VHMA Insiders' Insights Commentary January 2025
Brittany Yost, CVPM, CVBL, CCFP
Senior Manager, Customer Implementation and Engagement
As we enter 2025, it's a great time to reflect on the trends, challenges, and opportunities that have shaped the veterinary industry over the past year. From slowing revenue growth to declines in patient visits, the data provides insights into the areas where practices need to focus their attention. Throughout the last year, we examined the Revenue, Patients, and Practice Health KPI metrics in depth each quarter. Now, let's take a step back and look at the broader picture to uncover the key takeaways.
Revenue Insights
The revenue dashboard shows that over the past 12 months, the percent change in revenue has consistently stayed positive, with only three months — March, June, and November — seeing small dips below zero. VHMA members experienced an average 12-month revenue change of 4.3%, compared to 4.0% among non-members. Revenue per patient has remained above zero every month in 2024, with a 12-month average growth of 5.8%.
A broader study involving 6,574 U.S.-based practices revealed similar trends. As we've highlighted throughout the year, price increases have been a key driver of revenue growth since late 2022. While pre-pandemic growth hovered near 7%, this year’s revenue growth has settled closer to 4%, reflecting the impact of declining active patient counts and fewer visits. One of the most notable trends is the growing gap between visits. Pet owners are waiting significantly longer to bring their pets in for care. Between July 2020 and July 2021, the average time between visits was 72.8 days. From July 2023 to July 2024, this figure has jumped to 112.3 days—a staggering 48% increase.
As patient visits continue to decline and the gap between visits widens, now is a crucial time for practices to revisit their pricing strategies to maintain profitability and client engagement.
Revisit Your Pricing Strategy
A common question among veterinarians and practice managers is, “How do we determine what to charge?” Two of the most widely used pricing strategies in veterinary medicine today are cost-plus models. Markup pricing involves multiplying the cost of a product or service by a set factor. For example, a 100% markup doubles the cost to reach the price. If a product costs $20, a 100% mark-up would result in a price of $40:
● Mark-up price = cost x (1 + Markup Percentage)
● Mark-up price = $20 X (1 + 100%)
● Mark-up price = $40
Margin pricing differs from markup as it focuses on setting a specific dollar or percentage amount for profit rather than adding a percentage to the cost. For example, if a product costs $50 and a 30% margin is desired, the selling price would be $71.43:
● Margin price = cost / (1 - desired profit margin)
● Margin price = 50 / (1- 30%)
● Margin price = $71.43
While markup and margin pricing are the most commonly used strategies in veterinary practices, they may not always be the most effective. Many practices adopt these methods because they are easy to implement. However, these strategies often overlook critical factors such as competitive pricing, overhead expenses, labor costs, and, most importantly, a practice’s unique customer value proposition, which can range from prioritizing affordable care to personalized care to cutting-edge care.
A value-based pricing model, though requiring more effort to implement, should be strongly considered in today's competitive market. This approach shifts the focus away from cost and, instead, looks at the value a practice delivers to its clients. It highlights the unique benefits and quality of services provided. For instance, practices focused on high-quality and expert care can justify premium pricing for advanced imaging by showcasing the skill and knowledge of their team and the improved outcomes these services can offer.
Pricing strategies should never remain stagnant but must evolve to reflect the distinctive advantages and value a practice provides. Aligning pricing decisions with what differentiates a practice ensures the achievement of business goals and the cultivation of long-term client loyalty.
Check out the VHMA's free value-based strategic pricing resources.
Patient Visits Insights
Declining patient visits remain a significant concern across the veterinary industry. The VHMA's November 2024 Insiders' Insights Management Trends Survey highlighted this issue, with 35% of practice managers identifying reduced client visits as one of their top three concerns. Over the past 12 months, VHMA member and non-member hospitals have experienced declines in visits. While non-wellness or "sick” visits have remained relatively stable over the last two years, wellness and product-only visits are at risk. Wellness visits make up about 24% of total visits and lag at -2.9%. Product-only visits represent over 25% of total visits and show the largest decline at -7%.
