WHAT are we seeing when we look at practice and its role in today’s troubled economy? Are we even looking at our role within this troubled economy at all? To be fair, one could see some merit in pulling the duvet over one’s head and waiting quietly for it all to blow over but that’s not entirely a grown-up response, however tempting it may be. We know that the UK economy is teetering along, probably doing a little better than some European nations and faring a little worse than one or two others. We also know that Germany is tiring of being the endless sugar daddy for the Eurozone but also that it has little option but to continue if the love-child it conceived with France is to have any chance of survival. We also know that it will be several years before any of these ailing economies, including our own, will be buoyant and bouncy again; in the meantime, we are getting used to the idea of doing without certain things we once took for granted. Borrowing is probably the most important of these and, since the mid 1990s, we’ve all become accustomed to having whatever we want now, rather than having to wait for it, and whole business sectors have grown up based on the limitless supply of credit.
Substantial sales
Numerous sofa companies have built their businesses on the idea of “nothing to pay for 12 months and then four years interest-free credit” to make it easier to buy the furniture. Most of us look at that system as if it were alien but it continues to make substantial sales even in an adverse economic climate when the word borrowing is as familiar to a high street bank as the concept of lead poisoning through the water supply. Intriguingly, the word lending seems to have been excised from the banking dictionary despite the fact that many of those trying to keep the good ship Family afloat are, reluctantly, the banks’ new owners. If we look only at small animal practice, perhaps we should stop looking at the bigger picture, the world economy, even our own national economy, and focus on the micro detail down to family level. We may have forgotten, but those still employed in the public sector will not have done so, that our coalition government has decided to reverse the previous government’s policy of creating a bounty of new jobs in the public sector. From 1997 to 2010, the public
sector payroll grew by 0.9 million, or 17%. A number of these arose through the nationalisation of certain banks but even when we omit this from the calculation, the growth in public sector employment still comes to around 13%. A substantial number of new jobs had been created in the NHS: since 1997, the NHS has increased its staff numbers by an astonishing 35% – from 1.2 million up to 1.6 million; education staff have increased from 1.1 million to 1.4 million, a rise of 27%, and the police payroll increased by 28%, from 230,000 up to nearly 300,000. In several key areas, including the police, even a 25% cut would still leave
payrolls about the same as they were in 1997, even though, taking politics out of the equation, voters and taxpayers had campaigned volubly for years to improve services in the NHS, in education and to make the streets safer.
Biggest cut
So, we have to get used to doing without many of the things we’ve come to take for granted. The Government has announced the biggest cuts in state spending since World War II and savings estimated at about £83 billion are to be made over four years. The plan is to cut 490,000 public sector jobs. Most Whitehall departments face budget cuts of 19% on average and the retirement age is to rise from 65 to 66 by 2020 – and few of us believe that this will be the only delay in the retirement age over the next 20 years or so. Why do Americans talk about doing the math? Surely everyone calls it maths? Anyway, if we do our sums here, we will lose approximately 187 public jobs for each of the 2,626 main veterinary practice businesses in the UK by the time this cut has taken place. Let’s accept that only 50% of these are
pet owners and we are faced with every practice in the land losing around 94 potential active clients.
Savaging jobs
On top of this, the knock-on effects on ancillary businesses are already being felt. As this article is being written, BAE is announcing 3,000 job losses to reflect the necessary cuts in the defence budget and this will be one of many similar cascades to come over the next few years. Just as the previous government
had little choice but to create public sector jobs, this government
has little choice but to savage them. One way or another, we are going to have to get used to having either fewer active clients or fewer financially viable active clients. Maybe you are seeing this while many of the rest of us are not, but where are the signs that practice has taken this on board? Where are the signs that we are, individually or collectively, rethinking our age-old business model?
The business model we cling to, as if it were the timbers of a sinking ship, has had its day, at least for the next few years. Even if we are not seeing a huge hole in the side of our practice vessel, most of us would be lying if we didn’t admit to shipping more than a little water.
Massive attrition
Some things are unavoidable. We have witnessed but failed to react to a massive attrition in the number of active patients and active clients over the years. What was once FDI and is now Pfizer’s Performance Index, has shown an attrition of 19% in the number of active clients/FTE since 2002 – and our response has been, largely, to ignore the signs and to require the fewer captive clients to pay more. Gradually, client elasticity became sclerotic and many clients snapped, either leaving their chosen practice for
another one, operating a number of practices to suit their needs or even abandoning veterinary practice altogether unless disaster befell the pet. Much of our carefully crafted business in preventive care simply walked out of the door when pet stores demonstrated that they could do it cheaper and tolerably well. Still we plough on through even heavier seas and still we cling
tenaciously to our failing business model. No one has come forward to say that they have a better model to hand and that may be because no one has yet found a better model. What is now clear is that we are beginning to understand that the model has to change if we are to survive without huge changes being forced upon us in a situation where the gravest danger would be a progressive disengagement from pet ownership simply because we failed to make affordable veterinary care, in sickness and in health, available to all pet owners. If families cannot afford the care we make available, they may bite the bullet once but after that, and when the pet is no longer part of their family, for many the realisation will dawn that pet ownership is a luxury they can no longer afford. That would force a radical change in not only our business model but also in our hopes and aspirations for a whole profession. Isn’t it time we sat down together to think how changes – small and possibly not-so-small – made now, can keep our hopes, aspirations and businesses afloat until the economic tide improves?
