NEW CHALLENGES IN VETERINARY PRACTICE

Dennis M. McCurnin, D.V.M.Diplomate, ACVS

Louisiana State University

ECONOMY In 2008, the bottom dropped out of the U.S. In 2008, the bottom dropped out of the U.S.

and world economy and continues in 2010.and world economy and continues in 2010. NCVEI / AVMA/ AAHA and others have NCVEI / AVMA/ AAHA and others have

done economic tracking.done economic tracking. Revenue Revenue 4% , Transactions 4% , Transactions 1%, ACT 1%, ACT

5% ( fee 5% ( fee and reduced discounts & and reduced discounts & missed charges ) missed charges )

V.M. recession resistant V.M. recession resistant notnot recession proof recession proof Pay attention to Pay attention to Rev. and Rev. and Expenses. Expenses. 1/3 think 2010 revenue 1/3 think 2010 revenue , 1/3 , 1/3 and 1/3 – and 1/3 – Flat is the NEW upFlat is the NEW up

Spending During Recessions

Veterinary Spending GDP

% change % change

1974 2.9% -0.5%

1975 8.1% -0.2%

1980 1.9% -0.2%

1982 3.8% -1.9%

1991 6.5% -0.2%

2001 5.7% 0.8%

Average during recessions 4.8% -0.4%

Overall average since 1972 6.6% 3.0%

Analysis courtesy of Live Oak Bank and Dr. Dick Goebel, Simmons Northwest

AMERICANS SPEND $$$ ON PETS* *APPA 2010 In 2010 will spend In 2010 will spend $47.7$47.7 Billion on pets (+ 5.0%) Billion on pets (+ 5.0%)

Will Will sspend pend $23.8$23.8 Billion on vet pet care & medicines Billion on vet pet care & medicines Will spend $18.3 Billion on pet foodWill spend $18.3 Billion on pet food More families have a pet at home than a dad. ( 60% )More families have a pet at home than a dad. ( 60% )

NEW CHALLENGES

World Economy World Economy (Oil, Banks, Stocks, HM )(Oil, Banks, Stocks, HM )

Leadership/TerrorismLeadership/Terrorism Changing SocietyChanging Society Smaller FamiliesSmaller Families Single ParentsSingle Parents Intergenerational IssuesIntergenerational Issues

NEW CHALLENGES

Senior Citizen (40%)Senior Citizen (40%)

Speed / PriceSpeed / PriceCommercial Support: Commercial Support: Nat. Pet Wellness Nat. Pet Wellness

month ( Oct. AVMA & Ft. Dodge ) ** Cont. Ed. **month ( Oct. AVMA & Ft. Dodge ) ** Cont. Ed. **

Compliance Issues AAHA Compliance Issues AAHA ((‘02 64% to ’08 73%)‘02 64% to ’08 73%)

Using StandardUsing Standard Business PracticesBusiness Practices

E-communication E-communication (i.e.twitter.com?)(i.e.twitter.com?)

DVMs WORK WITH THE RELATIONSHIP BETWEEN THE OWNER AND THE PET

TRENDS

1. High tech / High touch1. High tech / High touch

2. Aging population (2. Aging population (baby boomers)baby boomers)

3. Efficiency of DVM3. Efficiency of DVM4. Quality Services4. Quality Services

5. Leisure Time5. Leisure Time6. 70% of associates6. 70% of associates plan to own practice plan to own practice ( 1-5 yrs.)*( 1-5 yrs.)*

*Vet Econ. Aug. 2007*Vet Econ. Aug. 2007

DVM EFFICIENCY Pediatricians / DDS: 40 cases / dayPediatricians / DDS: 40 cases / day

Ophthalmologists: 50 / day / Dr.Ophthalmologists: 50 / day / Dr.

DVM: 10 – 12 cases / day DVM: 10 – 12 cases / day (AVMA)(AVMA)

Banfield DVM: 17 cases / day / Dr.Banfield DVM: 17 cases / day / Dr.

( mature practice 35 )( mature practice 35 )

DVM EFFICIENCY

Multitasking ( 2 or more Ex Rooms )Multitasking ( 2 or more Ex Rooms ) Delegate to staff ( need quality )Delegate to staff ( need quality ) Incentive pay ( Prof & Staff )Incentive pay ( Prof & Staff ) Paperless records / Internet remindersPaperless records / Internet reminders On-line appointments ( Web-site )On-line appointments ( Web-site ) Prepacks in pharmacy (drive in )Prepacks in pharmacy (drive in ) Set goals: ( i.e. 30 cases / $700K )Set goals: ( i.e. 30 cases / $700K )

INFORMATION MANAGEMENT

KNOWLEDGE EXPLOSION

PRACTICE COMPUTER SYSTEMS

1985

10%

1990

60%

2010

99%

COMPUTER TASKS

AccountingAccounting

Appointment SchedulingAppointment Scheduling

RemindersReminders Management reportsManagement reports

Thank-Thank-yousyous

Client InformationClient Information

COMPUTER TASKS

Call backsCall backs

Word processingWord processing

SympathySympathy Med.RecordsMed.Records

InventoryInventory

Target mailTarget mail

INTERNET ACCESS 80%

Website $3-5KWebsite $3-5K

Consultations/CE (Consultations/CE (www.vin.com))

