Economic concerns push AVMA into action

Leadership conference inspires, informs members
Published on February 15, 2012
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AVMA House of Delegates
Members of the House of Delegates socialize before their meeting convenes. (Photo by Malinda Larkin)

2011 saw the AVMA leadership redefine its goals and start to take action on one major initiative in particular—reversing the profession's economic decline. The Association, meanwhile, has also worked hard to maintain fiscal responsibility when it comes to budgeting and investing.

AVMA officers spoke about these accomplishments and more during the plenary session of the regular winter session of the House of Delegates, held Jan. 6-7 in Chicago.

Unseasonably warm weather greeted delegates and attendees of the 2012 AVMA Veterinary Leadership Conference, held Jan. 7-8. Both events took place at the Intercontinental Hotel. In all, 465 veterinary professionals and others enjoyed walks along Michigan Avenue in 50°F weather between listening to motivational speakers, learning about the latest AVMA initiatives, and taking part in governance activities.

More than 80 of those individuals were emerging veterinary leaders on hand for the abbreviated Veterinary Leadership Experience and a networking event.

Opening speaker

Astronaut Mike Mullane keynoted the conference with a "Countdown to teamwork."

The West Point graduate flew 134 combat missions in Vietnam as a weapons system operator before being selected by NASA in 1978 as one of the first shuttle astronauts. Mullane completed three missions aboard the shuttles Discovery and Atlantis.

On a space mission, decision making and teamwork mean the difference between life and death. Mullane related stories and showed video clips to create a vicarious space experience and illustrate three leadership fundamentals.

Mullane described the first fundamental, "normalization of deviance," as the natural human tendency, under budgeting and scheduling pressures, to rationalize shortcuts from established best practices. False feedback and the absence of something bad happening are taken to mean the shortcut is acceptable. Examples are the 1986 Challenger and 2003 Columbia shuttle disasters.

Challenger disintegrated after an O-ring seal in its right solid rocket booster failed at liftoff. "Fourteen of 24 inspections (of earlier flights) found the O-rings had been touched by fire; that was in the internal memos," he said. "(NASA) had been blinded by a long-term normalization of deviance."

NASA forgot the lessons of Challenger when 17 years later, Columbia was damaged during launch by foam insulation breaking loose and hitting the thermal protection system. On previous missions, they knew that foam had missed the tiles, so deviance became the norm.

To guard against the normalization of deviance, Mullane said, one must recognize vulnerabilities, review practices and make sure there are no information silos, review and archive near-disasters, and be situationally aware. It's also important to listen to the people closest to the issue.

"(Morton) Thiokol pleaded with NASA hours before (the Challenger) launch to call it off because of the O-rings being less flexible in cold temperatures," he said. "Nobody grounded the flight, because of scheduling pressures."

The second leadership fundamental is responsibility. He was once on the crew of an F-111 fighter bomber that was running out of fuel. Mullane was distressed but said nothing, in retrospect because of his need for acceptance and reluctance to confront the pilot, who was experienced. The crew abandoned the plane moments before it crashed.

"Remain passionately engaged in the team," Mullane said. The power of the team lies in the diversity of life experience and perspectives of its members.

Courageous self-leadership is Mullane's third leadership fundamental. The keys are to expand one's performance envelope and be tenacious, he said. Great self-leaders challenge themselves with lofty goals, make midcourse corrections, stay focused, advance their education, and constantly do their best.

Leaders must empower the team in this way.

There was a reason he and other astronauts didn't raise concerns with NASA managers about the danger of private citizens being on board, for example, or a system that would destroy an out-of-control shuttle. "We feared our leadership. Signals were sent that actions would be taken if we spoke up, that we'd find ourselves in a long line to go on a mission," he said.

"You can have different leadership styles, but at the end of the day, people have to know you value them," Mullane said.

AVMA president's report

In her address during the VLC Jan. 6, AVMA President René A. Carlson identified the ability to listen as an essential leadership skill. She then listed ways AVMA leaders had responded to member concerns over the past year.

The AVMA established task forces charged with determining the degree of AVMA involvement in international veterinary medicine, for example, and with recommending ways to revitalize Association governance. Considerable AVMA resources—including $5 million—were set aside as part of the Association's long-term initiative aimed at improving the bleak economic situation facing current and future veterinarians.

In addition, member comments guided the most recent version of the AVMA's multiyear strategy for improving animal and human health and advancing the veterinary profession, Dr. Carlson noted.

"This past year has been about listening to our members," Dr. Carlson said. And it is important that the AVMA continues to hear from its membership, whose input and participation Dr. Carlson said are necessary to the success of any professional organization. She challenged the audience to engage AVMA leaders and staff as they shape the AVMA into a member-driven association equipped to meet societal demands and the needs of the profession.

