INDUSTRY OVERVIEW: WHERE WE ARE & HOW WE GOT HERE

Transcription

1 INDUSTRY OVERVIEW: WHERE WE ARE & HOW WE GOT HERE PET OWNERSHIP STATS 56% of households own a pet 2.4% decrease in last 5 years 36.5% of households own a dog 1.9% decrease 30.4% of households own a cat 6.2% decrease 3.1% of households own a bird 20.5% decrease (45.6% decrease over last 20 years) 10.6 % of households owned exotic pets 16.5% decrease AVMA Pet Ownership Demographic Study,

2 HOUSEHOLD BREAKDOWN Mean # of cats owned = 2.1 Mean # of dogs owned = 1.6 AVMA Pet Ownership Demographic Study, CHANGING STATUS 63.2% of Americans feel their pet is part of the family - dog owners more significantly than cat owners 4

3 PET EXPENDITURES A slightly different story from non-industry affiliated survey: Companion animal market will grow 4.7% in 2013 Trend shows that consumers are less price sensitive Packaged Facts American Pet Products Association 5 VETERINARY EXPENDITURES = $28B Cats 13.5% decrease in vet visits 22% of cat owners did not take their cat to the vet in 2011 Average spending in 2011 = $ % cat owners have pet insurance Dogs 7% increase in vet visits 68.1% of vet expenditures spent on dogs Average spending in 2011 = $ % dog owners have pet insurance AVMA Pet Ownership Demographic Study,

4 WHAT DO WE KNOW? 1. For many practices visits, active clients & new clients have been declining for more than 10 years 2. Automatic fee increases are no longer a viable strategy for growth, beyond meeting inflation 3. Diagnoses of preventable and treatable diseases have increased 4. The pet population is changing due to changing owner demographics 7 IT SHOULDN T HAVE BEEN A SURPRISE DVM State of Profession Survey, 2009 AVMA Pet Owner Sourcebook,

5 AAHA Pulsepoints 2010 AAHA PulsePoints, YOU ARE NOT ALONE Statistics/Vet * 2012 (WMPs) Active Clients 1,215 1,185 1,005 New Clients Active Patients 1,909 1,985 1,544 1,562 New Patients DVM Invoices 3,407 3,258 3,021 *No study conducted in 2010 A Study of Well-Managed Practices, Benchmarks

6 VISITS STAGNANT, BUT IMPROVED Increase Decrease More here Less here 11 REVENUES MORE STABLE 12

7 SIGNIFICANT UNUSED CAPACITY AVMA Veterinary Workforce Study: 18% excess capacity in veterinarians schedules Bayer Veterinary Care Usage Study: 52% of practices filling less than 70% of available appointments 13 ROOM FOR IMPROVEMENT Levels of Satisfaction with Practice Success 51% Satisfied 32% Dissatisfied Yet Most See Their Practice as Average or Above 92% 14

8 INCREASED VISITS ARE TOP PRIORITY BVCUS FEE INCREASES > INFLATION 76% of fees increased over the rate of inflation from % increased over the rate of inflation from AAHA Veterinary Fee References 2010 VHMA Practice Diagnostics Study 16

9 FEE INCREASES MASKED THE PROBLEM Production Growth Transactions Growth ATC Growth 2007 $462, % % $ % 2005 $432, % % $ % 2003 $378, % % $ % 17 STICKER SHOCK 26% each 18

10 WE NEED TO LISTEN Demand for veterinary services is NOT inelastic Pet owners cited value for money spent & payment options as the areas with the most significant room for improvement 19 PETS ARE THE ULTIMATE LOSERS Overweight dogs have increased 37% in the past 5 years 76% of dog owners think their dog is just the right weight Overweight cats have increased 90% in the past 5 years 69% of cat owners think their cat is just the right weight 2012 Banfield Annual State of Pet Health Report 20

