Practitioners discuss how they are weathering the downturn

Every small animal practice has its own story about the economic downturn.

The stories have common threads, though. Many clients, out of general concern about the economy, are asking for more details about the need for veterinary services. Some clients are not visiting their veterinarians—particularly in areas with job losses.

The practices that have continued to grow, if slowly, are either continuing with their current strategies or taking some steps to delay or reduce expenses. Practices with declining revenues have responded with more extensive measures, such as hiring freezes and staff reductions.

The following seven veterinarians offer pieces of a picture of how small animal practices from coast to coast are weathering the national downturn.

Staying the course

Dr. Cheryl Waterhouse, owner of Waterhouse Animal Hospital in Fresno, Calif., said her six-veterinarian practice has seen a slight increase in transactions and revenues recently despite the home foreclosures affecting the area. She said the downturn in 2000 didn't hit the practice, either.

Nevertheless, Dr. Waterhouse said, clients are asking for additional details now about the necessity of urgent and routine veterinary services.

"'Why do we need to do a heartworm test every year? Why do we need to clean my dog's teeth?'" her clients are asking. "As long as we explain, clients have been cooperative in doing things that we recommend."

Dr. Waterhouse counts herself lucky in her clientele as well as her location in one of the less expensive areas of California, where housing costs allow for somewhat more disposable income.

Dr. Edward B. Caldwell, co-owner of Deerfield Veterinary Hospital in Springfield, Mo., said the practice's revenues rose in 2008 on an increase in client visits. Boarding dropped, however, partly because the spike in gas prices curbed travel.

The area has suffered some job losses and home foreclosures, but Dr. Caldwell hopes for business as usual for the coming year.

"We're trying to emphasize the importance of service, just like we always have, but maybe I'm putting a special emphasis on it," Dr. Caldwell said.

Dr. Caldwell thinks being fiscally conservative in the past will benefit the hospital in the future, too. This past fall, for example, the owners were able to pay cash for a major remodeling project rather than taking out a loan.

Battening down the hatches

Dr. Clyde E. Dunphy of Capitol Illini Veterinary Services in Springfield, Ill., said growth has slowed for the two-hospital group, though client visits continued to increase in month-to-month comparisons for late 2008 versus late 2007.

Dr. Dunphy said one possible reason for the rise in visits is that the veterinarians are scheduling more follow-up examinations to check the medical progress of patients.

"The indications that I have from my clients is they want the best health care they can afford for their pets," Dr. Dunphy said.

The economy has had a minimal effect so far on revenues, but the hospital group has delayed some expenditures. The group put off raises for a couple of months and placed on hold a project to add client communication systems to examination rooms.

Dr. Donald R. Canfield, an owner-partner at Seattle Veterinary Associates, said his four-hospital group fared reasonably well in 2008 but is budgeting with the expectation of 5 percent fewer visits in 2009.

November and December 2008 were soft, Dr. Canfield said, though local flooding might have been a factor. 2008 saw a leveling off in surgical patients from 2007. As at many practices, clients want additional explanations of costs and outcomes.

"We're concerned, but we're going to budget so that in a worse-case scenario we'll be OK," Dr. Canfield said. "And if things get better, we'll respond to it."

The hospital group has decreased support-staff hours by 10 percent and is not hiring per diem veterinarians to cover for vacationing staff veterinarians. The group is not planning major expenditures—but is spending more time training staff to establish service norms throughout the practice.

Riding out the storm

Dr. David A. Eddleman, owner of South Anderson Veterinary Clinic in Anderson, Ind., said the economy has had an effect on revenues at the two-veterinarian practice.

"We see fewer clients walking in the door, and the clients that do are asking what's required or what is the minimum," Dr. Eddleman said.

Anderson already had lost thousands of jobs several years ago with the closure of a parts manufacturer for General Motors. Dr. Eddleman said residents are struggling even more now. Routine surgeries are down, for example, and some clients ask for rabies and distemper vaccines but not leptospirosis and Bordetella vaccines.

The practice has responded to the situation by reducing employees from 22 to 17, cutting the clinic's hours slightly, postponing major equipment purchases, and watching inventory closely. As a result of seeing fewer clients, Dr. Eddleman added, the practice has had more opportunities to educate clients about the value of high-quality veterinary medicine.

Despite the downturn, the practice remains profitable. Dr. Eddleman predicted that the practice will continue to do well as a leaner operation.

Dr. Maureen A. McElhinny, owner of Green Valley Veterinary Hospital in New Brighton, Pa., said the two-veterinarian practice saw a drop in revenues for September and October 2008—though not for November and December 2008. The clientele ranges from farmers to professionals to blue-collar workers.

"Some people are spending the same, and some people are spending less," Dr. McElhinny said. "There are definitely clients who will say they're not sure what is happening with their job or what is happening with their spouse's."

The economy doesn't affect some clients at all, Dr. McElhinny said, while many retirees among the clientele took a hit to investments in the stock market.

Dr. McElhinny said the practice is focusing on going the extra mile for each client and patient. At the same time, she might wait on a new computer system, and she is reviewing her insurance options. She continues to invest in continuing education for herself and her team.

Dr. Lora E. Miller, owner of the Animal Hospital of Berlin in Kensington, Conn., said revenues dropped from 2007 to 2008 for the 2.5-veterinarian practice in an area coping with ongoing job losses.

"In an area that has some problems, when there's a national downturn you take it on the chin," Dr. Miller said.

The practice is in a suburban town bordering the blue-collar city of New Britain, where manufacturers have laid off employees over the years. The recent bank crisis also is a problem because the financial industry is a major employer in Connecticut.

Nevertheless, Dr. Miller said, her clients are mostly the type of people who are willing to spend money on their pets. Also, her practice expenses have decreased because she refinanced a loan and an associate wanted to work fewer hours. In addition, she has instituted a hiring freeze to help avoid layoffs.

Economic outlook

Despite continuing concerns about the economy, many veterinarians hold out hope that the situation will improve in the next year or two.

Dr. Waterhouse in California and Dr. Dunphy in Illinois hope that the new administration of President Obama will help the economy recover.

Dr. McElhinny in Pennsylvania said she's quietly optimistic for the coming year, while Dr. Miller in Connecticut thinks a turnaround could come in 2010.

Tips from a practice consultant

Louise S. Dunn, owner of Snowgoose Veterinary Management Consulting in Greensboro, N.C., advised attendees at the recent North American Veterinary Conference and Western Veterinary Conference about practice management in tough times. Following are a few of her tips.

• Prioritize recommendations for clients who might not be able to afford necessary veterinary services all at once. Set up a treatment plan, such as starting with laboratory work and scheduling dental work for later.
• Run a tight business, being sensitive to detail. Budget. Track performance indicators such as the total time for a transaction, the time clients spend in the building, and the ways that staff members meet or exceed clients' expectations.
• Keep the practice team in the loop. Share the numbers.
• Put the right people in the right positions. Assign the responsibility for surgery packs to a staff member who is good with details, and assign someone who is upbeat to answer the phones. Make sure outside advisers and vendors are sensitive to the needs of the practice.
• For practices that are seeing fewer patients, use the extra time to educate the practice team and build relationships with clients. Treat each client as a treasure.

Correction: An earlier version of this article misspelled the name of the photographer for the first image.