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The softening in revenue growth continues in November, with VHMA practice growth at 4.5% and non-VHMA practice growth at 3.1% for an overall average of 3.4% from November 2021 to November 2022 and a 12-month average change of 6.1% for VHMA practices. The number of workdays in November 2022 and November 2021 was the same.

Revenue per unique patient in VHMA practices increased by 8.5% in November 2022 compared to the same month in 2021; however, patient visit numbers actually declined by 3.5%. The increase in revenue per unique patient is most likely due primarily to fee increases with some degree of greater acceptance of medical recommendations by pet owners. New client numbers continue to decline. One thing to remember is that most of the data captured here is from “traditional” veterinary hospital models; it does not include data from alternate care models such as mobile vaccine clinics, pop-up clinics seen in pet stores or other retail locations, and the newer de novo practice types. We don’t know if the decline seen here is across all practice types or if there is some movement of pet owners from more traditional to alternate care providers of veterinary services.

The current growth continues to be respectable, although not as high as some practices have become accustomed to. However, as we have noted several times previously, growth may not be as easy to obtain as we move forward in a very uncertain economy and a difficult hiring market. Pet owners may also not be as forgiving of poor service and higher prices when they once again have the ability to switch practices more easily. Practices will need to focus more on creating an environment that is attractive to both employees and clients and on building/maintaining the structure and processes necessary to keep a practice running smoothly.

A natural topic to discuss as we get close to the end of the year is strategic planning for next year. Large companies assume that strategic planning is a necessity and make time for it, but smaller companies (including veterinary practices) don’t often appreciate the need to focus both on short-term and long-term planning. When times were good and running a practice was easier, owners and managers could skip the planning process, and the practice still did well. However, this process is critical to success in this new environment.

Everyone in the practice needs to understand what the ultimate goal of the practice is and how the practice wants to achieve these goals. For most practices, the goal is some version of “to provide great pet care and great client service.” But what does that mean in day-to-day practical terms? And what precisely does the practice have to do to achieve it? It is a rare practice where everyone can articulate the answers to these questions easily.

A formal strategic planning process has many benefits, including:

• Dedicated time devoted to the process
• Analysis of trends impacting the profession and the consequent risks and opportunities for the practice
• Identification of the strengths and weaknesses of the practice and what truly makes this practice different
• New insights/ways of thinking about problems/opportunities
• Clear definition of future goals of the practice
• Development of specific plans to achieve goals-forced choices
• Translation of strategic planning into financial projections
• Increased ability to make continuous improvements and anticipate problems
• More confidence in decision making
• Buy-in from participants and the practice team

The process must lead to an identification of the problems and opportunities facing the practice, a definition of the critical success factors and changes that the practice must focus on, and specific action plans. Another way to think of it is to define “where does the practice want to be in the future,” “where is it now,” and “how does it get from A to B.” There are many helpful tools, such as a SWOT analysis and a budget, that help with the strategic planning process, but they aren’t the same as the planning process and don’t replace it.

One of the things successful practices do is build-in planning time each year. Ideally, this will be a strategic retreat away from the practice and moderated by an outside party. The retreat will last two to three days and include all key employees in the practice. Action plans will be developed with specific tasks assigned to specific individuals with specific due dates. Follow-up is essential to ensure accountability and real change in the practice. The use of an outside facilitator can help a practice that isn’t used to this kind of planning make real progress and can also help practice with more experience in this area break through to new ideas. The outside facilitator can also keep the sessions from getting derailed by non-relevant ideas or too strong personalities.

The SWOT (strengths, weaknesses, opportunities, threats) analysis is not a new idea but remains an excellent way to identify areas needing change in a veterinary practice. The real power isn’t just in listing out characteristics of each category but in using this process to generate concrete ideas and specific action plans. Areas to consider in each of the above categories include medical and surgical services, client service, changes in what pet owners want, other trends impacting the profession, and specifics about the HR, marketing, finance, operations, facilities, and general management aspects of the practice. Once these strengths, weaknesses, opportunities, and threats have been identified, they can be prioritized and action items determined in order to preserve the things the practice is doing well and improve in the areas that need change.

A typical agenda for a strategic planning meeting will include:

• Introduction
  • Why are we doing this?
  • Ground rules
• Current understanding of practice mission and goals
• SWOT analysis
• Writing or revision of mission statement
• One-year action plan
  • Goals
  • Steps needed to accomplish goals—assignment of responsibilities and due dates
  • Desired outcome
  • How will the outcome be measured?
  • When will the outcome be measured?
• Five-year plan
  • Goals
  • Steps needed to accomplish goals—assignment of responsibilities and due dates
  • Desired outcome
  • How will the outcome be measured?
  • When will the outcome be measured?
• Consolidation of the action plan
• Preliminary budget review

After the initial meeting, some research may be necessary to determine how to achieve these goals, and a budget will need to be put together. Then, a second meeting (shorter, in-house) will be necessary to further prioritize goals and revise action plans based on the research and budget results. Regular meetings after that will be necessary to keep the changes on track.

Ideally, you will have started your strategic planning process already, but it’s never too late if you haven’t!

I hope everyone has a wonderful holiday season and a great start to 2023!

➤ Download Insiders' Insights - KPI, December 2022 Report

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Data review and commentary is provided by Karen E. Felsted, CPA, MS, DVM, CVPM, CVA of PantheraT Veterinary Management Consulting, www.PantheraT.com.