Changes on the horizon

On winding roads amid rolling mountains and lush evergreens, she feels a bit like her idol James Herriot. Grants Pass, Ore., is as close to Yorkshire Dales as an associate veterinarian can get these days in a profession rushing headlong into the new century. Despite a desire for thoroughly modern practice management, she feels closest to what brought her into veterinary medicine when she's responding to an emergency as Herriot always did, out on a night call driving these roads in her powder-blue mini-van, on her way to pull a calf from the womb. But make no mistake; Dr. Elizabeth Kraft is a practitioner looking forward.

She's a recent graduate. She takes business classes at the local community college. She wants to own a practice someday, and when she does, she intends to run it as "a business, not a charity." She wants to practice high-quality medicine, but she says she won't be afraid to refer clients to specialists.

What waits around the bend for all the Elizabeth Krafts out there? VeterinaryEconomics put the question to a range of practitioners and consultants in companion animal, equine, and large animal medicine. Their predictions for the next five years vary as much as their individual expertise and experience. But they do agree there are trends already at work driving the profession forward.

Bigger practices dot the landscape

Digital radiology has created a sweeping change in practitioners' diagnostic abilities. And it has also set off dramatic changes in how equine practices will be organized five years from now, says Dr. Andrew Clark, MBA, CEO of 130-year-old Hagyard Equine Medical Institute in Lexington, Ky. The problem: Digital radiology is a $100,000 purchase. Not every practice can afford it. "Yet clients demand it," says Dr. Clark. "Small equine practices will have to find a way to get access, or they'll lose those clients to the bigger practices."

Will there be enough doctors?

"Across the profession, the cost of technology is pushing practices to merge or collaborate," says Dr. David Horn, an independent food animal consultant in Greenwich, N.Y. "And it hasn't been a welcome change. Fifty years or so ago the admissions committees in veterinary schools somehow selected people who wanted to be individuals—and who felt uncomfortable talking about money. It was like creating the elements for a perfect storm."

Those particular elements generate the same stormy relationships in companion animal medicine, says Veterinary Economics Editorial Advisory Board member Dr. Karen Felsted, CPA, MS, CVPM. She's often asked to picture the future of veterinary practice in her think-tank role at Brakke Consulting Inc. in Dallas. As a former companion animal practitioner, she understands that what looks smooth on paper may be full of potholes if you try to drive it.

"Mergers get lots of press as the greatest solution for veterinary practices," she says. "And, theoretically, they're great. The problem is implementing the theory.

"If you're going to enjoy all the efficiencies of a merger, you need to work under the same roof," she says. "That arrangement only works if you and your merging partner share similar business and medical philosophies. That's hard enough to achieve when a long-time associate buys in. A merger presents far more difficulties.

"Veterinarians, as a whole, are fairly independent. We tend to have minds of our own," Dr. Felsted says.

Still, despite the challenges, practices are getting larger, she says. The AVMA "Economic Report on Veterinarians and Veterinary Practices" shows fewer one-and two-doctor practices and more three-and four-doctor practices. "It's a slow shift, but it's there," she says.

"The Gender Shift," a study conducted by DVM Newsmagazine in 2004, confirms that practices with about three full-time-equivalent veterinarians have become the average. The study reports an average support staff of eight.

With that shift also comes a new way of running things, says Dr. Clark. "The new practice doesn't look like the old just with more people," he explains. "We run things differently because of the economies of scale. I'm a CEO. We have a human resources person, a public relations person, an events coordinator, and a director of operations. In a smaller practice, the veterinarian shoulders all these responsibilities. In larger practices, we can put a management team together and keep veterinarians doing the things that require a veterinary license. The average veterinarian should be billing $300 an hour. It costs a lot less to pay an events coordinator."

Dr. Andy Clark, mba

So does this mean smaller practice owners won't be able to compete?

Bigger isn't always better

Smaller practice owners will succeed—as long as they know their limitations. "A solo practitioner can't be everything to everyone," says Dr. Dennis Cloud, an editorial advisory board member and owner of Cloud Veterinary Center in St. Louis. "A six-doctor practice can afford ultrasound. If you're a one-doctor practice, you have a radiologist come in and provide this service," he says.

Larger practices enjoy greater efficiencies and resources, and they can support longer hours and larger teams, ultimately minimizing wait times, says Dr. Cloud. Yet they're at a disadvantage when it comes to one-to-one relationships between veterinarians and people. The trick for the larger practices of the future will be to balance the standard of care with the warm communication clients love.