11 ARTHRITIS AND MORE Increase in feline diagnoses Arthritis 67% Otitis Externa 34% Flea Infestations 12% Roundworm Infections 12.4% Kidney Disease 15% Hyperthyroidism 10% 13% sr Diabetes Mellitus 16% Increase in canine diagnoses Arthritis 38% Otitis Externa 9.4% Flea Infestations 16% Whipworms 8% Diabetes Mellitus 32% 2012 Banfield Annual State of Pet Health Report 21 OBESITY-RELATED INSURANCE CLAIMS VPI database of 485,000 insured pets Steady rise in obesity claims For dogs most common claims related to obesity were arthritis and bladder/urinary tract disease For cats they were bladder/urinary tract disease and chronic kidney disease 22

12 SIGNIFICANT BREED CHANGES 2012 Banfield State of Pet Health Report 23 SIGNIFICANT SIZE CHANGES BofA Merrill Lynch Global Research 24

13 SIZE DOES MATTER Economic Impact Considerations Longer life span Diagnoses changes Treatment changes Testing differences Decreased pharmacy income? Decreased boarding income? Increased need for grooming? 25 AGE ALSO MATTERS Significant increase in the number of cats and dogs owned that are over the age of 6 With pet ownership and multiple pet ownership declining are you bringing in enough younger pets to compensate? Total patients Canine 45,622 1,618 11,680 6,420 23,182 Feline 19, ,581 13,535 26

14 CHANGING OWNER DEMOGRAPHICS Families have always owned more pets than singles, but Single mom family designation grew the most at 5.2% since 2006 Single women grew 22% Single males grew 27.7% According to another recent survey, half of all adults age own a dog AVMA Pet Ownership Demographic Study, RAMIFICATIONS TO CONSIDER Smaller living spaces + no yards = smaller pets Limitations on multiple pet ownership Greater pet exposure to transmissible diseases (dog parks, walks) As well as Hours pet owner available for vet appointments Desire for more education Mode of communication with pet owners 28

15 WE ALSO KNOW 5. Many pet owners don t understand the value of preventive medicine Veterinarians need to become better communicators and educators 6. Many cat owners don t have any idea that cats need preventive care Veterinarians need to focus on becoming feline friendly and potentially re-examine feline protocols 29 PET OWNER ATTITUDES 36% agree/somewhat agree that they only take their pets to the vet when shots are needed 33% agree/somewhat agree that they only they take their pets when sick 24% agree/somewhat agree with the statement that routine check-ups are unnecessary 34% disagree/somewhat disagree with the statement that without check-ups their pets are more likely to get sick Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 30

16 LACK OF EDUCATION CLEARLY AN ISSUE I d visit the vet more often if Cat Owners Dog Owners I knew I could prevent problems and expensive treatment later 56% 59% I thought it would help my pet live longer 53% 59% I really believed my pets needed exams more often 49% 44% Yet 59% of veterinarians said they try to avoid giving pet owners too much information Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 31 CURRENT COMPLIANCE CANINE Protocol 15% or less 16-30% 31-50% 51-75% More than 75% Vaccines 0% 5% 19% 48% 27% Heartworm testing 4% 7% 22% 42% 24% Parasite testing 1% 13% 37% 31% 17% Frequency of exams 0% 6% 18% 47% 26% Preventive care blood work 10% 32% 30% 19% 8% Senior wellness 22% 20% 29% 19% 8% *63% estimated WMP = 34-42% profit to gross revenue margin A Study of Well-Managed Practices, Benchmarks

17 CURRENT COMPLIANCE - FELINE Protocol 15% or less 16-30% 31-50% 51-75% More than 75% Vaccines 2% 16% 25% 32% 24% Heartworm testing 66% 7% 3% 4% 21% Parasite testing 15% 30% 35% 17% 4% Frequency of exams 5% 18% 34% 23% 19% Preventive care blood work 26% 24% 30% 13% 5% Senior wellness 36% 25% 21% 15% 2% *63% estimated WMP = 34-42% profit to gross revenue margin A Study of Well-Managed Practices, Benchmarks MEDICAL PROGRESS EXAMS 27% of all appointments require a follow-up visit within 2 weeks What percentage of clients schedule recommended follow-up at conclusion of current visit? Protocol 20% or less 21-40% 41-60% 61-80% More than 80% Recheck 16% 25% 32% 16% 9% FU blood work for chronic conditions 46% 32% 6% 12% 2% Recommended dentistry 60% 24% 13% 2% 0% A Study of Well-Managed Practices, Benchmarks

