2021 State of the (Veterinary) Industry

A couple of weeks ago I had the pleasure of speaking at the National Veterinary Business Management Association’s (VBMA) annual officer training. It was such a great event and I am very thankful for that opportunity. When putting together my presentation I finally had the time to really digest everything that went on in veterinary medicine this past year. What I eventually decided on was that this last year, more than other years, was really about the PEOPLE of veterinary medicine. Specifically, the people on both sides of the market: Veterinarians, Veterinary Clinic Staff, and Consumers. So here are some points about the industry that played a huge role in 2020 and ones that I see to be continued areas to watch/address in 2021.

Consumers

1.) The biggest thing we saw happen to consumers was unemployment. It spiked from about 3.6% to right under 15% at it’s highest point. This put a huge strain on a large number of current and potential pet owners. While it has come down with the economy open up in Q3 last year, the fact is that many people are still unemployed. We will likely not see unemployment come back down to pre-pandemic levels this year, or even next year. Vaccine distribution will help with decreasing unemployment but many businesses have closed which will increase competition for open positions. If consumers aren’t working, they are not taking their pets to the veterinarian.

2.) At the same time that unemployment spiked, so did personal savings rates. This means consumers saved more of their disposable income rather than spending it. Again, this came down in the second half of the year (people started spending more as the economy opened back up), but it is still almost twice as much as it was pre-pandemic. This will continue as the economy works towards recovery. In addition, because unemployment was up, those that are/were unemployed had to use savings to survive. This means that many people’s savings were depleted and that will keep consumer spending sluggish throughout 2021.

3.) Pet adoptions via shelters was lower in 2020 than 2019. You might disagree with this point, but the numbers from Shelter Animals Count (see below) just don’t support increased pet adoptions. However, pet surrenders seem to be way down, which could partly explain why many shelters across the country had few, if any, pets. This means that all of us staying home all the time to care for our pets. I know my dog Sam really enjoyed me being home all the time rather than traveling 100+ days a year.

Veterinarians, Staff, and Clinics

But, Clint, veterinarians were so busy this last year! Well, they were in July/August/September, but that seems to be a bunching of demand from earlier in the pandemic when veterinarians were not considered essential. So let’s take a look at this in more detail, along with some other issues.

1.) Looking at the data from VetSuccess, 2020 was a great year for revenue on average – up 7.2% from 2019! While this is great, I want to point out that the number of visits was LOWER in 2020 than 2019. My worry for 2021 is that we will continue to see this decline in quantity demanded. Increased revenue but lower visits means that the cost per transaction is increasing. While this bodes well for veterinary clinics in the short-term, this is not a positive long-term trend. We already have concerns about veterinary care access for many consumers, not just those that are considered low-income. With a continuing increase in the cost of veterinary medicine, what are we doing as an industry to address this problem?

2.) As I’ve talked about before on my blog and numerous events…diversity, equity, and inclusion is a prominent issue that has taken centered stage in the last year and must continue to be addressed in everything that we do. There are significant pay gaps in race and gender in this profession. In addition, the profession is also described as the “whitest profession.” To put it simply, DEI is a human rights issue AND an economic issue. By increasing diversity in the profession veterinary care access will have the opportunity to provide veterinary care access to communities that are not predominately white. This will increase compensation for veterinarians and clinic revenue. The industry will flourish when pet owners can obtain services from people that look like them. But diversity is only part of the battle. A need to create equity in educational and business opportunities and include those voices (better yet amplify) those voices in every single part of the discussion is paramount to solving this issue.

3.) Everyone knows I have done some work on the gender wage gap in veterinary medicine. I have a forthcoming article in JAVMA on this issue that I will address at a later date. But, women make less at every point in their career, even when they own their clinics. This is something that needs better understanding and solutions.

4.) Almost 40% of veterinarians consider leaving the profession with 25% being serious. WOW. This is a huge concern and one that keeps being put off on the individual to take responsibility for their own work-life balance – the largest reason many want to leave. This is BURNOUT. Plain and simple. This narrative and issue needs to be changed. It is just as much on the business/organization to work to reduce burnout as the individual, if not more so. I’m happy to report that I am have an agreement with AVMA to but some dollar values on the cost of burnout to the individual business and the industry as a whole. I can tell you, the economic cost of burnout is much higher than you think and if we don’t solve this problem from an organizational standpoint the veterinary industry will suffer for it.

5.) My last point is the talk about shortages of veterinary medicine. In 2020, there were 234 USDA designated shortage areas across the U.S. All of these shortage areas were in food/large, mixed, and public practice types and almost exclusively in rural areas. This number has been growing over the last decade for many reasons I won’t get into here, but it’s something that needs to be addressed before the problem gets any worse. Veterinarian unemployment is still low (~3%), but it exists (IBISWorld, 2021). This means that there is not an overall shortage of veterinarians, but rather a maldistribution problem. I would like to see more work on understanding this issue in the next few years.

Overall, the veterinary industry is surviving the recession. However, we need to be cautious about what this year holds. Extraneous expenditure on pet care are likely to be low until personal savings and unemployment recover – which is heavily dependent on vaccine distribution. Revenues were up for clinics, but not quantity/visits. How do we make veterinary care affordable while also keeping clinics profitable. That is the age old economic question and its up to all of us to find a solution to that intricate issue.

As always, thank you to all the new people who have connected with me and chatted with me about future collaborations and topics. This blog is all about communicating science based work that can impact people, businesses, and policy makers. Let’s make the world more informed with good science. Special thank you to the National VBMA for inviting me to give the State of the Industry Address, VetSuccess and Shelter Animals Count for providing fantastic data sources, and AVMA for providing me the opportunity to contribute and learn from their fantastic resources and staff.

Leave a Reply

Your email address will not be published. Required fields are marked *