Market Opportunities for High Volume, Low Cost Veterinary Care

Michael Dicks, MS, PhD, chief economic adviser for VSOP Solutions-Calico, discusses growth opportunities for independent veterinary practices, in this video, filmed at the 2018 NY Vet conference in New York City.

Michael Dicks, MS, PhD: There are 2 general business models that are available, and almost every business does 1 or the other. It’s not good or bad, it’s just a different way of doing business. One, as I use the example of, I’m selling Mercedes Benz, right, so I’m going to sell very few Mercedes, but I’m going to sell at a very high profit, each one. On the other hand, I could be a used car salesmen, and I’m not going to get a very high mark up on a used car, so I’ve got to sell lots of them. On one hand, I’m looking at profitability, I’m trying to maintain as high a profit as I can, and on the other hand I’m using more of a turns model. I’m trying to get high volume, low price, and veterinarians can do that same thing.

Predominantly today, the business model is to focus on profitability and we have priced ourselves into such a situation where most of our clients are above median household income. There’s this enormous market potential of pet owners who have less than median household income. So, the question is 'how do we provide the care those pets need at a low cost, so that it’s affordable and doable for them?' It’s the high growth area of veterinary medicine, and there’s lots of companies that are trying to get into that space. The nice thing is, if you’re a veterinary business and you have a practice someplace, you’re probably focused on profitability, and you’re probably 80-90% of your clients are in that high end, but that doesn’t mean that you want to try and lower your price in that practice to get the lower income. What you need to do is invest in some satellite practice, maybe 1 or 2 days a week, that provides that service for some of the lower income people. That market is there, and if you don’t take it, sooner or later somebody's going to come in and grab that market.