April 2010

Pour Me a Drink...Half-Full, Please
The effects of unemployment on veterinary occupations

By Lorraine Monheiser List, CPA, CVA and Leslie A. Mamalis, MBA,
MSIT Summit Veterinary Advisors, Littleton, Colo.

Abstract:

Unemployment rates are at or near record highs, and the veterinary profession is certainly impacted, though fortunately not as much as other industries. Yet some practices continue to grow and thrive, while others are bracing themselves for more bad news. Now is your opportunity to re-evaluate staffing, protocols, systems, and procedures while you have access to the largest pool of available doctors and staff in recent history.

Article

According to the U.S. Bureau of Labor Statistics, the national unemployment rate was just under 10 percent at the end of 2009, 2.6 percent higher than a year earlier. Fargo, N.D., had the lowest rate at 4.0%, while El Centro, Calif., was the highest at 27.7%. Regionally, the West had the highest jobless rate in December (10.7%) and the Northeast recorded the lowest at 9.2%. According to the Institute of Business Appraisers’ National Economic Report dated March 18, 2010, “massive budget deficits, rising taxes, and investor caution are likely to keep these unemployment numbers high for some time to come.” Chances are your community has seen the impact of these figures in many different ways, from friends and family out of work, stores closing or offering deep discounts, and a geometric increase in the number of applicants for any available job.

How do unemployment rates affect veterinarians and their practices?
We are fortunate to work in a profession that has not been hit as hard as many other industries. Emergency practices and some specialties have felt the effect of clients who have less discretionary income to spend on their animals. Some wellness practices have seen a drop in revenue from prior year figures, yet others have experienced growth, even in the same communities. It is also clear that practices have reacted differently to the same economic news. Some see rising unemployment as an opportunity and others see it only as a threat. What’s your reaction?  Is the glass half full or half empty?  Are you taking that information and turning it into something positive for you, your clients, your patients, and your clinic, or are you sitting back and riding the economic waves?

If your glass is half full, you recognize these opportunities:

The pool of qualified job applicants has expanded considerably.
A job posting that attracted 30 resumes three years ago resulted in over 500 resumes in December, including applications from excellent candidates.  Resumes today are much more likely to reflect employers that closed their doors, positions that were eliminated, and jobs which shrunk to part-time.

The 10% unemployment rate doesn’t reflect workers who are now under-employed and would readily switch to a full time job or take this opportunity to change careers. If you’ve been served by a friendly, efficient sales clerk or waiter, find out if there is any interest in working in your practice.

Downward pressure on wages allows you to hire a good candidate for less than you would have paid a year ago.
Also, given the competition for jobs, your current employees may not be expecting generous raises. From an employee’s perspective, operating with fewer staff members can provide a great opportunity for growth and development. When staff numbers are down, all employees are in the spotlight and have a chance to prove their worth, take on new tasks, and learn new skills.

“When people are not working, they tend to pay attention to their home lives more, to the health and well-being of their families,” says Hospital Administrator Kirsten Fell, RN. We all know pets are family, too. While pet owners may have to cut back their spending in other areas, family healthcare is still near the top of the list. If we don’t “X-ray the client’s wallet” and decide what they can afford before offering treatment options, we may find clients just as receptive to quality medicine as before. Explain the payment options your practice already offers and use third party payers and pet insurance to give the client plenty of choices. 

For the first time in years, you may actually have some breathing room to get to those administrative projects that never quite get to the top of your “to-do” list. Now’s a good time to write or update job descriptions, or get the inventory features in your practice management software working right. One practice shut the doors for a day and invited the team to don old clothes and have a painting party at the hospital. The result was a clean, bright and updated reception area and spruced up, tidy exam rooms, which gave everyone a morale boost.

Be sympathetic to your clients’ economic situations.
If a client confides that she truly can’t afford a dental prophy for her dog right now, don’t be judgmental. Offer to follow up in six months after her situation improves.  Your non-critical attitude will foster long-term client loyalty. Then don’t forget to follow up!

Consider these situations and how differently you might react.

Half empty – “My clients are not getting the treatments their pets need.  I guess they just can’t afford it.”

Half full – “Ms. Jones declined my recommendation. How can I communicate better to help her understand that this treatment is important for the health of her pet? If money really is the issue, did I offer her alternative payment plans to help her pay for the procedure? Or can the procedure wait without the pet’s health being compromised?”

Pet owners may have been postponing recommended treatments and procedures trying to save money. You are the animal’s advocate:  it is your job to communicate the importance and long-term effects of the treatment. Use this time to really connect with your clients and give them good information on which to base their decisions.

Half empty – “I had to lay Sally off, so how are we going to get everything done?”

Half full – “I had to lay Sally off, so let’s see who will step up. This is an opportunity for the rest of the team to shine.”

According to an article written by Tara Kalwarski in the March 1, 2010 issue of Bloomberg Businessweek, “the productivity of nonfarm U.S. businesses has increased by 6% since the end of 2007. That’s because there are fewer workers, but those who remain are producing more per hour.” Take a look at your current employees.  Are they equally productive? There are lots of qualified people out there right now. In fact according to Heidi Shierholz, a labor economist with the Economic Policy Institute to Washington, D.C, for every current job opening, there are six job hunters. If there is someone in your practice that causes problems or is not working to his or her potential, consider that there may be six people looking to fill that position. Instead of keeping a doctor or staff member who is negative, unmotivated, or draining the team’s energy, now may be the time to find a replacement.

Be careful to keep your team informed.  A positive aspect for the practice can be a negative for veterinary staff, especially if each person thinks jobs are in jeopardy. Involve your co-workers in finding solutions to deal with the unemployment-related issues in your practice. It is a challenge to keep people motivated when they are worried about keeping their jobs. Sharing real information about the impact on the practice and building for the future go a long way in getting through this recession and emerging stronger in the end.

Stories about rising unemployment are rife as media compete for attention. When the unemployment rate is 10%, the employment rate is 90%, but that statistic isn’t newsworthy. Don’t overreact to bad economic news. What really matters is what’s happening in your practice, with your clients, and in your community.  For every threat, there is also an opportunity for those who can identify and capitalize on it. How you and your practice interpret and react to economic news will impact operations, growth and profits for years into the future. So pour your own glass, and pour it half full.

Lorraine List, Leslie Mamalis and the team at www.SummitVeterinaryAdvisors.com work exclusively with veterinary practices, offering valuation services, profitability analysis, QuickBooks setup and monitoring, assistance with practice startups, and exit strategies.

Questions or comments? E-mail EconNews@VetPartners.org.

VetPartners is a professional organization consisting of members who consult to the veterinary profession and whose mission is to promote excellence and ethics in veterinary consulting and advising through continuing education, communication, collaboration, and collegiality and to establish and improve business practices and standards. For more information visit www.VetPartners.org

AAHA is the only organization that accredits animal hospitals throughout the U.S. and Canada. AAHA-accredited hospitals voluntarily choose to be evaluated on 900 quality standards that encompass all aspects of pet care — from patient care and pain management to team training and medical record keeping. Visit www.aahanet.org for more information.

To opt out, send an email to aahafeedback@aahanet.org and put Unsubscribe in the subject line.

© 2010 American Animal Hospital Association. All rights reserved.