Richard C. Nap, DVM, PhD, DECVS, DECVCN
The perception that there are too many veterinarians in a market is not new and not unique. It seems to be a general perception by many observers in many markets for many years. On the other hand, it seems that markets have absorbed the graduated veterinarians over the years and in general the profession is doing well. Somehow there is a mismatch between the perception of saturation and the realities, at least in many countries around the world. The (perceived) saturation is not only an issue of markets with high levels of veterinary care such as the USA, Western Europe, Australia, New Zealand, Japan, and many others. It is also the case in countries that have a lower level of average standard veterinary care.
Who is the competition for the veterinary practitioner? The classic way to answer this question is to point at the other veterinarians in the village or city or region. In addition, pet-specialty retail shops are considered competition by veterinarians who sell goods and services that seem to overlap with those sold in these shops.
An alternative analysis based on many years of observations around the world is that the veterinary profession may need to shift paradigm and focus much wider. The times with one priest, one doctor, one teacher and one veterinarian per community are gone. People travel to reach the place where they prefer to buy their preferred products and services. Pet owners travel (sometimes by plane) hundreds or sometimes thousands of kilometers during a weekend to attend dog and cat shows. Pet owners are also much higher educated compared to the past (the academic degree of the doctor is no longer unique in town), and they are also often pressed for time (busy, busy, busy). When they shop, they look for places where they can find the quality level of products and services that fit their lifestyle. Surveys show that location is still an important factor for many clients to choose their GP veterinarian. However, we should not confuse this with low mobility. People are willing and able to travel when they have a good reason to do so. Visiting their trusted veterinarian of choice might be such a good reason.
Owners visit the veterinarian to have peace of mind regarding the (future) health of their pet family member, and they are looking for an optimal healthcare experience. Factors involving the quality perception for the owner are multiple and are typically not primarily related to the level of care delivered from a scientific point of view. The classic quote "the owners don't care how much you know, until they know how much you care" can be repeated here. The way the veterinarian is perceived depends primarily on her/his communication skills and those of her/his staff. This applies not only to communication (while meeting in the hospital) but also to all other formats of communication such as contacts via the telephone, the Internet and in print. The designs and layout of the website can be the factor that drives a potential client to or from the clinic.
Owners make conscious and subconscious comparisons between their experiences at the veterinary hospital and those in other places such as supermarkets, shopping centers, cinemas, offices of lawyers, doctors, dentists, hotels, car dealers. They compare the services provided by the veterinarian and her/his staff with the average level of services in places where they like to shop and where they feel good. Veterinarians are in the business of selling an experience (emotions) and people need to feel good about the visit to their veterinarian. In this sense, veterinarians compete for quality perception far outside the boundaries of the veterinary medicine environment. Why are (in general) lawyers better dressed than vets? Why do sales people at the Mercedes-Benz dealership not wear sneakers to work? Why is the quality of furniture in the Sheraton Hotel better than that in the Ibis hotel, and why is their staff better educated and trained in communication and customer service? What does the lack of maintenance on the outside of the building and the landscaping have to do with the quality of the surgeon? These and many more similar questions can be asked and can be answered based on the vision and mission statements for these businesses and their brand positioning. Once it is known what the positioning is, it becomes clear how to "behave" in that segment of the market. Veterinarians compete for perception far outside their own professional arena.
In addition to this, the competition with the outside world is based on the simple fact that people can only spend their money once. From that point of view, every place where (potential) pet owners can spend money is a competitor. If these businesses are better in convincing owners about their needs and wants, the money will not be available to be spent at the veterinary hospital. Many products and services sold at the veterinarian are not related to emergency treatment. This includes plans for internal and external parasite control, preventive vaccination programs, heartworm prevention, and healthcare programs focusing on dental disease and obesity to mention just some obvious examples. Their use can be postponed or abandoned. However, it does not stop there. It also includes elective surgical procedures. How do we communicate and educate about the benefits of the hip prosthesis? The pain and discomfort caused by OA (osteoarthritis) is not known to many pet owners of dogs suffering from these conditions, and they might choose to spend their money on the ski piste or on the beach, buy a new TV set or a new car, instead of having the "elective" surgery done. If only they had known. To optimize healthcare, veterinarians as a profession need to make a maximum effort on informing pet owners about the benefits of these and other healthcare and wellness programs for their pets and for them, in order to secure the money to be spent in the veterinary clinics to the benefit of both the pets and the owners.
