Keeping quality employees on staff is an essential part of practice productivity, said Frederic Ouedraogo, PhD, an AVMA senior economist and associate director in the Veterinary Economics Division.
Looking at employee turnover rates by practice in 2022, companion animal exclusive (19.4%) had the highest rate, followed by mixed animal (16.7%), then companion animal predominant (16.4%), equine (10.3%), and food animal exclusive (7.1%)
To help mitigate employee attrition and increase retention, Dr. Ouedraogo suggested employers keep wages competitive while also accounting for inflation. He gave the presentation “Veterinary Businesses: The Market for Veterinary Services” at the annual AVMA Veterinary Business and Economic Forum, held virtually October 24-25.
These and other highlights Dr. Ouedraogo shared at the summit are based on data from the U.S. Census Bureau and the AVMA’s 2023 Practice Owners Survey.
Wage increases and benefits
Over 760 veterinary practice owners responded to the survey. About three-fourths of survey respondents were owners of companion animal exclusive (45%) and companion animal predominant (28%) practices, followed by mixed animal practices (14%); equine practices (9%); food animal exclusive practices (3%); and the remainder specialty or exotic animal practices.
Most surveyed veterinary practices (86%) indicated they had raised wages within the past year, while 8% said they had never increased wages, and 6% reported increasing wages one to two years prior. Most practices (43.0%) raised wages 4% to 6%. Almost a quarter (23.7%) said they raised wages 1% to 3%, 19.2% of practices raised wages 7% to 9%, and 14.1% of practices raised wages 10% or higher.
“It is important to keep in mind the context in which wages were raised,” Dr. Ouedraogo said, noting that the nation’s 2022 annual inflation rate had climbed to 6.5%.
He also suggested awarding bonuses and customizing benefits to meet individual needs and preferences.
“Also consider adopting a mission statement. Only 42% of surveyed practices indicated having a mission statement and that it’s communicated to employees,” he said, adding that 84% of practices indicated not having a wellness plan in place, which could also help support employees.
Veterinary practice revenues and staffing rates
Average gross revenue reported respondents per practice type in 2022 is as follows:
- $1.72 million for companion animal exclusive
- $1.45 million for companion animal predominant
- $1.54 million for mixed animal
- $883,159 for equine
- $603,448 for food animal exclusive
In 2023, the average practice workforce ranged between two and 14 employees with the following breakdowns by practice type:
- Companion exclusive: 2.9 veterinarians, 6.5 veterinary technicians and assistants, and 4.6 nonmedical staff
- Companion animal predominant: 2.7 veterinarians, 5.7 veterinary technicians and assistants, and 4.1 non-medical staff
- Mixed animal: 2.8 veterinarians, 3.9 veterinary technicians and assistants, and 3.6 nonmedical staff
- Equine: 2.1 veterinarians, 2.9 veterinary technicians and assistants, and 1.5 nonmedical staff
- Food animal exclusive: 1.6 veterinarians
When determining a practice’s efficiency, he compares inputs such as labor and capital with outputs such as gross revenue, number of patients seen per year, and number of appointment slots per full-time equivalent (FTE) veterinarians per year, he explained.
A study Dr. Ouedraogo coauthored that appeared in the September 2023 issue of JAVMA, “Increased efficiency could lessen the need for more staff in companion practice,” showed that 58% of companion animal practices could reach their current production levels with 17% to 34% less resources.
This can be done by optimizing revenue-generating space, implementing automated processes, and aligning tasks to individuals’ skills, experience, and abilities. Remodeling or redesigning a practice space, training and mentoring staff members, and adopting new technologies to boost staff productivity are some examples he gave. Low-hanging fruit includes technologies such as inventory management, online appointment scheduling, and telehealth, all of which are still under 50% adoption rate, according to survey results.
Making these changes could help alleviate the pressure on current resources, enhance profitability, and sustain growth, Dr. Ouedraogo said.
More practices with more employees
Dr. Ouedraogo said one aspect of industry growth is increasing the number of suppliers in the market. The number of U.S. veterinary practices increased by 1% every year between 2009-21, adding an average of more than 320 new practices annually over a 12-year period.
On a closer examination of the new types of veterinary practices from 2009-21, the data show that the number of S corporations and C corporations in the profession increased from 53% to 61.1% for the former and 16% to 18.3% for the latter.
The Internal Revenue Service defines an S corporation as a small business with fewer than 100 shareholders that is permitted under the tax code to pass its taxable income, credits, deductions, and losses directly to its shareholders. A C corporation is like an S corporation but legally separates owners’ or shareholders’ assets and income from those of the corporation and limits the liability of investors and firm owners.
During that 12-year period, veterinary practices with 20 or more employees saw the highest growth rate, from 11.9% to 17.7%. The number of veterinary practices with fewer than 20 employees either decreased—one- to four-employee practices going down from 29.8% to 29.4% and five- to nine- employee practices going down from 29.6% to 23.3%—or slightly increased—10- to 19-employee practices going up from 28.7% to 29.7%.
“As you can see, the number of veterinary practices has grown steadily,” Dr. Ouedraogo said.