Darwin was right

The next five years will be remembered by the survivors as a time of chaos; a time of reordered priorities and a time of major adjustment. I'm sure that Nostradamus said something or other about this event.

Open your eyes and look beyond your exam room. We have too many veterinary practices and too few clients. Practices have opened and unfortunately will continue to open without regard to local demographics. Consider yourself very fortunate to be down less than 5 percent of the transactions you had last year. This trend will continue.

We graduate just over 2,500 veterinarians each year, each averaging almost $100,000 in educational debt before they get their first paycheck.

The facts are that 29 states and the Commonwealth of Puerto Rico did not increase populations enough to support additional practice growth over the last five years. Most of low- growth states are located in the north and central United States. The only other low-growth areas with an ocean border were Louisiana (before Katrina), Mississippi, Alabama and New England states.

From 2000 to 2005, with a national average state population growth of 5.3 percent, the number of practicing veterinarians grew 12.9 percent, more than double. The growth generated another 66,000 households which would support 13 practices nationwide. We graduated 7,000 new veterinarians. Of course, only a third or about 5,000 went into private practice. That's just 100 per state. Except for those that replaced retiring veterinarians (which weren't many), all they did was lower the incomes of existing practices.

Yes, many veterinarians sold their practices and retired. Many closed their doors for lack of a buyer. However, nowhere except in some areas of southern California have I heard of a shortage of veterinarians. Seventy is the new 60, and it allows us to put off retirement and practice longer.

The next five years are projected no differently. For every two practitioners in 2000, we will have three in 2010, coinciding with only a 10 percent increase in pet ownership. As only 36 percent of the population seeks veterinary care, that equates to just under a 4 percent increase in patients.

As in world wars, victory brings unemployment. We have all but conquered the major viral threats. Devastating flea-borne diseases have succumbed to monthly treatments, devastating flea populations. We have been too good at our medicine. Today only 30 percent of patients are seen for illness or trauma. The rest are for wellness and prevention.

The facts are that fuel prices have devastated whatever savings our clients might have set aside. Literally tens of thousands of families are under eviction proceedings from their rented or foreclosed apartments or homes. The building trades are in a major slump as new housing construction drops to half of last year's numbers.

Thirty-six percent of 2006 Christmas shoppers surveyed said they will spend substantially less than in 2005. Credit card debt has never been higher and higher minimum payments are shrinking disposable income.

The Titanic was a certified disaster. The iceberg it hit was a standard model A1 iceberg. It was designed by nature to float and get in the way of things, and it performed exactly to specifications.

The Titanic, however, was under-equipped in the waterproofed compartment and lifeboat departments. Our practices certainly are approaching a titanic disaster in the next few years with our overbuilding and understaffed hospitals.

The Titanic disaster could have been prevented with a double hull and sufficient lifeboats. The demise of many of our colleagues' practices can still be prevented by charging appropriately higher fees to those clients able to afford them, which are necessary to sustain your practice.

How much can your clients afford? That's easy. They can afford to pay you an average transaction fee of 3.0-3.3 times their average household income in thousandths. The average practice, in my studies, is only getting 2.6 times their client's average household income (in thousanths). The difference per veterinarian is 5,000 transactions x (3.3 – 2.6) x Average Household Income in thousandths.

If your area (within five miles) has an average household income of $50,000, then the loss to your practice in gross income per full-time veterinarian is about 5,000(0.7)50=$175,000. As that number is incremental income in excess of current revenues (assuming you are able to pay your bills,) it is 80 percent profit, generating $140,000 to the bottom line, and saving your practice from disaster. Full details on how this works is available from my Web site at www.vethelp.us.

Fees based on the above produce more income per transaction, but will not avail when transactions shrink past your sinking point. Thinking may prevent sinking. You need at least 4,000 transactions per veterinarian to prosper. That is 1,000 over-the-counter and 3,000 client/pet transactions.

We need to question our national organizations and schools about the need for larger numbers of new veterinarians. Many universities closed their law and dental schools when they saw their graduates were having difficulty earning a living. Do we have too many veterinary colleges? Are the class sizes more than the country can handle? Does anyone care?

There is a responsibility on the part of our institutions to ensure that its graduates will be successful. Do we just build mountains of school debt for no societal reason?

Not everyone can be employed by industry or the government. When talking movies arrived, more than 20,000 piano players were unemployed overnight. Electricity put those who came to light the gas street lights every night out of business.

We certainly will not fall as they did, but how many practices around you are dropping from four associates to three, three to two, etc., and how many will close their doors for the lack of a buyer in 2007-08?

Solo practices are becoming an endangered species. Get a feasibility study performed before considering opening a practice in the near future. Darwin was right. Only the fittest survive. Don't guess about your future.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at P.O. Box 189, Hebron, KY 41048-0189; (800) 292-7995; vethelp@insightbb.com; Fax: (859) 534-5265.