Taking Stock of 2022 Veterinary Clinic Trends

A look at the major trends affecting veterinary clinics in 2022 and beyond.

When speaking with Vet-Advantage earlier in the year on market consolidation, Brakke Senior Consultant John Volk made the following prediction: While the overall consolidation rate has slowed, the industry may see more instances of larger consolidators acquiring some of the smaller ones in the near future.

This fall provided an example of that, as AmeriVet Veterinary Partners announced that it has acquired 14 new veterinary practices from Northeast Veterinary Partners, bringing the total number of clinics in AmeriVet’s network to 186.

“This is the first time in AmeriVet history that the company has purchased another veterinary consolidator,” the company said in a release. The newly added clinics are spread across several states, including New Hampshire, Massachusetts, Vermont, California, and Maine.

With this acquisition, AmeriVet anticipates having over 200 veterinary practices in its network by the end of the year. The projected revenue for 2022 is $375 million, a significant year-over-year spike as the company continues to expand its clinic partnerships.

Market consolidation was one of several trends affecting the industry in 2022. The following are some of the other major stories we’ll continue to follow heading into 2023.

Inflation continues to disrupt

Prices for veterinary services have increased 10% in the past year, according to government data, the biggest spike on record in the last two decades. The rising cost of veterinary services demonstrates how high inflation has spread beyond physical goods and is now affecting services. The trend has stoked fears that inflation is growing more entrenched and that the Federal Reserve will keep raising interest rates at an ever-higher risk of causing a recession, according to The Associated Press. Inflation rose 0.4% in September, a year-over-year rate of 8.2%, the Labor Department reported in October.

“We haven’t seen levels like this in quite some time,” said Dr. Matthew Salois, president of Veterinary Study Groups, in an interview with Vet-Advantage. Dr. Salois is the former chief economist of the American Veterinary Medical Association (AVMA) “There’s so much about the economy that’s unprecedented these days. Forget textbook economics – everything is being rewritten here.”

Fritz Wood, a veterinary industry veteran with a special interest in finance, said labor costs are higher than ever, and that’s the single largest expense in companion animal practices. “To date, clinics have been able to raise professional fees to accommodate the higher labor costs, but the number of visits or transactions is flat or shrinking,” he said.

Pet ownership numbers softening (but not pet spending)

The pet adoption bump that occurred in response to the sudden stay-at-home/work-from-home dynamics of this COVID-19 era has plateaued, according to Packaged Facts’ Pet Population and Pet Ownership Trends in the U.S. The percentage of U.S. households owning pets slipped slightly from 54% in 2018 to 52% in 2022, for a current total of 68 million pet-owning households.

In response to COVID, the number of pet owners jumped remarkably among households earning $100,000 or more, according to Packaged Facts. For this upper-income bracket, a national gain of 1.3 million pet owners between 2017 and 2019 was tripled by a gain of 3.9 million pet owners in the COVID years of 2019 to 2021. These gains, however, were countered by losses among lower-income or more budget-conscious households.

“Even so, there is no debate over a pandemic-fueled spike in pet care spending, nor is there any complaint over pet market financial performance,” Packaged Facts reported.

Yet even after a year of explosive pandemic-fueled growth in 2020 among most pet market sectors, sales growth in 2021 did not disappoint, with overall pet industry sales increasing nearly 14% to reach $123 billion. Packaged Facts data from August 2022 show that while two-thirds (68%) of consumers have been cutting back on household expenses in the last 12 months – due to price inflation, economic uncertainty, or other factors – pet care is a relatively spared category. Among pet-owning households who are curbing expenses, only 15% are doing so in pet care, and far higher percentages (such as 28% for pet food) are increasing pet care spending above and beyond price inflation. In comparison, among households that are curbing expenses, nearly half (46%) are cutting back on food grocery spending, and two-thirds (69%) on eating out/takeout/food delivery.

Vet professional burnout is real and not going away

Even before COVID, veterinary professionals were struggling with burnout. According to data from the 2016, 2017, and 2018 AVMA Census of Veterinarians surveys, 50.2% of respondents were classified as having high burnout scores.

Today, workplace burnout costs the veterinary industry $2 billion a year, according to research from the Cornell Center for Veterinary Business and Entrepreneurship. The researchers say it’s critical to demonstrate the financial side of workplace burnout to the veterinary industry so organizations and practices can start taking steps to alleviate the issue. “When we hear about burnout, we don’t often understand the cost of it. That’s what’s been missing in our literature,” said Charlotte Hansen, economist and assistant director of statistical analysis at the AVMA. Two billion dollars in lost revenue is almost 4% of the industry’s entire value, according to Cornell. The cost includes both veterinarians and veterinary nurses/technicians, each accounting for approximately $1 billion lost.

Several industry initiatives were launched in 2022 to address the increased levels of burnout among veterinary health professionals, including Project WAG (Wellbeing and Growth) by Zoetis. The company designed this U.S. initiative to help veterinary professionals build and maintain a better standard of well-being within their practices. Project WAG provides all veterinary professionals – veterinarians, veterinary technicians, and support and administrative staff – with easy access to resources and tools designed for self-care to help them set healthy boundaries at work, connect with the community and create more joy in their day-to-day work.

 

Photo credit: istockphoto.com/xavierarnau