Latest News May 2022

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The COVID boom for vets is over, but that does not resolve the staff shortages

We have been watching the KPIs in the veterinary industry very carefully for the last 2 years so that strategic decisions can be made based on tangible data. As of last month, we put together the last 2 years in some nice charts to give the whole picture. The first chart looks at financial KPI’s and the second at ‘workload’ KPI’s. Note also that here we are measuring growth month by month compared to the same month last year, so a value of zero does not mean a significantly bad result if the same month the previous year experienced a high growth. Also a downwards trend does not mean the industry is going backwards, it just means that there is less growth. To make sure that the data was not skewed by new practices opening up and general industry growth, we used exactly the same practices when we measured each month. The data was collected across 200 full time vets spread across Australia but with a bias to the east coast.

 % growth in revenue and average invoice value

In May 2020 we started to measure the industry metrics because our clients wanted to know what to do when the epidemic started. It was clear already by June that the industry was actually booming, showing an over 20% growth in revenue compared to June the previous year. Right up until Dec 2021 the growth remained positive. Even in November 2021 the growth was at roughly 13% when compared to November 2020 which had already grown by 15%. Was the revenue growth as a result of price increases or more workload? Probably both but mainly due to more workload.

But then in Dec 2021 something interesting happened, the growth in average invoice value became greater than the growth in revenue. This indicates the point where growth became a result of only price increases and not because of increased workload.

For Dec, Jan, Feb 2022 revenue growth has levelled off at 5% which is where we estimate growth used to be prior to the epidemic. All financial indications here indicate that the boom from COVID making practices busier had now levelled off approximately to where CPI is. 

 % growth in invoice number, animal number and primary consults per animal

To assess the actual workload of practices we looked at some non-financial KPIs that correlate very closely to the workload in veterinary practices.

Animal number measures the percent growth of animals seen in each month compared to the same month the previous year.

Invoice number measures percent growth of invoices each month compared to the same month the previous year.

Consultations per animal is slightly different and looks at whether the growing population of patients is receiving primary consults at the same level (essentially it identifies if patients are getting the same level of attention).

For invoices and animal number, the data closely replicates the financial data mentioned before. It confirms that roughly in December 2021 the boom from COVID had levelled off and in fact in the case of invoice number it has started to drop below zero, indicating a very slight downturn in the volume of work performed to what were very busy months the previous year.

Attention given to patients in the form of primary consultations was negative in Dec 2020 – June 2021, indicating that patient care was deteriorating temporarily as veterinary practices struggled with the high growth, but then consultations reached normal levels again.

What can we try to ascertain from this information?

We feel the COVID growth boom is over. Don’t worry, the industry is not currently going backwards. If you look at the compounded growth over the last 2 years, patient numbers have increased by about 10%, so a 0% growth now means that you are stuck with these 10% extra patients. In fact it may be a good thing that the growth has slowed down, because the very high growth months caused a slight decrease in patient care as could be seen in the number of consultations delivered per patient in Dec 2020 – Jun 2021. We also measured dentals per patient and admissions per patient which indicated a similar trend but did not chart these for simplicity.

From a non-data perspective, we can currently see in our client meetings that at any time in a veterinary practice (or any other business for that matter), 15-20% of the staff are off sick or as close contacts. And regardless of the close contact rules, if children are sick, parents often stay home as carers. If we couple the 10% growth in patients with a 15% staff reduction, we come to a 25% deficit in staffing – no business can wear that comfortably, and the 25% deficit will remain as long as the patient growth stays at, or above zero, and as long as COVID continues to be transmissible at the current rate.

Hopefully staff recruitment will become a bit easier in the coming months as our borders open and vets are allowed to travel into Australia again – there has always been a reliance on imported vets from the UK, South Africa and New Zealand and this will help with some of the deficit. These vets will however be able to cherry pick their jobs and wages.

Therefore your current staffing levels are critical even if you are not growing anymore! Expect wages to go up and continued difficulties in recruiting staff. To offset the increased cost of staff your prices will need to go up even more, everyone is doing this which is why CPI currently is the highest it has been since the introduction of GST in Australia. Efficiencies within the practice, being an employer of choice, flexible rosters, flexible wage agreements and having enough staff to buffer sick leave are also important – we are more than happy to assist you with this.

Quick reminder – Don’t forget to pay your tax

For those of you who have not paid your tax yet, a reminder that this is due now. For many businesses the deadline for paying tax is 15 May.  If you are one of our clients and are unsure how much to pay or payment details please contact us.

Congratulations Renaei and Welcome Denise!

Many of you will have spoken to Renaei who joined us a year ago to do bookkeeping. She is an experienced qualified accountant and has proven herself very capable. She will be moving up in the APL pack to work with Paolo and Anne on valuations and business advisory work.

But those of you relying on her bookkeeping skills won’t miss out, as we have been very lucky to be joined by Denise who is also an experienced qualified accountant. Denise will be doing bookkeeping and payroll along with Joy and Amanda.

Dog Tales!

I’m so glad I found a nice home with a good vet! I had to have some dental work done last week. I had lots of blood tests less than 3 months ago when I was very sick with pancreatitis, but the vet still did a blood test on me before my anaesthetic – and it seems I may have early kidney problems. Who would have thought?! I’ve heard there are vets that wouldn’t have worried to do another blood test as my last one wasn’t that long ago, but it just shows you that it’s always worthwhile to do another check before an anaesthetic as things can change quickly.

They kept me on fluids longer before my anaesthetic, monitored me very closely whilst I was ‘under’ and despite a very long anaesthetic I was bouncing around wanting to play games within 24 hours! I’m super happy I had my teeth sorted and so grateful that my vet does lots of tests to make sure I’m okay. Paws crossed I still have a few years left enjoying life, so please remember to always do the best for your patients because we deserve it.