When focusing on competition within the veterinary profession, the standard (and often only known) procedure to compete is to lower the prices in the hope that this will attract more clients. The immediate effect, of course, is a reduced profitability because without lowering costs, lowering prices directly hits the bottom line. Lowering prices will also lower the perceived quality position of the clinic in the quality-price pyramid. The lower the position in the quality-price pyramid, the more the inter-vet competition is about volume and (low) price. Low costs businesses positioned in the low segments of the market work with high volume (long days) and extremely narrow profit margins. To be successful, they therefore need to be very well managed. Typically veterinarians are not very good (financial) managers. Despite that global and generally accepted reality, many veterinarians do choose to ignore the rules of the game and compete in the low price battle. In contrast, at higher levels in the quality-price pyramid, the competition is about smaller volume, higher quality, higher pricing and wider margins. This option is too often overlooked by many veterinarians when preparing to compete. In a neighborhood that already has too many low-quality veterinary outlets (to avoid the words clinic or hospital), these do not present real competition to a high-quality veterinary hospital. They present the contrast to the higher-quality services offered.
The sun does not consider the rain as competition. Both have a place in the spectrum, and both are appreciated depending on priorities. The same is true for the summer and the winter. The contrast adds value to the overall market. There are clients for both. Clients interested in shopping in high-quality places do not enter into low-quality outlets. Veterinarians who make the strategic choice to offer high-quality products and services often compete with very few colleagues. Perceived higher quality (by clients) does not by definition imply adding diagnostic, medical and/or surgical services and significant investments in hardware. Remember that the experience of the veterinary customer is not primarily based on the scientific, factual and rational realities. They are based on the "soft" aspects of the visit, factors that contribute to the emotional experience which clients have when visiting the place. How does it look, how does it smell, how are the seats, how is the coffee (if any) and even the bathroom. How do I feel to be treated as a client? Does the staff pay attention to me? Do they know my name and the name of my pet? Do they remember (database!) the patient history? To summarize: Does the staff manage to make the pet owners feel special and important and appreciated as a client? Do they convince the clients that they truly care about them and their pet? Do they feel they were offered an optimal healthcare experience? Is the clinic perceived to be an optimal healthcare center for pets?
In many cities in the world, there are small veterinary outlets in every block and sometimes more. In analogy with the hotel business, these low-quality businesses can be compared to no-star or 1-star quality clinics, and they are competing in the very bottom segments of the quality-price pyramid. Working (and often waiting) long hours, working (partially) in black, and killing each other's business (and their own) with impossible low prices by not generating profit and often not even adequate income. What is the perception of the veterinary professional that clients have when visiting these low-quality places? Although they might offer services at a price and quality level that owners in a low segment of the market appreciate, many others will not be satisfied. When no alternative is available, they will feel like guests looking for a 4-star or 5-star hotel who are forced to sleep in the only available 1-star hotel in town. In the end, nobody is happy with this level of service. The pets do not receive adequate care, the owners do not find the quality they look for, and the veterinarian gets frustrated because (s)he cannot practice most of what (s)he studied.
What is lacking in many markets is the opportunity for clients to visit practices offering 3-star and higher service levels. In many cities, these higher-level services do not exist, while the potential clients do exist. By increasing the quality level of services and by positioning the services higher in the quality-price pyramid, veterinarians have a significant opportunity to add business and grow the size of the overall volume of veterinary medicine in the market. As history has shown, this is not only true in the so-called underdeveloped markets. The competition for higher quality will positively influence and benefit the overall professional market, and with the rising tide, all the boats will go up. This in turn will have a positive impact on the overall level of quality care that the profession can make available for the pets and their parents/owners.
1. Moreau PH, Nap RC. Essentials of Veterinary Practice. An Introduction to the Science of Practice Management. Hereford, UK: Henston Publishing; 2010.