Despite a continued slowdown in the veterinary sector, vets are being urged to take advantage of the additional time they have to ensure their practices are in the best possible shape to take advantage of the upturn when it comes.
According to the Fort Dodge Index (FDI) – which analyses and benchmarks the performance of 250 practices across the UK – figures for the first quarter of 2009 confirm that the downturn which started to grip the sector in the last quarter of 2008 has continued with the only mitigating factor being a modest increase in average transaction value (the amount a client spends in a year).
Matthew Rowe, Companion Animal Marketing Manager at Fort Dodge, comments: “It’s been clear for some time that the veterinary sector is being hit by the double whammy of static growth and an increasingly competitive environment. The reduction in turnover being experienced by many practices is primarily down to current clients visiting less often and fewer new clients being attracted.
“Times are tough but we’ve all heard enough gloom and doom. In fact, there’s a major opportunity for practices which are prepared to face the challenge.
“As the FDI data shows, practices which embrace change by investing in new marketing ideas and enhanced practice communication and staff development are consistently more successful. We urge all practices to learn the lessons of the last 12 months and to prepare their practices for the more profitable future already being achieved by some.”
Key findings of the FDI for the first quarter of 2009 are:
- Turnover growth (derived from professional fees and drug sales) has decreased to 0.7 per cent from 1.1 per cent in March 2008 which, according to FDI analyst Alan Robinson, looks less optimistic for practices looking to achieve a 6-7 per cent annual growth rate to maintain growth above inflation.
- Turnover per vet is up 1 per cent partly due a slight reduction in overall vet numbers. The data shows that professional fees and vet generated turnover is up by 0.8 per cent and 2.5 per cent respectively, reflecting increased surgical consultations but slightly reduced surgical procedures. Nurse turnover is up by 1.7 per cent.
- Transaction volume growth (derived from active client and patient numbers and their frequency of visits to the practice) has decreased to -0.7 per cent from -0.3 per cent last year. The reduction in client numbers is due mainly to reduced numbers of new clients (-3 per cent) compared with -1.1 per cent this time last year. On a more positive note, client retention at +2.5 per cent helps to counteract this. It compares with a figure of 0.9 per cent last year.
- Total client growth reduced by -0.5 per cent this quarter and, when it comes to numbers of clients being lost by practices, Alan Robinson says it’s clear that ‘bonded’ clients (those with vaccinated animals) are more easily retained with only -0.2 per cent being lost. For non-bonded clients, the loss rate is higher at -0.7 per cent.
- The contribution of nurse consultations to practice turnover has increased slightly. They now make up 6.7 per cent of practice turnover, up 1.1 per cent on March 2008
- Average transaction value has shown a 10.7 per cent increase from £35.97 in March 2008 to £39.83 per visit in this quarter. Transaction value is generated by the prices charged for products and services and the number of products and services sold per transaction.
Alan Robinson said: “In the current climate, the only contributor to turnover growth in many practices seems to be a steady rise in the price of professional fees, consultations and surgery. These have continued to push up average transaction values (by 1.4 per cent) and client values (1.2 per cent) in this first quarter of 2009 despite reducing visit frequency. Drug related income increases seem to be driven by a small increase of POM mark-ups in many practices.
“But this alone will not sustain a successful business and, with transaction volumes still falling, the priority for practices is to maintain client footfall despite increasing competition and falling pet ownership. In today’s market, retaining clients is a cheaper and more effective way to maintain client and patient numbers so an emphasis on ‘bonding’ clients though preventative health care and heath maintenance programmes is key.
“We’re seeing a steady increase in the number of practices running these programmes but the percentage of pets involved is still woefully low so the message is that practices can and must do better.
“The good news is that there is a wealth of information out there to help practices get to grips with some tools and techniques to become more successful.”
A full breakdown of the data in the Fort Dodge Index is available at www.fortdodgeindex.co.uk or from Fort Dodge on 01489 781711.