AAHA State of the Industry address gives reason for optimism
Between 2011 and 2012, a select group of animal hospitals experienced a level of growth that greatly outpaced that of the overall economy. They were able to grow their revenue and increase patient visits even if their sizes or locations weren’t perfectly suited for growth.
So what was their secret, and what separated them from other hospitals that actually lost revenue over the last year?
According to Michael Cavanaugh, DVM, DABVP, executive director and chief executive officer of AAHA, these “Growers” took control of their growth and excelled in creating client-centric practices that also focused heavily on preventive care.
During his AAHA State of the Industry address at the 2013 AAHA Yearly Conference, Cavanaugh discussed why Growers are thriving compared to those on the other end of the spectrum, the "Decliners," and shared his thoughts on how more hospitals can replicate the successful characteristics of Growers.
Economic outlook on the upswing
Closely watched economic indicators such as the Gross Domestic Product, unemployment rate, and consumer spending are slowly but steadily returning to pre-recession levels, Cavanaugh said. Despite the improving numbers, he said experts are predicting a slow and challenging recovery.
When it comes to animal hospitals, Cavanaugh said both patient visits and revenue growth are also trending upward and are now approaching 2008 levels. According to him, the average growth in hospital revenue from 2011 to 2012 was 5.6 percent.
While the 5.6 percent growth is encouraging, Cavanaugh said it is important to look at the hospitals above and below the average - the Growers and Decliners - to discover how more hospitals can transition to the Growers category.
Growers vs. Decliners
Growers were the 25 percent of animal hospitals that grew their revenue by at least 10 percent. Their gains were achieved whether the hospitals were large or small, and regardless of whether they are located in affluent areas or cash-strapped regions.
“Interestingly, there are serious Growers even in some of the most economically depressed areas in the country,” he said.
The disparity in revenue between Growers and Decliners, those who experienced a drop in year-over-year revenue, indicates that Growers “believe their growth is independent of the economy,” according to Cavanaugh.
On top of their economically independent views, Growers tend to focus much of their attention on strengthening their client relationships. In fact, practices that engage their clients are more than twice as likely to be Growers compared to Decliners, Cavanaugh said.
“It turns out that as you dig into this data, the single most important factor differentiating the Growers from the Decliners is the focus on the client relationship - the client centricity as we’re calling it,” Cavanaugh said. “This makes sense if you think about it - it is the client that makes the decision to bring the pet in, and it is the client that has to pay the bill, and it is the client that has to comply with the recommendations.”
With client engagement firmly in mind, Cavanaugh outlined five major factors that are critical for growth:
- Focusing on your clients by operating a “client-centered practice”
- Driving preventive care
- Leveraging technology to embed the client focus into driving preventive care
- Setting goals and measuring your business
- Communicating the value of higher standards
Cavanaugh mentioned important business aspects such as forward booking, client reminders, and additional client visits stemming from preventive care visits as examples of areas where there is much room for improvement, and said even modest improvements in those three areas combined can produce revenue gains for the veterinary industry in excess of $1 billion.
"This is powerful data that every veterinary professional can use to help their practice thrive," Cavanaugh said. "With tools like those from AAHA and our friends involved in the Partners for Healthy Pets coalition, every practice can work to improve communication and client engagement."
Challenging hospitals to work toward growth in 2013
As his presentation drew to an end, Cavanaugh challenged animal hospitals to take charge of their growth in 2013, which he said ultimately helps the profession grow.
"Consider making a conscious effort to take steps this year to accelerate your hospital's growth," he said. "It is growth that you drive in your hospital that enables our profession and industry to grow. If AAHA can help, please reach out to us. We've got a great team and we're eager to help you be successful."