Canadian veterinarians continued to prosper in 2019, as the national veterinary economy expanded for the 4th consecutive year, attaining new record highs in several key metrics. Across both companion animal and mixed and large animal hospitals, revenues grew, expenses remained under control, and net incomes advanced.
Companion animal hospitals
Canadian companion animal hospitals benefited primarily from surging revenues, with the national weighted average climbing to $631 517 per full-time equivalent (FTE) DVM, an increase of 6.7% year-over-year. As would be expected with revenue growth, expenses increased in 2019, rising by 5.7% from 2018, to a national weighted average of $430 937 per FTE DVM. With the escalation in revenue outpacing that of expenses, companion animal hospitals were able to boost their net incomes by 7.2%, to a national weighted average of $200 580 per FTE DVM (Figure 1).
Figure 1.
National weighted average revenue, expenses, and net income per full-time equivalent DVM for companion animal hospitals in Canada from 2015 to 2019.
While the average figures across all of Canada paint a rosy picture, there were, as usual, some provinces that registered above average results, and others that came in below average. Nova Scotia, Alberta, and British Columbia companion animal hospitals all had revenue growth that was well above the national weighted average. However, Newfoundland & Labrador and Prince Edward Island suffered declines in gross revenue. Saskatchewan companion animal hospitals saw their revenue stagnate, and growing expenses resulted in a drop in net incomes.
Examining non-DVM expenses as a percentage of revenue, Canadian companion animal hospitals did see a minor uptick from 2018 to 2019, from 68.0% to 68.3%, yet this remains well below the recent high-water mark of 69.6% in 2016 (Figure 2).
Figure 2.
National weighted average non-DVM expenses as a percentage of gross revenue for companion animal hospitals in Canada from 2015 to 2019.
Comparing expenses as a percentage of revenue allows for a meaningful comparison across time, between practices of various sizes, and in different parts of the country. For example, a larger hospital, generating more revenue, will invariably have a higher dollar amount of expenses when compared to a smaller hospital that generates less revenue. By expressing their expenses as a percentage of the revenue each generates, it becomes possible to assess efficiency against benchmarks.
Though the financial metrics of companion animal hospitals provided much cause for celebration, client metrics once again showed very little positive change. Current clients declined by 1.4% in 2019, to 816 per FTE DVM, while new client numbers remained essentially stagnant at 213 per FTE DVM, a change of 0.9% from 2018 (Figure 3).
Figure 3.
National weighted average current and new clients per full-time equivalent DVM for companion animal hospitals in Canada from 2015 to 2019.
Taken together, the financial and client metrics indicate that the average Canadian companion animal veterinarian is seeing fewer clients than even a couple years ago yet is more than making up for this through increased fees, greater compliance, and higher spending from each individual pet owner. This playbook has worked out very well in recent years, as demonstrated in previous figures, but there will eventually be a need to staunch the decline in clients, particularly if the overall Canadian economy encounters a rocky patch and clients rein in their spending.
In an ideal world, a hospital would maintain their current client numbers, attract a healthy number of new clients to replace natural attrition, continually work on improving compliance, raise their fees each year, and diligently manage their expenses. Obviously, these are easier said than done, yet they are all possible to accomplish.
Pre-booking routine appointments and implementing Wellness Plans continue to show great impact in both retaining clients and increasing compliance. New clients are most effectively recruited by providing great service to current clients, who then recommend their veterinarian to friends and family.
Regular and attentive budgeting commonly proves the best method for keeping expenses under control, by identifying abnormal spending early and rectifying it before it evolves into a more serious concern. Implementing all these strategies can help a hospital’s net income expand for years to come.
Mixed and large animal hospitals
Mixed and large animal hospitals across Canada were not able to match the revenue growth of their companion animal colleagues, with the national weighted average climbing by 2.4%, to $544 425 per FTE DVM in 2019 (Figure 4). Echoing previous years, mixed and large animal veterinarians are assiduous budgeters, and managed to limit expense growth to only 0.6%. This resulted in net incomes increasing faster than companion animal hospitals, expanding by 5.9% to a national weighted average of $193 041 per FTE DVM. Whereas 5 years ago, mixed and large animal hospitals had an average net income per FTE DVM that was over $21 000 lower than the companion animal hospital average; in 2019 this gap had narrowed to only approximately $7000.
Figure 4.
National weighted average revenue, expenses, and net income per full-time equivalent DVM for mixed and large animal hospitals in Canada from 2015 to 2019.
As in companion animal hospitals, there were some provinces that outperformed the average. Alberta and Saskatchewan enjoyed revenue and net income gains beyond the national average, while British Columbia saw both metrics turn negative.
After bucking the recent trend and ticking slightly upwards in 2018, mixed and large animal hospitals got back on pace with non-DVM expenses, reducing them to 64.3% of gross revenue. This is a substantial decline from the high of 69.4% in 2015 (Figure 5).
Figure 5.
National weighted average non-DVM expenses as a percentage of gross revenue for mixed and large animal hospitals in Canada from 2015 to 2019.
While companion animal veterinarians appeared to focus more of their attention on expanding revenues in 2019, mixed and large animal veterinarians clearly directed their efforts to controlling expenses as a method for growing their net incomes.
On the heels of 4 years of solid growth, one of the greatest risks is that of complacency, particularly as many economists warn of a coming slowdown or recession. When a hospital is busy, it is easy to justify not implementing Wellness Plans, skipping budgeting, or even forgetting to raise fees, as there is enough business coming through the doors to make these feel unnecessary. Eventually though, this current expansion will cease; better to be well-prepared ahead of time.
Notes: Data for the CVMA Practice Owners Economic Survey are derived from the 2019 Provincial Practice Owner’s Economic Surveys. Provincial averages are weighted based on relative population size to calculate a national weighted average for all metrics. For the purposes of this research, a Full-Time Equivalent veterinarian is assumed to work 1750 hours annually. Note that, due to data gaps in 2015, Quebec is omitted from the calculation of the national averages for all years presented.
Footnotes
This article is provided as part of the CVMA Business Management Program, which is co-sponsored by IDEXX Laboratories, Petsecure Pet Health Insurance, Merck Animal Health, and Scotiabank.
Use of this article is limited to a single copy for personal study. Anyone interested in obtaining reprints should contact the CVMA office (hbroughton@cvma-acmv.org) for additional copies or permission to use this material elsewhere.