Practice closures in USA indicate tough times are here
On the 31 January, this article was published in the VIN news service:
“VCA Animal Hospitals will permanently close at least 17 urgent care practices in five states today, judging from announcements on each practice’s website. Seven remaining urgent care locations are listed on their websites as open today and have no announcements about permanent closures.
The closures mark an apparent reversal of strategy for the company, which 2½ years ago announced its first urgent care center in Mar Vista, California, and plans to open in future locations.”
While Australia often appears more resilient to global recessions, it’s crucial for veterinary businesses to remain vigilant. Recent data reveals a concerning trend: declining patient visits, mirroring similar reports from the UK and highlighted by the recent closure of 17 VCA Animal Hospitals urgent care practices in the US. This suggests a potential shift in the veterinary landscape that demands attention.
A key challenge facing Australian veterinary practices is the escalating cost of wages. Historically, staff wages (including superannuation) have typically comprised 41-43% of turnover. Alarmingly, many practices now report wage costs exceeding 50%, severely impacting profitability and threatening the long-term viability of these businesses. In some cases, owners might be financially better off as employees.
Several factors contribute to this wage spiral:
- Increased sick leave and the need for additional staff to cover absences.
- Growing administrative burdens related to wage awards, contracts, and payroll.
- The rise of part-time employment, leading to more complex payroll management.
- The demands of social media marketing and its impact on administrative workloads.
- A perceived slowdown in consultation speed, potentially linked to increased note-taking requirements.
Practices that proactively address these issues will be best positioned for success. Key strategies include:
- Targeted Support: Identifying and assisting staff struggling with absenteeism or efficiency issues.
- Productivity Analysis: Regularly assessing individual performance to identify areas for improvement.
- Outsourcing: Delegating administrative tasks like bookkeeping and marketing to external providers, reducing payroll costs and management overhead.
- Workflow Optimization: Continuously reviewing and refining consulting room workflows and techniques through training.
Despite the challenges, there are emerging opportunities:
- Improved Hiring: As less efficient practices struggle, more qualified candidates may become available, easing recruitment challenges.
- Employee Ownership: Profitable practices are increasingly offering buy-in opportunities to key employees, fostering team stability and ensuring the future of veterinary-led businesses. This creates new pathways to practice ownership for veterinary professionals.
By adapting to these changing dynamics and focusing on efficiency, veterinary practices can navigate the current economic climate and position themselves for long-term success.
