one. Without it, a more equipped entity will come along and take your clients. If you think curbside care will stop in six months, think again. A portion of your clientele will always want it as an option. If they can't get it from you, they'll get it from somebody else.

0 comments


Leave a comment