Lower transactions put squeeze on 2009 income
If your 2009 financial numbers didn't look so good, you're not alone. The Veterinary Hospital Managers Association (VHMA) recently released its 2009 Practice Diagnostic Report, and although it contains a lot of gloom, there are also some glimmers of hope.
VHMA member hospitals reported that client appointments were down 10 percent from 2008 (see the chart below). Fortunately, the number of surgical and dental procedures per week held steady, despite fewer client visits.
While client visits and client transactions were down (7 percent fewer visits per client, 4 percent less per transaction, 6 percent less revenue per client), the number of clients seen by doctors leapt 18 percent. That translates to more clients spending less money.
Unfortunately, while client transactions fell, expenses continued to rise more than revenue. Practices reported a disappointing 4 percent drop in net income, thanks mostly to higher drug costs (2 percent rise) and wages (3.6 percent rise). The drug increase may be due to veterinarians dispensing more expensive drugs for chronic conditions, which are typically marked up less than more common, less expensive drugs.
VHMA spokesperson Darren Osborne suggests that practice owners and managers—many of whom have never faced a recession in their career—rein in inventory and maintenance costs, along with any other excess spending. "Good managers roll with the punches and produce a profit even in the face of all the hardship," Osborne says.