AVMA economist advises caution during economic uncertainty
August 26, 2020
Veterinarians should prepare for the current national economic downturn to continue this fall, said the AVMA’s chief economist.
Matthew J. Salois, PhD, director of the AVMA Veterinary Economics Division, stresses that he doesn’t know what economic changes will come, but he urges caution. He sees signs of a continuing recession and recommends that veterinarians maintain savings, delay unnecessary large expenses, and improve efficiency.
He also recommends they stock additional personal protective equipment in case of a rise in COVID-19 infections.
Warning signs emerged during a busy summer for private practitioners, who reported solid income numbers, Dr. Salois said in an interview with JAVMA News. He cited encouraging practice revenue data published this spring from analytics company VetSuccess.
“As of early May, we were pushing toward recovery, in that moving out of negative territory of revenue, back into positive year-over-year gains,” Dr. Salois said. “There have been some valleys and some peaks, but we’ve remained comfortably—nationally—10% ahead of revenue last year.”
But revenue at veterinary practices had started falling again in U.S. states with high numbers of COVID-19 cases, including California, Florida, and Texas, Dr. Salois said.
He also delivered those messages in late July to members of the AVMA House of Delegates.
During that presentation, Dr. Salois said many clinics likely saw short-term increases in business this summer from pet owners who delayed veterinary appointments in the spring as well as from owners who, when they started working from home, had more opportunities to see potential health concerns in their pets. Veterinary medicine fared better in those months than some other health professions, such as optometry and dentistry.
In the interview and his presentation, Dr. Salois described signs of struggle in global economies, worrying signs among U.S. companies, and the risk to clinics’ clientele if the federal government reduces or ends unemployment relief enacted early in the pandemic.
He noted that, in July, American Airlines warned that the company could furlough 25,000 employees, and Bank of America announced its second-quarter profits were down 52% from a year before. He also noted the uncertain future of the unemployment safety net.
At press time, Congress and President Trump had yet to agree on terms for extending payments to millions of people laid off during the pandemic.
Federal data back Dr. Salois’ observations. In the second quarter of 2020, the U.S. gross domestic product fell at an annual rate of 32.9% from a year earlier, according to a July 30 announcement from the Bureau of Economic Analysis.
In addition to saving money, Dr. Salois recommends that practice owners explore ways to make curbside care more efficient, integrate telemedicine into their business strategy, and increase income through telemedicine.
“The need for these types of approaches isn’t going away,” he said.
If anything, they will become more important at least into early 2021 but likely beyond, he said.
Potentially tens of millions of pet owners are already unemployed, and many may think they need to choose whether veterinary care is a priority. Dr. Salois recommends having conversations with pet owners about payment plans, credit financing options, and pet insurance.
This summer, the AVMA had several surveys out to recent graduates of veterinary colleges, practice owners, and veterinarians in general. Dr. Salois plans to share insights once his team has time to analyze the survey results, including through the AVMA Economic Summit, which will be presented online Oct. 26-28.