Webinars (AAHA)Webinars (AAHA) E-mailE-mail

PharmaciesPharmacies TelemedicineTelemedicine

E-commerceE-commerce ( $40 + billion/ xmas )( $40 + billion/ xmas )

WEB SITE SERVICES (70%)

AppointmentsAppointments

Practice tourPractice tour DVM & StaffDVM & Staff

Case of the monthCase of the month Virtual boardingVirtual boarding

WEB SITE SERVICES

PrescriptionsPrescriptions

MapMap ServicesServices

My accountMy account About our fees About our fees

(Internal Marketing)(Internal Marketing)

www.VetMatrix.com

PETMED EXPRESS

        ACTIVITY                           Increase over PCY

$236 million in net sales                          8% $28.5 million spent on advertising           10%$26 million net income 10%

Average sales per customer $87 with 64% from the internet

Most often sold: Flea, Tick and Heartworm Jan., 2010

BASIC IMAGING IN MANAGEMENT SOFTWARE

ECGECG CT / MRICT / MRI PACS PACS (picture archiving and communication system)(picture archiving and communication system)

Radiographs D.R.Radiographs D.R. UltrasoundsUltrasounds

BASIC IMAGING IN MANAGEMENT SOFTWARE

• invoicesinvoices

Pet photo:Pet photo:

• estimatesestimates• remindersreminders• prescription labelsprescription labels

VETERINARY HOSPICE

Pain controlPain controlTerminal casesTerminal casesClients now askClients now ask

Closure of griefClosure of grief Home environmentHome environment

PET INSURANCE Veterinary Pet Insurance (VPI) since 1982Veterinary Pet Insurance (VPI) since 1982 $210 million in coverage / year (total $1.1B ‘12 )$210 million in coverage / year (total $1.1B ‘12 ) Wellness Plan Banfield,Inc. ( Wellness Plan Banfield,Inc. ( not insurancenot insurance ) )

>1 Million animals in 2009>1 Million animals in 2009 $40 / m X 1,000,000 = $40M/Mon = $480M/yr.$40 / m X 1,000,000 = $40M/Mon = $480M/yr. AVMA GHLIT offers Pet Insurance Education: AVMA GHLIT offers Pet Insurance Education:

Aetna in association with Dr. Jack Stevens, Pets Aetna in association with Dr. Jack Stevens, Pets Best Insurance ( July, 2008 )Best Insurance ( July, 2008 )

AAHA is working to encourage high deductible AAHA is working to encourage high deductible coverage ( $500 - $1,000 ). coverage ( $500 - $1,000 ). www.aahanet.org

15 Pet Insurance companies are in business 2009. 15 Pet Insurance companies are in business 2009. US 2-3%; Germany 33%; Sweden 50%; UK US 2-3%; Germany 33%; Sweden 50%; UK 42%; Canada 2% cats & 9% dogs- 80% clients 42%; Canada 2% cats & 9% dogs- 80% clients recommend pet insurance ( VetEcon, Aug. 2010 )recommend pet insurance ( VetEcon, Aug. 2010 )

RAPID INCREASE IN DVMs (AVMA )

(25% of new DVMs will be educated outside the U.S. by 2012)

1972

22,000

2010

83,000 +

PRACTICE CHANGESSee Fewer:See Fewer:

Plugged male catsPlugged male cats Chronic nephritisChronic nephritis Cat abscessesCat abscesses Cat LeukemiaCat Leukemia TracheobronchitisTracheobronchitis German ShepardsGerman Shepards

(hips, pannus, diarrhea)(hips, pannus, diarrhea)

PRACTICE CHANGES

See More:See More: OncologyOncology Reconstructive SurgeryReconstructive Surgery Diagnostic TechniquesDiagnostic Techniques Imaging CT / MRImaging CT / MR Nutrition / P.Med.Nutrition / P.Med. DentistryDentistry

ATTITUDES OF DVM’s

1960’s1960’s1970’s1970’s1980’s1980’s1990’s1990’s2000’s2000’s

RejectionRejection

ConfusionConfusion

AcceptanceAcceptance

Vaccination Clinics Spay & Neuter Clinics Pet Super Stores Low Cost Practices

COMPETITION

Corporations i.e. VCA, Banfield, NVA, etc ( 5% )NOW Internet Pharm. & DVM’s (VETCENTRIC.COM)

DVMs role ( healthcare provider) Practice quality medicine

Outstanding personal service

DIFFERENTIATION

PET SPENDING Consumer Electronics # 1 in growthConsumer Electronics # 1 in growth Pet Spending # 2 in growthPet Spending # 2 in growth

(Pet spending doubled in past 10 years)(Pet spending doubled in past 10 years)