18 MEASUREMENT OF COMPLIANCE WITH REMINDERS IS WEAK Types of Reminders Used Compliance Monitored Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 35 WHAT VETERINARIANS SAID 88% Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 36

19 WHAT PET OWNERS SAID 37 APPROACH TO EXISTING CLIENTS Completely Agree Somewhat Agree In comparison to other vets, I tend to spend more time building long lasting relationships with clients I would change how my practice operates if I knew it would increase client satisfaction In my clinic a client is assigned a veterinarians whom they see on nearly every visit I would do almost anything to ensure my clients are satisfied We routinely measure client satisfaction through after-service surveys 38% 44% 82% 34% 82% 48% 29% 48% 19% 23% 74% 51% 6% 20% 14% 38

20 LIMITED STANDARDIZATION OF WELLNESS EXAMS WITHIN PRACTICE The practice has a standardized approach Each doctor is responsible for his/her own approach 39 LET S TALK ABOUT CATS AVMA Pet Owner Sourcebook, Cat owners don t think indoor pets need checkups 2. Cat owners don t know that cats hide symptoms 3. Cat owners don t necessarily think cats require more care as they get older 40

21 OWNER PERCEPTION IS DIFFERENT Often acquired without prior thought 59%: Cat found me Free 69% paid $0 Many acquired because they are low cost, low maintenance Received no health instructions Acquired purposefully Purchased, adopted for $100 s or more Considered high maintenance Recommendations on veterinary care from breeder, shelter Often written Bayer Veterinary Care Usage Study III: Feline Findings 2013 Bayer HealthCare 41 PERSONALITY More view as a pet Independent More view as a companion Dependent, even needy Much more childlike Reciprocate affection Bayer Veterinary Care Usage Study III: Feline Findings 2013 Bayer HealthCare 42

22 OBSERVABLE HEALTH STATUS 37% don t even think vet recommends annual checkups Effective at masking signs of illness, injury Which cat owners don t believe 53% think cat has never been sick or injured Many live to be a ripe old age without vet care Less accomplished at hiding signs Vet visits expected; part of responsible dog ownership You re not a good owner if you don t take dog to vet Bayer Veterinary Care Usage Study III: Feline Findings 2013 Bayer HealthCare 43 COOPERATIVENESS 58% of owners say cat hates going to vet Single biggest obstacle to veterinary visits 38% say dogs dislike going to vet Not a big obstacle Bayer Veterinary Care Usage Study III: Feline Findings 2013 Bayer HealthCare 44

23 % OF CAT OWNERS RECEIVING INFO ON TRANSPORTATION FROM THEIR VET Bayer Veterinary Care Usage Study III: Feline Findings 2012 Bayer HealthCare 45 UNCLEAR COMMUNICATION In focus groups, veterinarians did not provide logical and succinct responses when asked to explain why cats should be brought in for annual exams And cat owners clearly aren t getting the message 44% said that when they do bring their cat in, the veterinarian does not recommend regular examinations Bayer Veterinary Care Usage Study III: Feline Findings 2013 Bayer HealthCare 46

24 47 OTHER COMMENTS FROM CAT OWNERS Comfort of waiting room for their cat 57% less than satisfied Comfort of waiting room for the cat owner 56% less than satisfied Perception of value for money spent 59% less than satisfied Bayer Veterinary Care Usage Study III: Feline Findings 2012 Bayer HealthCare 48

25 NOT JUST A CLIENT ISSUE 10% 18% Easy to work with during exams Challenging to diagnose 44% 57% 49 FOR CATS, ACTION LAGS INTENTION 50

26 SOME ADDRESSING PROBLEM Implemented Changes in Last 2 Years to Reduce Stress for Felines Improved/Increased Staff Training with Regards to Felines 38% 32% 31% Yes, all non-vet staff received training Yes, some non-vet staff received training No 51 RECENT GOOD NEWS 1000 practices worldwide are on track to receive the Cat Friendly Practice (CFP) designation awarded by the AAFP Initiative started in 2012 in response to decline in feline visits Requires extensive team training, physical layout adjustments, equipment ( ( Practices are seeing a big difference, as are cat owners 52

