Disruption Creates Opportunity
By Edward L. Blach, DVM, MS, MBA
April 9, 2018
The veterinary industry is undergoing great disruption.
Practice ownership is changing as aggregators continue to purchase hundreds of practices at valuations never before seen in the history of veterinary medicine in the United States. Tuition at veterinary schools continues to climb as the federal student loan monster continues to feed on unsuspecting students.
Practice owners continue to try to find and hire qualified veterinarians and technicians to fill available positions, many of which go unfilled for months, or even years. Pet ownership continues to climb as millennials adopt pets at record rates. The millennial generation now represents a majority of pet owners in the United States. And with all-time highs in pet ownership, we still see flat or declining visits to the veterinarian.
We have a choice
These are just a few of the symptoms of disruption. Disruption is a beautiful and sometimes painful thing, depending upon our perspective and our willingness to change. We have a choice. We can use disruption as our opportunity to grow, or be the victim of it, and watch our opportunities erode. Disruption is what creates new opportunities for young people. Instead of the same people owning an industry for decades or even centuries, disruption helps create new ownership opportunities for those willing to recognize and grab them. Disruption can refresh an industry by creating exits for those who are tired and afraid of change, and it creates new opportunities for those willing to invent new solutions to deliver what customers want.
What is driving this disruption? Disruption is almost always driven by the customer. In some instances, major government regulation can drive disruptive change to a marketplace. Obamacare is an example.
In veterinary medicine, animal owners are voting with their wallets when it comes to sourcing animal care. They are seeking care from many different sources. They might purchase food from Chewy, because they like the service, convenience, and the price. They might get medications from 800-Petmeds, or from Costco or Sam’s. And when they need veterinary care, then they might call a veterinarian, or visit the local pet store to access a veterinarian. They get most other services on demand, when it’s important to them, via mobile device. They connect, discuss, purchase, and share their experiences constantly. They take charge of their ability to acquire solutions to their needs. They do not tolerate waiting for a web page to load, let alone for a return phone call. They will find a way to get what they are seeking, NOW. So, why would we expect them to source animal care in a drastically different manner by calling a local veterinarian’s office, talking to a receptionist who has no veterinary medical training, perhaps waiting for a return phone call, and then waiting a few days to be able to actually see a veterinarian? In increasing numbers, clients are deciding to find solutions elsewhere. Increasingly, only in instances of injury and illness are many clients seeking care from their regular veterinarian, if they have one.
Dealing with debt
On the issue of many young veterinarians and students who have extremely high student debt, they’ve been given some bad advice, and they’ve made some bad choices. They’ve been offered seemingly ‘easy money’ from a federal government that falsely promoted unlimited amounts of student loans as a responsible way to pay for education costs. They’ve not been educated appropriately about the impact of those loans on their lives and their ability or inability to repay them while trying to live a regular life.
Instead, while signing documents promising to repay loans that often exceed the amount they’d owe when purchasing their first home, they rarely received counseling or education about how much they’ll have to make and what the current market is paying for people with their training. What our federal government did to our younger generation is criminal. The federalization of the student loan programs will hurt a lot of people for a very long time. As a consequence, younger veterinarians are demanding higher salaries, fewer hours, and less emergency work, which is not a good fit for the current structure of the veterinary industry. Thus, many practices are finding it very difficult to hire veterinarians to fill empty veterinary jobs for many months. The tight labor market is disrupting many practices by reducing their ability to serve client demand, which will in turn, reduce growth and profitability, and a practice’s ability to pay associates and staff higher wages.
So, disruption is exerting itself upon both practices and individuals in very different ways. Ultimately, if customers cannot get veterinary care in a manner that is timely and pleasing to them, they will find a way to solve their needs in other ways. Perhaps they’ll get answers using a telehealth solution. Perhaps they’ll send a text to Ask.Vet, or seek answers from Alexa’s “MyPetDoc.” Or they’ll establish a recurring food shipment on Amazon.
Perhaps veterinary practices will adopt alternatives to current labor by using artificial intelligence to answer their customer inquiries, perform triage, and guide them to appropriate care, in an effort to streamline and focus the allocation of their available veterinary talent to more profitable and customer-pleasing activities. All of these solutions have developed because customers are seeking to solve their needs differently.