Bayer discusses strategy
Ornery cats, prohibitive pricing, the Internet, client ignorance and competition from other players have converged with the recession to diminish the number of veterinary visits pet owners make in the United States, despite steady growth in dog and cat ownership, according to new research.
A study by Brakke Consulting Inc., the National Commission on Veterinary Economic Issues (NCVEI) and Bayer Animal Health concluded that while the recession has taken a bite, multiple other factors contribute to difficult business conditions experienced by many companion-animal practices.
One notable factor is that the number of companion-animal practitioners has exploded in the past decade, rising from 30,255 to 44,785 between 1996-97 and 2006-07, a rate of 48 percent — greater than the rate at which the pet population grew during the same period.
The upshot is that the median number of active clients per full-time-equivalent veterinarian is in steady decline, dropping from 1,200 in 2001 to 1,070 in 2009, according to Financial & Productivity Pulse Points
, published by the American Animal Hospital Association (AAHA) Press.
The fast-rising number of small-animal veterinarians is likely exacerbating rather than creating the trend in declining visits, as the total number of veterinary-clinic visits appears to be stagnant or sliding as well, said John Volk, a Brakke senior consultant who designed and managed the study, which was funded by Bayer.
He pointed to statistics from the 2007 U.S. Pet Ownership & Demographics Sourcebook
published by the American Veterinary Medical Association, which shows veterinary visits dipping from 197 million in 2001 to 196 million in 2006, while the pet population climbed from about 130 million to more than 150 million in the same period.
Volk said he was unaware of measures of veterinary visits taken since the nation's latest economic downturn, which began in 2007. “That’s the scary thing about (the trend),” he said. “The visits were declining, or certainly not growing, pre-recession.”
He noted that public filings of VCA — owner of more than 520 animal hospitals in 41 states — reflect a decreasing number of visits quarter after quarter beginning in 2004, as well. “(It’s) just been a continual erosion,” Volk said.
It was figures such as these that led Bayer to enlist Brakke Consulting, NCVEI and others to probe the reasons for the decline.
“Some of the trends are, quite frankly, alarming,” said Ian Spinks, president and general manager of Bayer Animal Health North America at a news conference about the study, which was presented at the North American Veterinary Conference (NAVC) in Orlando last week.
However, Spinks said, the research determined that veterinarians can influence four of six factors behind the decline. “It is highly likely that the trend can be reversed,” he said.
Volk said the study entailed a review of the literature; in-depth interviews with 28 veterinarians across the country; discussions with eight focus groups containing a minimum of eight pet owners per group; and an online survey of 2,000 pet owners whose collective demographic profile matched that of American pet owners as a whole.
Besides the recession, the predominant factors identified by researchers are:
Fragmentation of veterinary services
“Today, pet owners have more options for services than ever,” Volk said. For example, “Five hundred new practices were added in the last 10 years in pet stores. They’re mostly Banfield,” he said, referring to the largest veterinary hospital chain in the country, “but not exclusively.”
Other alternatives to standard veterinary clinics include low-cost spay-neuter clinics, shelters that offer subsidized care, mobile clinics that provide limited but low-cost services such as vaccinations, and specialty practices.
When pet owners turn to other, often less expensive, outlets for procedures such as spays, neuters and vaccinations, traditional veterinarians lose those “starter” visits, Volk noted.
Thirty-nine percent of pet owners surveyed indicated that they always or usually look online first when they notice that their pets are sick or injured.
Fifteen percent completely or somewhat agreed with the statement, “With the Internet, I don’t rely on the vet as much.”
Volk acknowledged that some pets recover on their own but said that in those that don’t, the delay in treatment is evident to practitioners. “I’m seeing pets three days sicker these days,” one veterinarian told researchers.
Misunderstanding the value of veterinary visits
Volk said the study found a variety of misperceptions on the part of pet owners. They associate veterinary visits with vaccinations, for example, or perceive that indoor pets need less veterinary attention than outdoor pets.
Most disturbingly, Volk said, people perceive that as pets grow older, they need less care rather than more.
