Enterprising and bold veterinary practice owners seeking to expand their business should examine new opportunities – even some that might be perceived as unconventional – rather than restrict themselves to existing business models, according to the AVMA’s director of veterinary economics, Dr. Michael Dicks. Study findings, in fact, suggest that veterinarians must identify and improve service delivery to make competitive strides, according to Dr. Dicks. Informed by data from the soon-to-be-released 2017 Pet Ownership and Demographics Survey, Dr. Dicks offered the following advice to practice owners in a recent conversation.
Why should practice owners explore unconventional opportunities in the profession, rather than continue in a mode of “business as usual?”
The most important reason is that, in your market area if there is an untapped, maybe previously unseen, opportunity, someone else will go after it if you don’t. Competition from “Dr. Google,” big box stores, consolidators, low-cost clinics, and online sellers is a result of an expanse of potential prospects that veterinary practices did not recognize or did not wish to develop. By failing to spot or contend with these challengers, conventional practitioners now face competition from them.
The soon-to-be-released AVMA Pet Ownership and Demographic Survey (PDS) offers food for thought regarding the potential to find new ways of both improving animal health care outcomes and boosting the financial condition of veterinary practices by widening or altering service offerings. Findings point to a considerable portion of pets that are not provided a level of health care in line with best-practice guidelines, or pets that are getting attention – just not from a veterinary practice.
Two other recent surveys conducted by the AVMA – in collaboration with allied organizations in the bovine and equine sectors – found that both practice segments are experiencing threats from what are considered “parallel service providers”: sources of animal health care that focus on more routine tasks of the veterinary medical discipline. A substantial majority of respondents in each of these two studies, in fact, reported that non-veterinarian providers of veterinary services have taken business away from them.
What are some examples of “untapped new markets” that veterinarians might contemplate? How might practice owners identify potential new markets?
Consider the current trends of declining retail stores, more online purchases, demand for low-cost yet high-quality products and services, one-stop shopping, and pet day care and longer-term boarding. In addition, there are veterinary service deserts in both rural and urban areas, and pet owners who can’t afford the current cost of meeting wellness care guidelines in a single annual payment. The current brick-and-mortar medical service provider is meeting the demand of only a small segment of the veterinary service market.
A larger part of the veterinary services market remains untapped – that part of the market where the needs of the animal exceed the demand for services from the typical veterinary practice. A case in point is the need to address the nutritional needs of pets. Nearly half of the Pet Demographic Survey respondents indicated their pet’s weight was not ideal. The implication of overweight pets on animal well-being suggests that thought be given to putting more emphasis on helping clients manage a nutrition and exercise program for their pets.
Consider, too, these other findings from the study:
- A significant percentage of households with pets do not deem that common pet health issues merit attention from a veterinarian.
- Households with pets are consulting a veterinarian for some but not all of the preventive services recommended.
The majority of dog-owning households, for example, expressed little interest in most of the preventive care available for their pet(s), with only a modest number of the pets in question getting pertinent attention from a veterinarian. Among horse-owning households, less than 20 percent obtained preventive treatments from a veterinarian. Engaging the market to capture a greater share of unmet demand will call for new ways of thinking about practice business models.
Does entering a new market sphere require replacing a current business model?
The established practice can wade into new waters with less risk than a newcomer. Such a practice already has a clientele and an established market. These kinds of practitioners can add services and try different business models using a share of current profits. For example, established practices could more easily fund a mobile practice, open or expand a boarding and grooming facility, or launch a low-cost care center in nearby veterinary service “deserts” because they are already established in the area. A newcomer will require a larger investment to begin – on top of not having an established source of revenue.
What trade-offs might veterinarians need to be prepared to make to seize opportunities out of their traditional realm of practice?
The most important trade-off is the shift in focus from profitability to return on investment. Focus on ensuring that all pets in the business area receive the total care recommended by the practice care guidelines. Shift some practice resources to identifying practices that maintain high-quality pet health outcomes at lower prices, meaning more pets receive the services required. This will require looking to new employees for better practices rather than attempting to hold them to current practice guidelines or business models.
What skills are necessary for success in pursuing new opportunities?
Veterinarians are well suited to provide veterinary medical services to animals. They have developed a process for determining the health care needs of animals and ensuring the best health outcomes. Unfortunately, like most small businesses, they generally have not learned how to do the same thing for their practices. The veterinary practice is a small business and needs to be managed by a competent business manager. A veterinarian who is working full time providing veterinary services will not have the time to both manage a business and seek new opportunities for growing that business. This means that veterinarians, owners and associates, must learn to play their position on the team and hire the best people for the other team positions.
What AVMA or other resources might help veterinarians assess and/or pursue them?
Evaluating the market and assessing opportunities could be effectively served by applying an analytical perspective, drawing not only from information gathered through research such as the Pet Demographic Study, but from ideas such as the Blue Ocean Strategy, a marketing concept conceived by Chan Kim and Renée Mauborgne.
The annual AVMA Economic Summit, scheduled for Oct. 23-24, will feature discussion of the state of the market for veterinary services. Registration for the summit is open now, and we encourage practice owners to consider attending.
Practice owners interested in deepening their understanding of the economic forces that impact their businesses also can learn a lot about the veterinary markets by reading the articles in the AVMA’s Exploring Veterinary Economics series as well as the AVMA Veterinary Economic Report Subscription Series, both of which are available to AVMA members at no cost.