Summary of the February 2009 AAHA Economic Impact Survey
The recession has affected veterinary practice revenues in the last half of 2008, but our sample estimates that this trend will not be as negative in the first half of 2009. For the last six months of 2008, half (50%) of the respondents reported that revenues were lower than during the first half of 2008, while less than a third (31%) saw an increase in revenues. Coincidentally, the average decrease in revenues was the same size as the average increase (9%), but unfortunately many more veterinarians reported decreases than increases. There were statistically significant differences in revenue declines across FTE categories. Of the practices that experienced decreases in revenue, the smallest practices (1.0 FTE) experienced greater decreases (12%) than did other practices. These data appear to be fairly accurate, with nearly nine out of ten (88%) veterinarians basing their responses on actual practice data instead of ‘gut feel.’
Looking forward, the expectations are not as bleak; About a third (35%) of the practices expect to see decreases in revenue for the first half of 2009 compared to 50% who experienced a revenue decline in the last half of 2008; 27% of the practices expect to see revenue increases compared with 31% who saw an actual increase in the last half of 2008. The largest percentage of practices (38%) expects to see no change in revenues. As before, the estimated average increase is coincidentally the same size as the estimated average decrease (8%). However, the accuracy of these more optimistic forecasts is questionable given that in our earlier study, only 16% of the practices expected to see revenue decreases in the last half of 2008 when in fact, revenues declined in half of the practices.
In the comment section of the survey, veterinarians mentioned a variety of adjustments they are making to cope with these difficult economic times. Some have implemented hiring freezes or reduced employee benefits, and some have trimmed staff. Practices appear to be adopting more divergent strategies concerning other aspects of the practice. Some have reduced advertising expenditures, while others are increasing marketing efforts, perhaps in media they believe are more cost effective, such as online marketing or communications with existing clients. Some practices have reduced or eliminated discounts, or even raised prices, in order to boost revenue, and they have become more diligent about collecting balances due. Other practices are becoming more flexible in billing, perhaps recognizing the financial difficulties facing their clients. The divergence in strategies may well reflect the conditions of the specific local markets that different veterinarians face.
Rocky Mountain Market Research, Inc.