"Leadership is about facing the challenges before us, creating a vision for a better future, and creating a plan of action for our goals," Dr. Carlson said.

Officer candidates

Each candidate for AVMA president-elect and vice president was allowed time to make brief remarks. Dr. Clark K. Fobian was the only contender for 2012-2013 president-elect. Dr. Fobian owns a small animal practice in Sedalia, Mo. Also, he is District VII representative on the AVMA Executive Board and chair of the American Veterinary Medical Foundation board of directors.

There's a three-way race to succeed Dr. Jan K. Strother as AVMA vice president when her two-year term ends in August. This past summer Drs. James E. Smallwood and Walter R. Threlfall announced they were running to be the next AVMA liaison to the Student AVMA and student chapters. Dr. Stacy L. Pritt recently declared she also is a candidate for the office of vice president.

Leadership is about facing the challenges before us, creating a vision for a better future, and creating a plan of action for our goals.

Dr. René A. Carlson, AVMA president

Dr. Smallwood is a professor of anatomy at North Carolina State University College of Veterinary Medicine and faculty adviser to the college's student chapter of the AVMA. Dr. Threlfall taught at The Ohio State University College of Veterinary Medicine for nearly 40 years and is currently a theriogenology consultant. Dr. Pritt is director of preclinical laboratory operations for a contract research organization and an instructor with the Colorado Technical University Online. She is the alternate delegate for the American Society for Laboratory Animal Practitioners in the AVMA HOD and serves on AVMA committees dealing with federal legislation and the AVMA Annual Convention.

The HOD will elect the new president-elect and vice president this August during the House's regular annual session in San Diego.

AVMA Group Health and Life Insurance Trust representatives spoke about the potential impact the new health care law will have on the GHLIT plan, which insures some 36,000 veterinarians and their families (see story).

Dollars and sense

Next up, data showing a chronic decline in the economic fortunes of the veterinary profession were presented along with an update on the AVMA's efforts to reverse that downward trend.

AVMA Executive Board Chair Ted Cohn, who led the ad hoc committee helping implement the initial stages of the Association's veterinary economic strategy, said the AVMA will soon commission a study of the U.S. veterinary workforce. (Publication of a National Academy of Sciences report on the topic was originally set for 2008 but, after four years, the NAS has yet to release its findings.) Dr. Cohn said the AVMA study will examine the relationship between the number of veterinarians and demand for veterinary services and make proposals about increasing the profession's profitability.

Other AVMA economic-related activities Dr. Cohn mentioned include a meeting between AVMA officials and veterinary college deans that started a dialogue about how, together, they can help make the veterinary profession economically sound again (see story). The AVMA is part of a coalition of veterinary and pet-related industries—the Partnership for Preventive Pet Healthcare—devising strategies for expanding veterinary visits, especially among feline patients. The members of the recently formed AVMA Veterinary Economics Strategy Committee were announced (see story), and the search for the new AVMA Veterinary Economics Division director continues.

Dr. Karen Felsted presented data from several studies on the business of veterinary medicine. The consultant and former CEO of the National Commission on Veterinary Economic Issues said the numbers show veterinary usage softening prior to the recent recession—a trend that persists despite ever-growing numbers of pet owners. "We really ignored the trends because revenue and earnings were still increasing," Dr. Felsted explained.

But that is no longer the case. Most companion animal practices continue to see only modest revenue growth. As a consequence, veterinary incomes either plateaued or fell slightly in recent years.

"I don't think anyone thinks 2012 is going to be a whole lot better," Dr. Felsted said.

Inadequate business practices and fee increases have contributed to the current climate, according to Dr. Felsted, who believes an oversupply of veterinarians is also a factor. She cited AVMA data showing the total number of companion animal veterinarians grew from 30,255 in 1996/1997 to 44,785 in 2006/2007, a 48 percent increase. Pet ownership during the same period rose about 36 percent, Dr. Felsted noted. More data on the veterinary workforce is needed to better understand the problem, she said, adding that the economic impact of laypersons performing veterinary procedures also must be evaluated.

Another sign of the profession's financial woes is the widening gap between veterinary student debt and starting incomes. According to an AVMA survey of veterinary students graduating in spring 2011, mean educational debt among the approximately 90 percent of graduates with debt was $142,613—up 6.5 percent from 2010—while the mean full-time starting salary for veterinarians dropped 1.3 percent to just under $67,000.