27 JUST A FEW OTHER ISSUES WE FACE 1. In-hospital pharmacy revenue will continue to decline (both volume and margin) Regardless of whether HR1406 passes Consensus that pet owners should have choice of where Rx is filled once VCPR is established 2. Spay/neuter revenue will likely not be back any time soon POTENTIAL CRISIS RECENTLY CONFIRMED AVMA Workforce Effectiveness Study just released Supply of veterinarians exceeds demand by 12.5% Expected to persist at same rate at least through 2025 YET Just two years ago were claiming shortage of veterinarians Still accrediting several new schools in the U.S. Increasing class sizes due to budget cuts 54

28 4. VETERINARIAN DEMOGRAPHIC HAS CHANGED Over 80% women graduating Want small animal exclusive Increase in desire for part-time positions Potential decreased ownership interest leaves door open for corporate buy ups Starting salary has decreased Approx. $60,000 small animal exclusive Average debt load over $200, LENDERS SEEING INCREASED ACTIVITY Confidence in improved economy has led to increase in relocations, renovations, technology improvements Glut of practices sold at end of 2013 due to capital gains tax increase supply depleted As a result, many now considering start ups rather than acquisition 56

29 IDEAS FOR SUCCESS IN THE NEW PRACTICE ENVIRONMENT 57 If the rate of change outside your organization is greater than the rate of change inside your organization, the end is in sight. Jack Welch, former CEO of General Electric 58

30 YOU CAN T MANAGE WHAT YOU DON T MEASURE % of vets checking metrics at least quarterly Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 59 KEY PERFORMANCE INDICATORS Key Performance Indicators 60

31 REMOVING BARRIERS TO CARE Decrease the focus on the one shot deal Focus on increased visits with potentially lower ACT 1. Use treatment plans and full-year health plans 2. Schedule next appointment before leaving 3. Offer incentive for pre-anesthetic panel done ahead of time (dentistry) 4. Lower/include recheck fee 5. Offer a variety of payment options, written financial policy 61 INCREASING VISITS AND RETENTION Coach and monitor veterinarian communication skills Promote the talk and touch method Make sure doctors have enough face time with clients Actively encourage individual vet-client bonding and referrals Implement an internal marketing program that acknowledges your clients preferred mode of communication Ask them what they want in a veterinary practice! 62

32 EVERY PATIENT EVERY TIME On the basis of history and physical examination findings, assessments are made for: Medical conditions Infectious and zoonotic diseases Parasite prevention and control Dental care Genetic, breed, and age considerations Pain Behavior Nutrition 63 GROWTH OPPORTUNITIES SERVICES NOT PRODUCTS Service Median 75 th %ile Feasible Potential Diagnostics 15.4% 23% 25% Dentistry 2.8% 4.4% 5% - 8% Imaging 3.6% 4.8% 6% - 7% Exams/Rechecks 17% 21% 25% Why services? Better medicine, higher profit margin Pharmacy expenses are 15% - 25% of gross revenue Imaging and lab expenses are 4% - 7% of gross revenue AAHA Financial Productivity Pulsepoints, 7 th edition. 64

33 MAKE IT A MISSION 1. Make the first visit count 2. Provide resources specific to cats 3. Provide feline-friendly handling 4. Enhance the feline examination 5. Educate about pre- and post-visit experience 6. Reinforce and reward good behavior 7. Be more assertive in recommending, reminding, following up on care 8. Identify lapsed cats 9. Focus on feline-friendly marketing 65 USE YOUR RESOURCES 1. AAHA/AVMA Feline Preventive Care Guidelines 2. AAFP Cat Friendly Practice Certification 3. Catalyst Council Cat Friendly Practice Program 4. Toolbox on 5. Survey your cat owners you won t know what they want unless you ask! 66

34 MONTHLY BILLED PREVENTIVE CARE PLANS 1. To promote the importance of preventive medicine as a means to improve and extend pets lives 2. To increase patient visits, client compliance and practice revenue 3. To offer affordable monthly payments as a means for owners to provide their pets with high level care on an ongoing basis 4. To reduce large, unexpected costs due to early disease diagnosis and treatment 67 THE VALUE EQUATION 68

