The changing veterinary landscape
Digital drivers are moving the industry forward, but not every clinic business model will survive.
The veterinary profession is undergoing a period of unprecedented change. This cliché is usually accompanied by a series of tropes like:
- Revenues are increasing but new-client numbers are staying flat.
- Veterinarians are experiencing burnout at an increasing rate.
- Corporate consolidation is putting more pressure on small practices.
- New models of low-cost care are putting upward pressure on clinics and forcing them to change.
There has been no end to the number of comments on all this, but there hasn’t been a sustained effort to demonstrate the mechanisms underlying some of the biggest changes taking place within the industry. The more we can understand these changes, the more we can improve outcomes for pet owners by reducing costs and increasing access, and the more we can create revenue opportunities for veterinarians.
Four major drivers are powering a series of interrelated innovations within the veterinary profession. These trends are:
1. The Digitization of Diagnostic Tools
Diagnostics tools underwent a major change when they were able to focus and convey information across mediums, such as when René Laennec first invented the stethoscope. Being able to focus and convey information has undergone many iterations over time, but the digitization of information conveyance is only a step in that process.
Diagnostic tools can now focus and convey information without respect for geographic or political barriers. The ubiquity of digital receptors, from remote Bluetooth devices to activity collars to in-home devices that alert owners and veterinarians about animal needs has created unprecedented levels of information capture and delivery. Harnessing these tools will increase the veterinary economic footprint and with that the access to care.
2. The Benefits of Economies of Scale
The drive toward acquiring new tracking metrics and developing analysis tools that determine areas of highest values allows businesses to focus their energies on the most valuable customer experiences. In combination with this, it has never been easier to build a veterinary clinic, if for no other reason than simply because finance opportunities are very attractive today. Combine these two items and clinics are able to scale their businesses through focusing on areas of highest value and constantly expanding upon their abilities to deliver that value by scaling their efforts across different locations.
3. Using Artificial Intelligence to Better Triage Cases and Augment Care
Companies such as Ask.vet and WhiskerDocs are taking their exchanges with clients and looking for patterns. They found that the vast majority of cases are relatively straightforward and easy to answer. The questions include vomiting, lethargy, fleas or ticks, and diarrhea.
By building decision trees and manually providing simple answers to owner questions, these companies have built up vast databases of question-and-answer decision trees that enable navigation without the necessity of manual work.
4. Building Trust Through Digital Platforms
The prevailing wisdom has it that nothing can replace the in-person experience for developing trust. We’ve seen that the in-person experience is a strong determinant of building trust, but it certainly isn’t the only mechanism.
What matters less is the location of the engagement, and what matters more is the frequency and the consistency for building trust. This means that a monthly touchpoint through digital platforms — yes, your text message is a digital platform — is more apt to build trust than a once-a-year in-person visit. The physical location is not as important as the ability to build a reputation as a reliable source of solving problems.
These underlying drivers have resulted in some of the changes we are seeing within the profession. For example:
1. The Rise of Pet Care Services and Veterinarians as a Fulfillment Engine
Companies that have better access to the pet on a day-to-day basis are positioned to have constant access to the health care of the animal. When those companies start partnering with each other, as with Rover and DogVacay, then we see them starting to build a continuous and seamless experience across multiple platforms.
This isn’t necessarily a threat to the veterinarian’s business if the clinic can incorporate company partnerships into its business model. The veterinarian then shifts from being the only provider of health care to one member of a team who is able to provide constant and consistent access to the animal’s health data. The veterinarian then becomes the fulfiller of a specific area of service that she is uniquely positioned to deliver.
In particular, this will result in veterinarians having more access to animals than previously imagined and give them the time to work on unique cases that the other companies are unable to address.
2. The Veterinary Entrepreneur and the Rise of the Digital-First Practice
Individuals and small practices are able to use digital services and better position their clinics for success if they bolt on high-touch client services tools, optimize for the in-clinic experience when necessary, and greatly increase their capacity and average pet owner spend. Doing so requires the development of an entrepreneurial mindset that creates opportunities for focused experiments that question value propositions and perpetually iterate on possible solutions in order to focus on areas of greatest value for the client base.
The creation of this clinic starts with a digital-first experience that lowers the barrier by making engagement virtually free. If the clinic has already partnered with health trackers or telemedicine platforms, then they have created the seamless and near-zero cost solution for customer acquisition and growth.
3. The Hub-and-Spoke Model
The consolidation of practices means they begin to structure their organizations in different ways. Instead of isolated, identical clinic silos, these clinics centralize high-cost resources that do not need to exist in each and every practice.
For example, does it make sense for two clinics to have digital X-rays, therapy lasers, cremation units and other expensive devices that are not used consistently? Instead, by building centers of competency and utilizing those only when necessary, the clinics are able to defray the individual carrying costs and maximize productivity of their diagnostic equipment. The centralization of resources means individual practices can be leaner and more cost-effective, a cost savings that can be passed to the client. This further lowers the barrier to entry for the client and increases the likelihood that the client will be able to access care.
A further step can be taken by utilizing in-home diagnostics that create an extension of the spoke into client’s homes. The use of these services increases client sensitivity to their animal’s needs. Once the client is aware of the needs and they have quick and easy access to the clinic by way of a triage tool, then they are more likely to seek the care their animal needs.
The net result of these drivers and their resulting changes in business practices is that we are entering a time of universal access to animal health care. These changes are disruptive, and not every clinic business model will survive the changes. Many clinics will not be able to make the changes required to adapt to the changing veterinary landscape.
In addition, veterinarians will have to be educated in new ways that help them understand their business model from a modular approach and their ability to focus on the highest level of value for their clients.
The coming decade will see an acceleration of these changes as more companies enter the space. Understanding these changes is only the beginning. Much more needs to be said about implementation and rising above the challenge to see the opportunity.
Innovation Station co-columnist Dr. Aaron Massecar is executive director of the Veterinary Innovation Council. Co-columnist Dr. Adam Little is co-founder of Future Pet.