Cost of care
Along the same lines, pet owners do not perceive that the care provided justifies the cost. A common sentiment is, “Costs are much higher than I expected.”
“They continually find themselves surprised by the bill,” Volk said.
Indeed, 76 percent of fees increased above the rate of inflation from 2004-06, although the rate of increase slowed from 2006-08, according to statistics from AAHA cited by the researchers.
In an informal “QuickPoll” conducted on the NCVEI website last July, 80.6 percent of practitioners responding said they planned to increase their fees in 2010 — most by between 1 to 8 percent but a few by as much as 12 percent. Only 1.4 percent reported lowering fees; 18.1 percent said their fees would be unchanged.
One veterinarian who was part of the study reported responding to a 20-percent drop-off in business by raising prices 20 percent.
The feline factor
Researchers also found truth in a common perception that cat owners are reluctant to take their charges to the doctor: The tendency of cats to fight being captured, transported and examined by a veterinarian translates to fewer appointments made by their owners.
As Volk put it: “Vets are in a test of wills with cats, and cats are winning.”
Recounting owners’ tales of woe, Volk said, “They can describe the scratches and blood on their hands and arms as they try to put (the cats) in the carrier.” Cats also have a way of disappearing for hours at at stretch when it’s time to visit the vet, researchers heard.
In the study survey, 37.6 percent of cat owners said that just thinking about taking their pet to the veterinarian was stressful. (Among dog owners, 26.2 percent said the same.)
The cat problem, sticker shock and misunderstanding about the need for veterinary care are factors that can be directly addressed by practitioners, said Dr. Karen Felsted, a veterinarian and accountant who heads the NCVEI.
Felsted said the issue of “feline resistance” is one she understands personally. “I’ll tell you, I have one of these cats,” she said. “Taking that cat to the vet is a hassle even for me, a veterinarian.”
She said veterinarians can befriend cats through actions such as:
• First, ensuring that they’ve identified all the cats owned by their clients. Some pet owners bring their dogs to the veterinarian regularly without mentioning that they also have a cat or cats.
• Training doctors and staff about cat issues and health care. She pointed to the Feline Life Stages Guidelines
developed by the American Association of Feline Practitioners and AAHA as a guide.
• Promoting cat-friendly handling.
• Making entrances and reception areas comfortable for cats by providing separate waiting areas for dogs and cats, and even separate entrances if feasible.
As for pricing, Felsted said the issue is not just how much clients must pay, but how
they pay. For example, clinics can offer a wellness package billed in monthly increments that covers all of a patient’s preventive care during a year. A package deal could include some office visits to check out suspected problems.
Other strategies she recommended:
• Price competitively products that clients can buy elsewhere, such as flea and tick preventive treatments, foods and supplements. “That one is a no-brainer,” Felsted said.
• Offer targeted discounts in slow months for lapsed clients.
• Reduce the "barrier to entry" by lowering exam fees.
To counter misperceptions about the value of the veterinary visit, Felsted said, communication and education are key.
“The number-one thing we need is a consistent, simple message to pet owners about the care that they need,” she said, citing as an example the U.S. Department of Agriculture’s “Five A Day” mantra about eating fruits and vegetables.
“The profession should work together to provide one go-to resource about pet health care,” Felsted recommended.
Individually and collectively, practitioners should explain to pet owners that wellness exams help to prevent future problems, serve potentially to lengthen the lives of pets and can help pets be happier and healthier today, she said.
When practitioners are doing exams, they should let owners know what they’re checking for, offering a “running commentary as they run their hands over the pet,” Felsted said. “Owners don’t get it because we don’t communicate it.”
In addition, practitioners can use clients’ Internet savvy to their advantage. “Harness the power of the Internet through your websites and other good websites,” Felsted said. “Give a list of (recommended) websites to clients.”
She also suggested supplementing postcard reminders of regular exams with reminders delivered by text and e-mail as well as telephone; and enabling clients to schedule appointments online.
The slide presentation accompanying Felsted's NAVC talk is posted
online. The study continues this year with a national survey of veterinarians.