The Future of Veterinary Real Estate
The pandemic changed how veterinarians do business. Here are five things to focus on.
Many veterinarians who changed their daily operations to account for COVID-19 would like to continue the adjustments moving forward. Here are the five to keep in mind for 2021:
- Utilizing curbside service: Even though challenging and time-consuming for practices, curbside service has increased overall clinic productivity, especially at practices that take advantage of technology. Team members can get patients in and out more quickly and efficiently today than ever during routine appointments. What had been a discussion in the exam room between doctor and pet owner became a brief phone or video conversation at the end of the appointment, with the veterinarian or staff member summarizing key points and answering questions. Staff members can get patients in and out of the practice quicker and prepare the exam room for the next pet in a streamlined process that benefits everyone.
- Implementing or continuing drive-up: Drive-up service is great for quick encounters like prescription refills. Practices that provide a safe, friendly and efficient drive-up service will stay a step ahead of their competitors after the pandemic. The added convenience is especially important for millennials and Gen Z who are short on time, for parents with kids in tow and for seniors who appreciate the added service and assistance. From a real estate perspective, this might mean changes to parking areas to reduce wait times, increase safety and optimize traffic flow.
- Offering telehealth solutions: Telehealth appointments have further streamlined operations across the board, with no exam space required for quick inquiries, rechecks and short follow-up appointments. In some practices, a traditional exam room can be divided into one or two smaller, soundproofed telehealth rooms. This, in turn, means the practice can interact with a larger number of clients and in a timely fashion. Telehealth is particularly important considering the surge in pet adoptions during the pandemic.
- Reconsidering pet boarding space: Pet boarding was hit hard by COVID-19 travel restrictions. Veterinary hospitals that provide on-site boarding might have a significant amount of excess space. In the meantime, practices must assess their clients’ boarding needs in a post-COVID era and decide whether to absorb the cost of empty space or invest in a revenue-generating reconfiguration.
- Evaluating the right time to sell: COVID-19 impacted the sales market. Over 1,000 veterinary hospitals were sold in 2020, and the pandemic is accelerating the sale of practices. Some veterinarians are choosing to cash out of their practice or real estate rather than make investments designed to keep up with changing regulations and trends. The corporatization of independent veterinary practices accounts for more than 10% of the companion animal segment, and the figure is forecasted to grow to 25% by 2023.
The trend toward larger corporate veterinary hospitals will put further pressure on independent one- and two-doctor practices as younger pet owners demand the 24/7, ultra-convenient access and services that they experience in other areas of life. Some veterinarians are shifting to a dental practice model to keep up with demand, relying on technicians and staff members for the larger portion of the typical exam and then circulating through the exam rooms as needed. This approach can create more appointment slots.
The veterinary industry was changing before the pandemic, like with the move toward e-commerce and home delivery of pet products. These shifts resulted in unused or under-used retail space in practices. Similarly, preventive and chronic prescription medications are being fulfilled online more often, suggesting that a practice’s pharmacy space might need to be reconfigured.
Another trend involves upgrading veterinary medical equipment and real estate to attract clients and help with employee recruitment and retention. Practices are not only competing for customers, they also are trying to attract the best team members during an industry-wide shortage of veterinary talent. Savvy practice owners know this and are upgrading their clinics, making aesthetic changes inside and out, improving signage and in some cases expanding the practice footprint.
How upgrades are funded must be considered. With interest rates holding at low levels, traditional bank loans are always an option. The key is to think of the real estate and veterinary practice as separate assets, because that is what they are.
As for retired veterinarians who still own veterinary real estate, selling the property might be the right move if taking out loans to make upgrades at a business they no longer own is not in their plans.
Keep an eye out on how 2021 unfolds to stay on top of the best way to utilize your real estate.
Terravet Real Estate Solutions founder and CEO Daniel Eisenstadt is an expert in veterinary real estate and was a co-founder of Community Veterinary Partners, a regional corporate operator of veterinary practices. He has garnered a great deal of insight from the challenges of 2020 and 2021 as they relate to the future of veterinary real estate.