Dr. Dennis Cloud

"If clients had their choice, they'd see one doctor all the time," says Dr. Cloud. "That's tougher to do in a big practice—but we need to start thinking about how to manage it."

The patient comes first

Dr. Cloud thinks the shift to wellness-focused care will continue to shape the future. "Right now, services that relate to wellness account for about 40 percent of our income," he says. "What is wellness going to be in the future? How easy will it be to expand from a vaccine-dominated wellness to other concepts of wellness?"

Dr. Cloud just hosted a four-hour dinner session with his staff to talk about improving nonvaccination elements of wellness practice. His message: "Everything we're doing now, we need to learn to do better. Vaccinations have been the anchor, but now we need to get better at nutrition. We need to get better at weight control. We need to get better at promoting general health."

Dr. Karen Felsted, cpa, ms, cvpm

And, says Dr. Felsted, practitioners will need to match their level of service to the fees they charge. Her Brakke Consulting colleague Roger Cummings, CVPM, agrees.

Is price resistance around the bend?

For more than two decades, consultants have preached raising fees, says Cummings, an editorial advisory board member. Statistics suggest the message has gotten through—partly anyway. "Between 1998 and 2003," Cummings says, "veterinarians' personal earnings increased 41 percent on average. A significant portion of this earnings increase is attributed to fee increases."

Roger Cummings, cvpm

The problem: Veterinarians, according to the results of the 2004 AVMA-Pfizer Business Practices Study, did precious little else to raise income. For example, most didn't take steps to manage inventories, reduce expenses, offer new services, train staff members, expand staff members, attend management seminars, increase marketing, employ a practice management consultant, charge by the hour, or charge for phone consultations. Ninety-five percent did report raising fees.

Cummings thinks this is a recipe for trouble: You can't raise fees without providing increased value for services, he says. You can argue until you're blue in the face about the increased cost of technology, education, facilities, staff, and so on, he warns, but if clients don't perceive that you increased value, higher fees will eventually hit a ceiling. The rule is simple, he says: "Savvy pet owners will pay what they perceive a product or service is worth. If they don't think they're getting a good value at your practice, they'll go elsewhere."

Becoming problem solvers

Dr. Felsted agrees. She says, "Think about this realistically. If a household is earning $45,000 a year, is a $3,000 veterinary bill realistic? We'd be foolish to think there won't be price resistance—no matter how much clients care for their pets or appreciate your services."

Dr. Felsted is quick to say she isn't advocating lower-quality medicine. She just wants veterinarians to discuss price resistance before it hits full force. (See "Raising Fees Only Takes You so Far" for more.)

Service: The next frontier

Competition is another factor driving a higher level of service. "Fifty years ago there were a few excellent equine doctors, and they had a huge advantage in the market," Dr. Clark says. "Today, excellent medical care has stopped being an advantage. It's an expectation. The next level is customer service."

Of course, great service starts with communication. And tapping technology helps you in this area as much as it does on the medical side. For example, Dr. Clark says, an equine practitioner equipped with an off-the-rack cell phone can now communicate directly with the office team to generate contemporaneous bills and reminders.

Dr. Horn agrees that improving doctors' communication skills will be key to success in food animal practice, too. No matter what consolidation occurs in the next five years, people will still be on the ground taking care of animals. Your ability to communicate effectively with these caregivers will raise the value of your services, he says. And he isn't just using the word "communicating" figuratively. He thinks learning Spanish will be essential as veterinarians increase the value of their services by offering personnel management and staff training.

"We can't wait for our roles to be defined," he says. "We need to create our own roles." He suggests leadership training for young veterinarians; exactly the track Dr. Kraft is following in Grants Pass. And her business courses teach a similar lesson. "We must take an active role managing and promoting our profit centers," she says. "Successful businesses do not happen by accident."

Women at the helm

One trend no one disputes is the overwhelming increase in women entering practice. When current veterinary school students reach the workforce across the next five years, the proportion of women will rise dramatically. So what does that mean?

"Men and women do manage things differently," says Dr. Felsted. "Without getting into pop psychology, I wonder whether we'll see more collaboration as more women own and manage practices. You usually think of women as working better in groups, being more open to listening to colleagues' ideas, and finding solutions everybody's happy with. Of course, those traits don't apply to every woman. But maybe we'll see more practices with multiple owners because women's management styles do tend to be different." E

Dr. Kraft sees differences but she isn't as confident they'll benefit practice incomes. "Women will need to be careful not to be too emotional," she says. "I can see a potential train wreck in the future if we don't empower ourselves to manage for profit. I'm afraid veterinary medicine will take a step backward financially, as care takes a step forward."