Wal-Mart $1 Billion + / day ( $410B ) Wal-Mart $1 Billion + / day ( $410B ) Sells more pet food / flea control than Sells more pet food / flea control than anyone elseanyone else

Pet Renting – Japan Pet Renting – Japan

PET POPULATION It is estimated that there are It is estimated that there are

more people today who own more people today who own pets than there are people pets than there are people that have that have

children. ( 63% children. ( 63% of families have a of families have a pet ) pet ) AVMA 2010AVMA 2010

PET POPULATION

Grew: 66% in 10 yrs.Cats = 82m* Dogs 72m*1996 (93M) to 2006 (154M)Current pop**: Cats = 93.6 M

Dogs = 77.5 M *AVMA 2007 ** APPA 2010

Veterinary Visits Per PetNumbers of cats and dogs are up 66% in the past 10 yearsNumbers of cats and dogs are up 66% in the past 10 years

Veterinary visits per pet have Veterinary visits per pet have declineddeclined, and , and cats cats are not are not receiving the same care as dogsreceiving the same care as dogs

Dogs averaged 1.5 visits in 2006 ( 1.9 in ‘01)Dogs averaged 1.5 visits in 2006 ( 1.9 in ‘01)Cats averaged 0.7 visits in 2006 ( 1.0 in ‘01 )Cats averaged 0.7 visits in 2006 ( 1.0 in ‘01 )63.7% of cat owning households had at least 1 visit in 63.7% of cat owning households had at least 1 visit in

2006. 2006.

*2009 = K9 2.1/Y & Cat 1.4/Y *2009 = K9 2.1/Y & Cat 1.4/Y AVMA 2007, *2009 AVMA 2007, *2009

USE OF SERVICES?

92% of Dog Owners Obtained Care60% of Cat Owners Obtained Care

Dog owners spend 48% more on their dogs than cat owners spend on their cats.

AAHA

VETERINARY FEES?

Barriers to more realistic fees rest with profession, not the pet owner

PET OWNER GROUPS

49.7% Pets as family

48.2% Pets are companions

2.1% Pets are property AVMA

IMPORTANCE OF SERVICES

1. Extended hours

2. Emergency care

(34% did not know about dental services?) AVMA

CONCLUSIONS

Appropriate evaluationAppropriate evaluation Charge for all servicesCharge for all services

Increase MarketIncrease Market

Pricing of servicesPricing of services Pharmacy on line Pharmacy on line ( incentive to order 6 ( incentive to order 6

– 12 months: $5 credit toward next visit )– 12 months: $5 credit toward next visit )

Improved client educationImproved client education

PROFESSIONAL FEES

ValueValue

BenefitBenefit

CostCost

PerceptionPerception

STRATEGY IN BUILDING A PRACTICE

Charging fair feesCharging fair fees Full serviceFull service Delegation Delegation DVM : Staff ratio (1/5)DVM : Staff ratio (1/5)

Quality vs. quantityQuality vs. quantity

1990’s - RETAIL MODEL

BUSINESS MODELS

2000’s - INTERNET MODEL Incentives Incentives

Percentage Percentage Bonus Bonus

Business Business orient.orient.

( Med.Rec/ Tablet) ( Med.Rec/ Tablet) Efficiency ! Efficiency !

WHERE ARE WE GOING?

Attention to professionalism/ethicsAttention to professionalism/ethics

More specialized services byMore specialized services by species/specialty ( feline, avian, species/specialty ( feline, avian, exotics, medicine, surgery, cl. path )exotics, medicine, surgery, cl. path )

Full service for life spanFull service for life span Increased in-house testingIncreased in-house testing Focus on health rather than disease Focus on health rather than disease

( Rehabilitation Services ) ( Rehabilitation Services ) Less hours and fewer emerg. Less hours and fewer emerg.

WHERE ARE WE GOING?

Reward by incentives Reward by incentives ( 60% NCVEI )( 60% NCVEI )

Develop true practice teamsDevelop true practice teams

Client education ( Teacher )Client education ( Teacher )

Fees based on knowledge rather Fees based on knowledge rather than procedures than procedures

Geriatric program with respite Geriatric program with respite and hospice care and hospice care ( AVMA 2001 )( AVMA 2001 )

Drive–through pharmacyDrive–through pharmacy

WHERE ARE WE GOING?

Behavior managementBehavior managementIncreased use of the internetIncreased use of the internet and electronic informationand electronic information (Increase Client Compliance: 64-73%)(Increase Client Compliance: 64-73%)

***EFFICIENCY******EFFICIENCY***

Increased imagingIncreased imaging Increased use of business Increased use of business

pract.pract.

www.vetpartners.orgwww.avpmca.org

SUCCESS FORMULA Team / EfficiencyTeam / Efficiency CommunicationCommunication PassionPassion It’s so easy to do it It’s so easy to do it

rightright

SUCCESS PersonalPersonal ProfessionalProfessional FinancialFinancial

Questions?