35 PREVENTIVE CARE PLANS AS A STRATEGY Will they provide your practice with competitive advantage? Use strategic insights to determine: Have visits declined? Has client retention declined? Is your schedule at capacity? What does your compliance look like? Are your revenue categories on target with industry benchmarks? Are you dealing with competition from low cost providers? Are others in your area offering? 69 ALTERNATIVE PAYMENT METHODS Client Interest in Pet Insurance 43% Net Increase Requests for Alternative Payment Methods 69% Net Increase Bayer Veterinary Care Usage Study 2011 Bayer HealthCare 70

36 DO PET OWNERS WITH INSURANCE BEHAVE DIFFERENTLY? 1. 41% higher stop treatment levels 2. Schedule 40% more visits 3. Spend 2x as much on veterinary care during pet s lifetime So why don t more pet owners have insurance? Their veterinarian hasn t recommended it! VPI Pet Owner and Client Survey, unpublished, Veterinary Pet Insurance, California, RD PARTY FINANCING 71% of the CareCredit cardholders said having a financing option affected their decisions regarding the level of treatment they provided their pets +19% 72

37 THE ULTIMATE SCENARIO 73 AN ALL ENCOMPASSING MARKETING PROGRAM 75% of local searches occur on smart phones do you have a mobile website? Clients are online and texting are you taking advantage of that? SEO optimization, searchable website Online reputation management Targeted promotions Effective social media campaigns Incentives for referrals 74

38 CLIENT FEEDBACK IS A CRITICAL KPI No less important than financial information Without it, business decisions being made based on only part of the picture Strategic thinkers realize the more information you have, the more impactful and accurate your business decisions Who should you ask? New clients Current clients after service feedback Missing in action clients Putting out feelers tap into unmet needs, generate actionable insight 75 NO NEWS MAY BE BAD NEWS According to studies done by the Technical Assistance Research Program (TARP), for every irritated customer who complains, 26 do not, although they still have grievances, and 6 of them have serious problems May very well be unaware of how many dissatisfied clients you have because most people don t complain in person The real value of human intelligence shows up when feedback is negative when something isn t working Organizations have realized the competitive value of this learning as a kind of intellectual capital and have recognized the importance of becoming a learning organization. Kenneth W. Thomas, Intrinsic Motivation at Work 76

39 STRATEGY AT ITS BEST 77 LET S TALK BIG PICTURE PERHAPS A CULTURAL SHIFT

40 THE NEW CLIENT LOYALTY EQUATION 79 THE CLIENT-CENTRIC BUSINESS MODEL Train your team to walk in the client s shoes with every interaction Look at everything from the client s perspective Express genuine empathy to convey understanding It s about added and unexpected value It s not about what works best for you It s about how would I want to be treated in this situation if I were the client? 80

41 CLIENT-CENTRICITY WINS BIG Teams that set aside their own interests and agenda to go above and beyond for a client reap the benefits A client base that trusts and recognizes that their needs and interests take precedence over all else This, more than anything, is what engenders client loyalty 81 IT S NOT THE SAME AS CLIENT SERVICE Client service is usually related to procedural courtesies or process-related behaviors Short wait times Friendly staff Nice doctors Client expectations have become far more complex than just good customer service Seek added and unexpected value at every step Requires a foundation of trust Requires availability not just on a physical level but on an emotional level as well 82

42 DEVELOP RELATIONSHIP CAPITAL Success depends on ability to develop trusted relationships with clients Clients want to feel listened to, respected and well-served It is important to find commonalities and connection points with clients Must take the time to check in with their emotions I see that I appreciate that I sense that I understand that 83 IT S ABOUT ADDED VALUE Relationships have become far more valuable than expert opinions Success depends on ability to build meaningful relationships with clients Position yourself as a long-term problem solver and advisor NOT an expert for hire Customers view many professional services as commodities 84

43 THE REWARDS OF EMPATHY 85 HOW TO BECOME MORE EMPATHIC 1. Self-awareness & self-control Allows you to perceive others independent of your own biases 2. Humility A belief that you can learn from your clients 3. Incredible listening skills Experts provide answers and tell; advisors ask great questions and listen. Andrew Sobel, Making Rain 86