Dr. Cohn
Dr. Ted Cohn, AVMA Executive Board chair, talks about the Association's work to reverse troubling economic trends seen throughout the veterinary profession. (Photo by R. Scott Nolen)

For 2011 veterinary graduates with educational debt, almost all of the debt—91.2 percent—was incurred while students were in veterinary college. Eighteen percent of last year's veterinary graduates owed more than $200,000 in student loans. "I can't imagine starting a career with that much debt," she said. "It can't be paid off in any reasonable time frame."

Studies show more and more new veterinarians are enrolling in internships to enhance their clinical competence. But unless the internship leads to a residency, there is no financial benefit associated with interning at a practice. "If you look at future earnings, internships don't do anything for it," Dr. Felsted said. "It just puts you a year behind on lifetime earnings."

Related to veterinary income, Dr. Felsted cited AVMA data indicating veterinary practice owners earn approximately $58,000 more annually than practice associates. An NCSU study, however, reported 74.2 percent of male first-year veterinary students were interested in eventually owning a practice as opposed to just 48.5 percent of female students being interested.

Veterinarians continue to earn less than human physicians, dentists, and lawyers, and their practices are also less profitable, Dr. Felsted observed. She also pointed out that 62 percent of veterinary practice owners aren't using any financial concepts to monitor business growth.

AVMA treasurer's report

Despite a period of unprecedented uncertainty in the U.S. and global economies, the AVMA remains financially strong and fiscally sound, according to AVMA Treasurer Barbara Schmidt.

Though the numbers had not been finalized when she gave her report, Dr. Schmidt anticipated the AVMA would end the 2011 budgetary year with a $2.3 million surplus. Those gains, she said, are attributable to the 2011 membership dues increase and the fiscally responsible actions of the AVMA Executive Board and staff, as well as a profitable 2011 AVMA Annual Convention.

"All this (was) despite the high volatility experienced by all domestic and international markets, which influenced all sectors of our AVMA investment portfolio in 2011," Dr. Schmidt said.

A $64,000 surplus is projected for the AVMA's 2012 budget, with expenditures expected to fall just below the $30 million in revenue. "Through careful strategic planning, keeping the interests of the members first, and maintaining a solid fiscal foundation, the AVMA will continue to be vital, strong, and relevant to its members," Dr. Schmidt said.

Membership dues account for 60 percent of the AVMA annual revenue, motivating Association leaders to ensure the AVMA is a member-driven organization, Dr. Schmidt said. More than 82,500 veterinarians are AVMA members, accounting for an "outstanding" 83 percent of all U.S. veterinarians. And, with a member to staff ratio of 595:1, the AVMA ranks as one of the highest in this category among the nation's large professional associations. "This speaks to the efficiency of operations at the AVMA," she noted.

The planning process for the Association's 2013 budget is already under way, and the Executive Board Budget and Financial Review Committee will submit a budget for approval at the board meeting in April. The approved 2013 budget will then be provided as information to the AVMA House of Delegates in August, Dr. Schmidt explained.

The AVMA reserve fund is currently 102 percent of the Association's operating budget, Dr. Schmidt said. AVMA policy requires that 50 to 150 percent of the Association's annual operating budget be set aside in a reserve fund.

Dr. Schmidt listed several projects supported by the AVMA's $1 million Strategic Goal Fund. These include purchasing the assets of the National Commission on Veterinary Economic Issues, developing, and establishing the 20/20 Vision Commission and the Governance and Member Participation Task Force.

The key undertaking Dr. Schmidt highlighted is AVMA's long-term commitment to strengthening the economic viability of the profession. The Executive Board, responding to member concerns, established the $5 million National Economic Strategy Reserve Fund to support programs and strategies toward that end. "You helped the AVMA identify economics as the number one critical issue for our Association," she said. "Your Executive Board listened and is responding in a positive way."

AVMA Executive Vice President Ron DeHaven rounded out the plenary session with an overview of the Association's participation in a national initiative that seeks to increase veterinary visits (see story).

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The Veterinary Economics Strategy Committee was created this past November to advise the AVMA Executive Board and develop plans addressing veterinary economic issues.

In January, the AVMA announced the committee members had been appointed. They are as follows: Dr. Link Welborn, Tampa, Fla., chair; Dr. Jane Brunt, Annapolis, Md.; Dr. Margaret Coffey, Baton Rouge, La.; David Gersholowitz, New York, N.Y.; Dr. Jeff Klausner, Portland, Ore.; Dr. Roger Saltman, Cazenovia, N.Y.; Dr. Carin Smith, Peshastin, Wash.; Dr. Scott Spaulding, Milton, Wis.; and Dr. Mike Thomas, Indianapolis.