Dr. Elizabeth Kraft

"The Gender Shift," suggests eight of 10 men believe understanding how the business side of practice works is very important compared to just 53 percent of women respondents. Interestingly, when asked what activity they enjoy least about their work, more than half the respondents said management; gender was no factor in the finding.

Dr. Kraft thinks women managers will select more compassionate team members. "But they'll need to be sure they also select for competency," she cautions. "I think women tend to be more aware of clients' educational needs, too."

Not so fast, says Dr. Carin Smith, owner of Smith Veterinary Consulting in Peshastin, Wash. She has experience in large animal, small animal, and mixed animal practice and has written extensively on gender issues in veterinary medicine. And she says many suppositions about how women will change the veterinary workforce are untested. Asked in "The Gender Shift," study which activities they enjoy most about their work, more women, 48 percent, chose the workup, compared to 29 percent of male respondents. And more men, 47 percent, chose talking to clients, compared to 29 percent of female respondents. The notion that women are unwilling to work long ownership hours is also not supported by survey results.

Dr. Carin Smith

"More women than men do work part time, but it's important to break down those women into owners and associates," Dr. Smith says. "When you see the 'average number of hours worked by men and women,' then the average will look less for women. But among full-time owners, the data I've seen show that women and men work virtually the same number of hours."

Another notion is that women organize their practices and working hours to be more lifestyle friendly. "I don't think men are necessarily less lifestyle friendly than women are," says Dr. Smith. "Women simply do more house and home work than do men, whether or not they have children. Thus they have fewer hours in the day for paid work, or for leisure activities for that matter."

Not more women, but fewer men

Dr. Smith says she hasn't seen research supporting the notion that women will organize practices differently. "No data show that more men than women are solo practitioners," she says. And she challenges the popular assumption that you can track the increase of women to just an increase in interest in veterinary medicine among women. Instead, enrollment numbers show that men turned away from the profession, creating openings that women filled.

She points out that the dramatic decrease in male veterinary students corresponds with "a decreased demand for large animal veterinarians and a decrease in real income." Dr. Smith cites a 1990 study of inroads by women into several professions, which showed that although equal opportunity or increased interest by women caused their entry into the entire workforce, they didn't enter all fields in equal numbers. The study suggested important factors affecting higher percentages of women in some fields may be a decline in job prestige and real earnings, leading to fewer men in the field. She theorizes that when the economics of veterinary medicine improve, men will return to seats in veterinary schools.

Long hours no more

Dr. Smith also predicts you'll see more relief veterinarians, part-time veterinarians, and veterinarians who make house calls helping employers fill needs. And these solutions provide flexible days or hours for veterinarians to better manage their careers and lives.

The growing number of women in veterinary practice will naturally require organizational changes across the next five years, says Dr. Horn. "It makes sense to believe that some women practitioners will interrupt their careers to have children, and practices need to reorganize to accommodate that reality," he says. "Owners need to think about family benefits, more time off, adjusting pay for production, and how to employ more part-time workers."

The traditional bovine operation demanding 55 to 60 hours a week across six days "just won't be sustainable with the current generation of graduates," he says. "And that's not just a gender issue. None of today's new graduates are interested in that kind of schedule."

Only time will tell

That's partly true, says Dr. Kraft. "It's not so much that we don't want to work long hours. We just don't want to work them for slave wages," she says. "While we love animals and have dedicated our lives to improving their lives, we associates also need to pay our bills, feed our families, save for buying a clinic someday, and plan for retirement. We expect to be paid a fair wage for our heartfelt endeavors; our professional degrees should provide us with a professional salary."

After six years in practice, Dr. Kraft sometimes fights burnout on those night calls. Then she'll round a bend and regain her passion. Other nights, her mind swims with the material she's learning in her business courses. Whatever lies ahead in the next five years, she'll be ready. This she knows for sure: "To become the successful veterinarians of the future, we need to become excellent business people now."

The bottom line

No one can say for certain what the next five years hold. Yet there are undeniable forces already pushing and pulling at the profession:

• more women in the workforce
• more technology, helping to improve client communication and working efficiencies, and driving mergers and collaborations
• more educated clients who demand a higher level of service.

Veterinary Economics Special Assignments Editor John Lofflin is a freelance writer based in Kansas City, Mo. Send your questions or comments to ve@advanstar.com