With product visits showing such a dramatic decline, it is no surprise that in-practice parasiticide, pharmacy, and nutrition purchases are down. Between August 2023 and August 2024, the data reveals:
● Average annual parasiticide-purchasing patients per practice decreased by 5.7%
● Months of parasiticide protection dispensed dropped by 9%
● Pharmacy purchases declined by 0.3%
● Therapeutic diet purchases fell by 4.2%
As clients' purchasing channel options continue to grow, hospitals will have to fight harder to keep their clients' purchases in practice. Some practices are shifting their treatment plan in favor of injectable medications over oral medications as a way to keep treatment in-house. Injectable options can be especially helpful for many chronic pain and chronic dermatological patients and can also be a semi-annual or annual alternative to monthly parasiticide prevention.
Increasing Patient Visits at Your Practice
While declining patient visits are a concern, there are several practical and easy-to-implement strategies to help reverse this trend:
● Target dermatology and osteoarthritic patients to boost nutritional sales - While over half of gastro, renal, and urinary cases are on therapeutic diets, only 7% of dermatology cases and 3% of osteoarthritic patients receive corresponding diets. Focusing on these underserved groups in 2025 could significantly increase nutrition sales while enhancing patient care.
● Forward-book patients' next appointments - Digital appointment management systems make it easier than ever to forward-book exams. These systems automatically remind clients of upcoming visits, eliminating the need for manual follow-ups. When scheduling, ask about other pets in the household to potentially book multiple appointments for needed services. The Preventive Pet Healthcare Champion Workbook provides a step-by-step approach for implementing forward booking.
● Promote last-minute appointment openings - Use one-way mass communication tools like email or push notifications to inform clients of last-minute availability. For example, if an owner cancels her pet's dental procedure, send a targeted email to owners of pets overdue for dental work. Sweeten the deal with an incentive, such as a small discount or a free bag of dental treats, to fill the slot quickly.
● Implement a referral program - Word of mouth remains one of the most effective ways to grow a veterinary practice. Encourage referrals by providing current clients with referral cards—either physical or digital. When a new client redeems a card, the referring and new clients receive a reward, such as a small discount or loyalty points. This simple strategy can drive new business while rewarding loyal clients.
Practice Health Insights
Active patient counts have steadily decreased each month this past year, with the number of lapsing patients whose last medical service was 14-18 months ago continuing to grow. Total active patient counts are down 1.9% due to a 3.3% decline in canine patients. This decrease can have a significant financial impact, as canines contribute an average of 81% of a practice's revenue. The decline is further compounded by a year-over-year reduction in new puppies and kittens, which have dropped by 9%. Similarly, new client acquisition has fallen by 8.6% compared to the previous year.
Adding to these concerns is a steady decline in productivity metrics per veterinarian over the past three years. Average daily transactions and days worked per month per DVM year-over-year have declined, and monthly patient visits per DVM are down 11. While 11 visits may not seem to be too concerning, this loss can have a significant financial impact on a practice:
● If a four-doctor practice sees 11 fewer visits per DVM each month, this totals 44 fewer visits per month.
● 44 fewer visits per month equals 528 fewer visits per year.
● With an average invoice total of $150, this would result in nearly $80,000 in lost revenue.
These trends paint a concerning picture of veterinary practices' financial health and sustainability. Declining patient counts, reduced new client acquisition, and lower productivity metrics create a compound negative effect.
Bring Your Patients Back
In today's competitive landscape, providing quality medicine alone isn't always enough to retain clients and grow your practice. While we have limited insights specific to what pet owners prioritize in veterinary care, broader U.S. consumer data offers valuable clues. Consumers consistently emphasize the need for speed, convenience, helpful employees, and friendly service. Candise Goodwin from Outlier Advisors highlighted this by stating, “Practices must adapt to this evolving landscape by delivering integrated, proactive care that keeps them central to the pet health journey. Those who innovate will lead this next chapter in veterinary care. To meet these expectations, practices must adapt and deliver care that aligns with clients' evolving preferences.”