44 BEING ACCESSIBLE Ease of use is a value-added characteristic that can truly differentiate one business from another Accessibility is a proven source of competitive advantage Ability to get in touch easily Being recognized when calling Speed of response Personal nature of response Rapid resolution of any issues 87 IT S PERSONAL 1. An appointment that concludes with the veterinarian asking the pet owner, Have I answered all of your questions? 2. Offering a business card and saying, If you think of anything else, please don t hesitate to call or me. 3. Writing their schedule on the back of the card so a client knows when they can be reached and what days of the week they should schedule their pet s next appointment 4. Providing the name of another veterinarian at the practice and assuring the client that If I am not available ask for Dr. Smith - I will make sure to update her on Toby s medical condition. 88

45 BUILDING TRUST When clients trust you anything is possible Recommendations carry more weight See sincerity not salesmanship 89 ARE YOU A STRATEGIC THINKER? Strategy defined: The generation and application of business insights on a continual basis to achieve competitive advantage Practices are not mirror images of one another, the choices you make have to be purposeful and based on your practice s data and circumstances Answers the question: Where should we focus our energies to get the biggest bang for our buck? 90

46 CRITICAL LEADERSHIP SKILL The ability to strategize is the most important leadership competency Research has shown that less than 10% of leaders are strategists Requires tremendous appetite for risk Strategic thinking is often squashed because we are punished if we make a mistake Doing nothing is safer status quo 91 STRATEGY IS NOT 1. Aspirations, goals or vision Strategy is the how not the what 2. Trying to be better than, rather than different, from the competition 3. Trying to be all things to all people 4. Always exercising caution 5. Being afraid to make trade-offs, commit and reallocate resources 6. Focusing solely on short-term objectives 92

47 STRATEGIC ORGANIZATIONS REALIZE 1. What works today may not work tomorrow 2. An organization is only as good as what it knows 3. You must continually redesign your business 4. Learning and course correction are both a mindset and an operating practice 5. Cultural norms must be reversed Making a mistake is the same as failure Don t rock the boat 93 RISK Mistakes are part of the process Be vigilant & monitor progress so that you can course correct when needed A strategic thinker cannot be cautious Caution is waiting around for someone else to do it first Leaves you rushing to catch up without ever reaping full rewards 94

48 REALLOCATING RESOURCES Equal allocation of limited resources is a watered-down business model that leads to mediocrity Need to be able to make choices based on what you know to be true Lack of focus = lack of strategy Throwing the same amount of time, money and manpower at everything and hoping that something sticks 95 COMPETITIVE ADVANTAGE Being better is subjective Competitive advantage must be representative of your practice s capabilities and core competencies Like it or not, you can t be the best at everything, nor all things to all people! 96

49 WHAT WOULD BE OBJECTIVE? 1. Difficulty of Imitation Not easy for competitors to reproduce 2. Breadth of Application Reproducible and sustainable within the organization over a broad spectrum of abilities and offerings 3. Relevance Recognizable & distinctive with superior value to clients 97 ASSESSING OPPORTUNITIES 3 need-to-knows: 1. Your options for competitive advantage 2. Your organization s current capacity for change 3. Your external environment 98

50 UNDERSTAND YOUR OPTIONS There are really only 2 ways to differentiate your business: 1.Perform different activities and provide different services from the competition 2.Perform similar activities and provide similar services in a different way from the competition 99 UNDERSTAND YOUR ORGANIZATION When initiating change, pay attention to your practice s capacity for change Make it a priority in your planning Complete a SWOT analysis Staff and pace your changes so that they have the best chance of succeeding Recognizing capacity is about being realistic See your reality clearly and build your change strategy and culture accordingly 100

51 YOUR EXTERNAL ENVIRONMENT See the Big Picture and the forces in your marketplace Political, economic, social, technological (PEST analysis) Be able and ready to adapt to new realities Be proactive rather than reactive on both micro and macro level Tendency to wait for things to get worse before seeking alternatives to current activities 101 People don t buy what you do, they buy why you do it Simon Sinek, Start with Why 102

52 QUESTIONS? Jessica Goodman Lee, CVPM Brakke Consulting, Inc THANK YOU!