Veterinary industry health update
I think we all know that we are staring a global recession in the face and it would be surprising if we didn’t have one when you consider that the whole world went from being fully productive one month to running inefficiently for 2 full years. When one considers that the scope of economic loss over the GFC must surely have been less, then its hard to deny that there must be tough times ahead. But everything in economics lies in relativity – in other words it is important also to understand where you are relative to everyone else. And we feel pretty comfortable that the veterinary industry is doing relatively better than most others.
Yes there is a general slow down. Our extensive data across many Australian practices undoubtedly indicates that:
-Patient numbers seen every month are dropping, but dropping slowly
-Number of invoices raised every month are dropping, but dropping slowly
Revenue/Sales and average invoice value are however holding a lot more firmly and there are a few reasons for this.
Firstly, the veterinary industry has always had the natural potential to pivot from going between high workloads and lower patient care to low workloads with higher patient care. This simply means that when there are fewer customers coming through the door, clinicians find that they have more time to work up cases more thoroughly. And we could clearly see the reverse of this in our data at the height of COVID when practices became too busy and the number of diagnostic tests, hospitalisations and dentals delivered to the pet population decreased.
Secondly, most practices we have been dealing with have increased their prices more than they would have done historically. Although this may seem counter intuitive when there is less money to spend in the general population, it is the only way a business can offset the increasing running costs, particularly wages, drug supplies, loan interest rates and rent. And yes it is in fact better to lose a few low value clients in the interest of offsetting significant business running costs.
Also be mindful of simply assuming that your business is following the national average trends! not every practice is reducing in client numbers and we do still have clients who have exponentially growing practices. This can be area specific and linked to population growth in certain areas or because they have simply weathered the storm better and made better decisions than their competitors.
Another potential silver lining, even though its early days, is that in other industries, the workforce seems to be returning. This is possibly because higher interest rates are forcing people who went part time over COVID back into full time jobs. We are hoping this will start to be noticeable in the veterinary industry as well.
So our advice to you now is not to go into any recessionary panic. Remember that you can adjust prices and your business can ‘pivot’ in the manner that it offers services, giving you a relative advantage to many other industries that don’t have these options.