Practices weather effects of sagging economy

The down economy of late appears to have run a hit-or-miss course among practices nationwide.

Of concern to veterinarians in some regions is whether high unemployment levels mixed with the economic downturn of the better part of two years have cut into the discretionary incomes of pet owners.

The number of jobless Americans receiving benefits hit its highest point in more than 20 years in June - an estimated 3.8 million people are unemployed, according to a U.S. Labor Department report released in early July.

At the same time, U.S. Treasury Secretary John Snow told USA Today in July he expects U.S. growth to top 3 percent by year end, due to recent tax cuts combined with low interest rates.

Dr. Merry Crimi

Meanwhile, practitioners in isolated pockets of the country have certainly felt the pinch from the staggering number of jobless clientele. Other practices have built-in buffers to rise above the crunch, while still others appear resilient to any economic slide.

Waiting for rebound

Dr. Nan Boss of the greater Milwaukee area can't wait much longer for Wisconsin's economy to turn around - she's moving to a newly constructed hospital in September.

"I have this huge new mortgage. Now I'm a scared rabbit," says Boss.

A practice owner for 10 years, Boss says she is down 100 invoices per month. One reason for the fall out, she suggests, may be a higher-than-average fee hike from a year prior, but she refuses to cave to pressure. "I think I'm better off sitting tight and waiting for the economy to rebound," she says.

War hits home

For Dr. Merry Crimi near Portland, Ore., the recession really hit home as Operation Iraqi Freedom broke out in the Middle East.

"In March and April, the phone simply stopped ringing. Like many people, pet owners were glued to CNN, affected already by an economic downturn that started last year and very nervous about spending," Crimi, the former AAHA president, says.

Dr. Eddie Garcia

Clients would call on the clinic for emergencies but elective and optional procedures were delayed.

Crimi was determined she wouldn't allow the circumstances of war or a flat economy hamper the staff environment. "The first thing I had to do as the practice owner was bolster my staff's confidence that this was temporary. There were legitimate reasons why our clients were choosing not to get pet care at this time," she says.

Crimi, who says her practice is now rebounding, also instituted certain cost containments, including elimination of unnecessary overtime and controlled inventory costs.

Already depressed

In Buffalo, part of the "rust belt" where the steel industry once flourished, Dr. Jay Geasling has practiced in a downtrodden economy for 30 years, but this time the damage appears greater.

"I went out to lunch the other day with a couple of practitioners and everyone was hanging their head a little bit and commiserating that it was slower than usual in June," he notes.

He works harder during such gloomy climates to remind his staff to focus on quality care. "Our staff needs to make sure we are doing the very best job we can with each and every pet that's presented to us. In slow times, it really allows us to do a better job with each pet."

Recession-proof

Seemingly resilient to the slumping economy is Dr. Cynthia Bowlin's all-feline practice in Columbus, Ohio. "If there's an economic slump, discretionary income is usually reduced. But in my experience, we've not experienced where (clients) have been hesitant to spend whatever (necessary) to solve that problem."

Bowlin attributes her clients' willingness to spend to the type of demographic she serves - clientele who view pets as family members. "Our clientele are usually very conscientious about the importance of preventive care."

Another survivor, Dr. Eddie Garcia, who's spent his 35-year career in an affluent area of Tampa, says while the number of transactions is slightly down, the cost of the average transaction continues to go up. "Economic slump? Not here," says Garcia, who employs twice-yearly fee increases. "Every time there's a recession, the low-end fee practices are the ones who have cultivated the price sensitive client. I have generated or formed a practice based on quality of medicine and service, not low fees. Therefore, when the economy's a little bad, my clients are the last to be affected."

On the other coast, in Orange County, Calif., Dr. George Makar, owner of five practices, says all have remained strong financially. "We continued to grow even during the war," he says.

"We get more people saying I've been laid off. But they come up with the money somehow," Makar says.

Basic care unaffected

Despite the state of the economy, most veterinarians have observed clients' willingness to continue to heed yearly exams and preventive pet care.

At Bowlin's practice, if clients can't pay, they're presented with financial options such as Care Credit or payment methods that might help cover something that's unexpected. "If the client can't do it, we try to give them alternatives so we can still help their pet."

Who survives

In economic down times, Louise Dunn, veterinary consultant, says it's the practices that focus on good medicine and good customer service that seem to thrive. "The practice team needs to understand their client and some business basics. If you believe that Eskimos need ice, you can sell it."

Key to survival, adds Crimi of Portland, is a network of veterinary allies locally to weather financial storms. "It was very helpful to network with people who consider leaders in my veterinary community and really get the same kind of feedback (about the economy)."

Broad perspective

Veterinary consultants like Dr. Jim Guenther of Asheville, N.C., suggest that overall, the economy hasn't hit practices as hard as expected because clients have learned to adjust.

"Theoretically the economy should be an issue, but for 18 months to two years people's incomes have been compromised," he says. "So they've learned to adjust and are probably more willing to spend some dollars."

However, Guenther views the recession as a "wake-up call" for practitioners. He advises unprepared practitioners to always be thinking about savings, setting up reserves, especially retirement-related reserves, and looking closer at purchases.