Included in the graphic below are the July, 2021 VetSuccess revenue metrics shown on the Insiders’ Insights KPI dashboard (https://www.vhma.org/resources/insider-insights) as well as placeholders for other related metrics that should also be reviewed regularly in order to get a full picture of what’s going on in a practice.
As we keep saying (!) it has been difficult over the last few months to get any useful info from revenue growth comparisons between 2020 and 2021 because the comparison was between the early months of the pandemic where revenue dropped dramatically for most practices and the same, but very busy months in 2021. However, this changed in June when comparisons became more meaningful and this month we have some additional information that also gives us a much better idea into what is going on.
There does seem to be a real slowing in revenue growth this month:
- Total growth in revenue was 5.8% in July, 2021 compared to July, 2020 while growth for the most recent twelve months compared to the prior twelve months was ~13%. 8% is a respectable growth rate but definitely less than the average for the prior year.
- Total growth in the number of patient visits in July, 2021 was 0.6% compared to about 5.6% for the prior year
- Total growth in new clients was a negative 9.3% in July, 2021 compared to about 6% in the previous year
This slow-down isn’t unexpected; the high levels of growth weren’t sustainable.
So what does this mean for practices going forward? We need to separate revenue growth from caseload growth to get the best insights into what may happen.
- A reduction in the revenue growth rate doesn’t mean a decline in growth--I don’t think most practices will lose the additional revenue they’ve gained; it’s just the future revenue won’t increase as much.
- So far, the lower revenue growth rates seen in this and other studies are still very positive and similar to historic growth rates.
- During the pandemic, most practices have seen higher revenue growth rates than caseload growth rates; both seem to be declining now.
- Obviously with caseload numbers dropping, that contributes to the decline in revenue growth.
- However, many practices appeared to be seeing a greater percentage of sick patients compared to wellness visits during the pandemic and that may be shifting back to more normal levels. Generally sick patient visits have a higher ATC so a shift back could contribute to a lower revenue growth rate.
- A reduction in caseload growth may be a good thing for many practices if it reduces the physical and mental demands on team members but the reduction may not be enough right now to reduce the challenges practices are seeing.
- Practices relying on the higher growth rates that came out of the pandemic to pay for new equipment or staff or support a new facility may have to shift focus and look for some other more typical ways to keep revenue up—better marketing, more client convenience, etc.
- A large number of practices saw many more new clients during the pandemic. This is partially due to some level of increased pet numbers but also due to clients jumping ship from “their” practice due to the difficulty in getting appointments. Note that there is a lot of debate about how many additional new pets were actually added to the system; time will tell on this. The artificially inflated new client numbers from practice-hoppers will come down and that may be what we are seeing in this month’s big decline in new clients and the reduced revenue/caseload growth numbers. Again, this means practices will need to focus on marketing, client convenience and client service to keep new clients coming in.
For many practices, worrying about being busy again isn’t a concern right now—they are still dealing with ongoing pandemic busyness—but the time will come. And, of course, the rapidly worsening COVID-19 situation isn’t helping anything—everyone’s tempers are fraying and planning is difficult because our crystal balls are getting cloudy again!
➤ Download Insiders' Insights - KPI, August 2021 Report
➤ VHMA Members can access the dashboard to drill down by region, species, and practice size filters, access the interactive KPI dashboard
Data review and commentary is provided by Karen E. Felsted, CPA, MS, DVM, CVPM, CVA of PantheraT Veterinary Management Consulting, www.PantheraT.com.