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➤ Download Insiders' Insights -KPI, February 2021 Report

Revenue

The VetSuccess data for January 2021 showed robust revenue growth at 14.1% for VHMA members and 14.5% for non-VHMA members compared to the same month in 2020.  The difference between VHMA and non-VHMA members isn’t large and we don’t know if it is statistically significant; I think the important point here is the strength of the growth for both groups.  There was 1 less work day (Mon-Sat) in Jan, 2021 compared to Jan, 2020—growth would have been even higher had the # of days been the same.

The really interesting question is:  what’s 2021 going to look like?  For all of the crazy busy months many practices experienced in 2020, total revenue growth for the year was essentially the same as 2019 (4.5% in 2020 vs. 4.2% in 2019).  The work was just spread out differently—normal growth in Jan-Feb, massive declines in March-May and then very strong growth the rest of the year. 

Although the National Bureau of Economic Research hasn’t called it yet, many economists say the U.S. is technically out of the recession that started early last year.  However, they also say this isn’t a healthy economy right now—high levels of unemployment, many businesses fighting for survival and permanent job losses.  Of course, many veterinary clinics were massively busy last year during the recession—will it stay that way once people get vaccinated and are out and about spending money once again at restaurants and movies or traveling and all the pets with undiagnosed conditions got fixed?  My crystal ball is no better than anyone else’s but staying flexible and being prepared to be less busy makes sense.  The super busy practices will likely sigh with relief to be back at normal levels.

Year over year growth in revenue per unique patient went from 5% for both VHMA and non-VHMA practices in February 2020 to 8.0% for VHMA members and 7.1% for non-VHMA members almost a year later (January, 2021).  There are many factors driving revenue growth; see the figure below for an outline of some of the most important ones.  There are also multiple factors driving the number of unique patients in a practice—marketing efforts, how many other practices there are in the area and how appealing they are to pet owners, the client service experience provided to pet owners, etc.  It’s important to track all of these factors individually in order to better understand what’s going on in your own practice and how this might influence your management decisions.  Again, remember, there was 1 less work day (Mon-Sat) in Jan, 2021 compared to Jan, 2020—growth would have been even higher had the # of days been the same.

Changes in revenue types are in step with changes in the caseload due to the pandemic—more sick pet cases vs. wellness and more clients buying OTC products online.

Remember, however, that these changes need to be looked at in the context of the total revenue of your practice and the contribution of each type of revenue to the total.  For example, surgery increased 23.3% in January, 2021 but surgery usually comprises just 5-8% of total revenue in a practice so the total increase to revenue from this surgery increase is less than 2%.  And, of course, the profitability of each area needs to be considered.  High growth in revenue may not make the practice more profitable if expenses are also growing significantly or the revenue growth is in a low-margin area of the practice.

Patient Visits

There has been a small increase in the % of total patients who are new patients vs. returning patients in both VHMA and non-VHMA practices as well as an increase in new client visits over the last year; this is probably pandemic related--pet owners are visiting other practices because their regular practice was closed or didn’t have available appointments.  When the pandemic first started, it appeared there was a large increase in pet adoptions which could also contribute to an increase in new clients.  New data, however, now indicates there wasn’t much change in adoption numbers so this is less likely to be a factor.

Growth in patient visits was strong in January, 2021—up from both January, 2020 and Q4 of 2020.  Primarily, this is likely due to the increase in new clients.  It is possible that more sick pet visits has also contributed to this trend but pet owners have been working at home for almost a year now and, at some point, we would expect all those pets with previously unnoticed problems to have been “fixed” and this factor to be less significant.  Some practices pushed back wellness care either because they were required to or because they were prioritizing sick pets and as those pets start coming back in, it could also contribute to an increase in total patient visits.

As noted above, there was 1 less work day (Mon-Sat) in Jan, 2021 compared to Jan, 2020—growth would have been even higher had the # of days been the same.

Patient visits and transactions have lagged revenue growth both pre and post pandemic and continue to do so.  Revenue growth that exceeds visit or transaction growth is due to increased spending by the clients who DO come in. 

Practice Health

Active patient numbers have grown in both VHMA and non-VHMA practices over the last 11 months.  An active patient is defined in the VetSuccess data as one who has had a medical service in the last 18 months.  The vast majority of practices recommend pets receive an exam and other medical services at least once a year so an increase in patients who visit the practice every 18 months isn’t necessarily a good thing if it means patients who used to be seen every 12 months are now seen every 18.  The VetSuccess data indicates this is indeed happening via review of “lapsing patients” which are defined as those who have not received a medical service in the last 14-18 months.  The increase in lapsing patients for the non-VHMA practices is about 70% of the increase in active patients which means there is real growth in active patients who are seen within 13 months; i.e. closer to what practices recommend.  The situation is reversed, however, for VHMA practices in which lapsing patients are growing at a faster rate than active patients.  So why would VHMA practices be different?  First of all, we don’t know how statistically significant these differences are but if it IS a real difference, why?  Were VHMA practices busier to start with and had to push back wellness appointments in order to see sick pets?  Again, need to track active patients at both 12 and 18 months as well as lapsing patients in your own practice in order to have a better idea of what’s going on.

There has been a strong increase in new client visits in both VHMA and non-VHMA practices.  As noted above, this is probably pandemic-related--pet owners are visiting other practices because their regular practice was closed or didn’t have available appointments.  As noted above, when the pandemic first started, it appeared there was a large increase in pet adoptions which could also contribute to an increase in new clients.  New data, however, now indicates there wasn’t much change in adoption numbers so this is less likely to be a factor.  Note that there was 1 less work day (Mon-Sat) in Jan, 2021 compared to Jan, 2020—growth would have been even higher had the # of days been the same.

The key question, of course, is whether these new clients/patients will stay with the new practice or go back to their home practice when they can. 

➤ Download Insiders' Insights - KPI, February 2021 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.