To borrow a popular refrain from our politicians, 2020 was an unprecedented year for Canada and the entire world. Yet, despite all the disruptions brought about by the COVID-19 pandemic, the veterinary industry proved once again to be remarkably resilient, with many key metrics continuing their climb to new record levels.
Companion animal hospitals
Canadian companion animal hospitals benefitted from a combination of increased revenues and prudent expense control, resulting in net income growth. The national weighted average revenue climbed by 2.4% year-over-year, to $646 893 per full-time equivalent (FTE) DVM; yet expenses only ticked up by 2.1%, to $439 880 per FTE DVM (Figure 1). This escalation of revenues outpacing expenses led to net income pushing up by 3.2%, to a national weighted average of $207 013 per FTE DVM.
Figure 1.
National weighted average revenue, expenses, and net income per full-time equivalent DVM for companion animal hospitals in Canada from 2016 to 2020.
Although the Canada-wide average figures are a good news story, there were individual variations between provinces, with some falling behind the average and others far exceeding it. Alberta and Manitoba companion animal hospitals posted revenue and net income growth well above the national weighted average. By comparison, British Columbia and Nova Scotia suffered declines in gross revenues and net incomes. Saskatchewan companion animal hospitals were faced with shrinking revenues, but by trimming expenses by more than enough to offset this, had net income growth even in these difficult conditions.
Assessing non-DVM expenses as a percentage of revenue, Canadian companion animal hospitals shrank this figure from 68.3% back down to 68%, a substantial decline from the highs of 69.6% witnessed in 2016. This budgeting and managing of expenses have been key contributors to net income growth over the past 5 y (Figure 2).
Figure 2.
National weighted average non-DVM expenses as a percentage of gross revenue for companion animal hospitals in Canada from 2016 to 2020.
Comparing expenses as a percentage of gross revenue permits comparison between practices of various sizes in different areas. As a simple example, consider a 5-DVM practice and a 2-DVM practice; the larger hospital will invariably have a much higher dollar figure expended on drugs and supplies, utilities, non-DVM wages, etc., compared to the smaller hospital that generates less revenue. However, by expressing expenses as a percentage of revenue generated, it is possible to compare these 2 practices and assess their efficiency against national and provincial benchmarks.
Another positive development for companion animal hospitals over the past year were client numbers. After 4 straight years of decline, the number of current clients rebounded by 8.7%, to 887 per FTE DVM, while new clients also climbed, to 226 per FTE DVM, a 6.1% increase from 2019 (Figure 3).
Figure 3.
National weighted average current and new clients per full-time equivalent DVM for companion animal hospitals in Canada from 2016 to 2020.
In recent years, much of the revenue growth in the typical Canadian companion animal veterinary hospital has come even as client numbers decreased, suggesting that veterinarians had been doing more with each client. Although greater compliance and higher spending from each pet owner is still a strategy worth pursuing, it is encouraging to see revenue increases supported by client numbers ticking back upwards, providing a solid foundation for continued future growth.
Moving forward, one substantial risk to hospitals is the acceleration of expenses, particularly as suppliers raise their prices to offset pandemic costs (e.g., PPE, physical distancing, etc.), and non-DVM and DVM compensation climbs due to a very tight labor market and high demand for these employees. Veterinary hospitals should consider robust fee rises, in tandem with regular budgeting, to both expand revenues further and ensure that expenses are monitored and kept under control.
Mixed and large animal hospitals
Canadian mixed and large animal hospitals outstripped their companion animal colleagues in revenue growth, with the national weighted average climbing by 4.2%, to $567 336 per FTE DVM. Unfortunately, this was eclipsed by expenses advancing by 8.6%. This culminated in net incomes slipping to $185 760 per FTE DVM, a decline of 3.8% from 2019’s figure. Last year, mixed and large animal veterinarians had almost completely closed the gap in net income to companion animal veterinarians; these results see them fall back to over $21 000 behind the companion animal average net income (Figure 4).
Figure 4.
National weighted average revenue, expenses, and net income per full-time equivalent DVM for mixed and large animal hospitals in Canada from 2016 to 2020.
As was the case with companion animal veterinarians, looking province-by-province, there were those that outperformed the national averages. British Columbia enjoyed robust growth in both revenues and net incomes, whereas Alberta and Saskatchewan saw both metrics decline by double-digit percentages. Ontario had stronger-than-average revenue growth, yet surging expenses drove net income growth into negative territory.
After fastidious budgeting in 2019 resulted in a decline in non-DVM expenses as a percentage of revenue, 2020 brought a significant rebound, with expenses climbing to their highest point in the past 5 y, at 67.1% of gross revenue (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 2016 to 2020.
Mixed and large animal veterinarians did a commendable job growing revenues in 2020, yet moving forward, equal attention will need to be directed towards staunching augmenting expenses, lest their hard work in bringing in more dollars simply flow out the door, rather than to the bottom line.
Five years of strong and solid growth, as a pandemic raged, and the economy contracted, have proven veterinary medicine to be a surprisingly irrepressible industry. By continuing to expand their clientele, raising fees to keep up with costs, and controlling expenses through budgeting, Canadian veterinarians are well placed to keep this winning streak going, regardless of the economic conditions that are around the corner.
Notes: Data for the CVMA Practice Owners Economic Survey are derived from the 2020 Provincial Practice Owners 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 h annually. Note that due to data gaps, 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.