The year began with a client bonding rate of 64.1% and ended at a rate of 62.5%. Although this slight decline may not seem alarming, it signals that fewer new clients are returning for follow-up visits. Improving retention starts with leveraging tools and strategies that elevate the client experience. Here are a few ideas to consider:
● Embrace e-commerce - Take inspiration from retail giants like Amazon. In a 2022 survey on human medication habits, 45% of people reported using a medication delivery service at least once, compared to just 15.7% in 2018. These trends are likely mirrored in the animal health space. Offering online prescription ordering and home delivery services can improve client satisfaction and convenience.
● Keep curbside service in the mix - Born out of necessity during the pandemic, curbside service proved to have benefits for both clients and staff. Many consumers now expect this level of convenience, as evidenced by the popularity of grocery and restaurant curbside pickups. For practices, this service can also improve operational efficiency by streamlining appointment flow.
● Ask your clients about their experience - Post-visit surveys provide a goldmine of actionable feedback. Clients are often candid about what they appreciated and what fell short during their visit. Use these insights to pinpoint areas of improvement and identify opportunities to build loyalty and trust.
● Focus on felines - The Fountain Report's December 20th Newsletter highlighted the “feline revolution" of 2024, noting that cat ownership grew significantly faster than dog ownership. Cat-owning households increased by an impressive 11%, compared to a 4% rise in dog-owning households. This trend presents an opportunity for practices to engage more feline clients and tailor services to meet the needs of this growing demographic.
Approaching 2025
As we start fresh, it's reassuring to see that practices are prioritizing new clients and increasing client visits, as highlighted in last month's Insiders’ Insights Management Trends survey. This focus signals a proactive approach to addressing declining patient numbers and strengthening client relationships. The economic shifts of 2024 have set the stage for continued challenges in 2025, but they also present growth opportunities. While the pandemic pushed many practices into survival mode, the post-pandemic era calls for a recalibration. By placing renewed emphasis on exceptional customer service, practices can build stronger connections with clients, foster loyalty, and pave the way for sustainable success in the year ahead. Cheers to a successful 2025!
For more information on these topics, click here to download Vetsource's white paper, “Behavior shift: Implications of today's pet owner trends on veterinary medicine in 2025", authored by Sheri Gilmartin CVT, Brittany Yost, CVPM, CVBL, CCFP, and Kate Zirkle.
Resources
"An Industry in Flux." Fountain Report, 20 December 2024, pp. 4-6.
Blue Heron Consulting. "Focus on Practicing Good Medicine: Increasing Average Doctor Transaction (ADT)." Blue Heron Consulting,
https://bhcteam.com/focus-on-practicing-good-medicine-increasing-average-doctor-transaction-adt/.
Data on file at Vetsource.
"Digital Pharmacies and Prescription Delivery Drive Savings." Rx Savings Solutions Blog, Rx Savings Solutions, https://rxss.com/blog/digital-pharmacies-and-prescription-delivery-drive-savings/.
Do, Duy, and Pascal Geldsetzer. "Mail-Order Pharmacy Use and Barriers to Adherence to Medications for Chronic Conditions among U.S. Adults." Journal of General Internal Medicine, vol. 36, no. 8, 2021, https://pmc.ncbi.nlm.nih.gov/articles/PMC8319048/.
Dunn, Loise. "How to Make It More Convenient for Clients to Do Business with You." DVM360, https://www.dvm360.com/view/how-to-make-it-more-convenient-for-clients-to-do-business-with-you.
“VHMA Insiders' Insight - Positive Outlooks for 2025.” Veterinary Hospital Managers Association. December 2024, https://www.vhma.org/viewdocument/vhma-insiders-insight-positive-o.
“VHMA Insiders' Insight - What Keeps You Up at Night.” Veterinary Hospital Managers Association. November 2024, https://www.vhma.org/viewdocument/vhma-insiders-insight-what-keeps.