Chart of the month: Size matters for consolidation

Published on July 15, 2019

The number of veterinary practices in the United States has been growing each year since at least 2002. On average, 1,300 new practices have come on line each year in that time, and the growth trend is projected to continue.

As this month’s chart shows, though, the growth pattern varies for practices of different sizes. The biggest growth is in the largest establishments – those with more than 100 employees. The number of businesses with 19 or fewer employees is actually shrinking.

Why is this significant? Because the largest veterinary firms are where the consolidators and corporate practices sit. Today they’re estimated to account for 10-15% of all practices. Over the next five years or so, their share is expected to grow to 20-25%.

The growth in large practices will mostly squeeze out practices with 5-19 employees, which are an important target for consolidation. Small practices with fewer than five employees probably will decline a bit, but will remain a significant share of the veterinary profession.

Consolidation is a natural evolution in nearly every sector of our economy, and there’s still room for small and independent practices to thrive. While larger practices have economies of scale that allow them to be very competitive, especially on price, smaller practices have their own advantages. They’re especially well positioned to compete on client experience and delivering patient value. There will always be room for smaller practices to build trust and relationships with clients in ways that larger practices may find difficult. In addition, smaller practices can specialize and carve out niche markets, like feline-only practices.

If you’re interested in learning more about consolidation trends, check out the CE webinar Consolidation counterpoint: Exit strategies on AVMA Axon. Consolidation also will be among the many topics on the agenda for the AVMA Economic Summit coming up October 22-23, and those attending AVMA Convention 2019 can learn more in Understanding and Adapting to Market Consolidation, taking place Friday, August 2, from 2-3:30 p.m.

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