ValuVet director comments February 2024

Now is a good time to have a long look back at what the veterinary economy is doing and also get an understanding of how we have been measuring this, because any analysis of this nature is only as good as the data used. Much like a clinical trial for a medication which you are all more familiar with, studies can easily be biased by insufficient or inaccurate data. As clinicians, we should always dig a bit deeper than simply believe the headline, so we feel it appropriate at this point to give a bit more detail as to where the information in this newsletter comes from.

The best way to display the information has been by comparing like-for-like months from 2 consecutive years. For example, Dec 2022 compared to Dec 2023. This allows us to take into account the seasonal fluctuations in the industry, which is generally quieter in winter and also allows for the most part to take the regular holidays into account.

Getting accurate data is a completely different challenge, because asking for manual data submission cannot be done quickly enough to perform a country wide month-on-month trial. So instead the data comes from an app that is installed in over 200 veterinary practices in Australia and then collects every single invoice raised in the practice every 24 hours. Attached to every invoice is usually a patient and a client, as well as the services offered. It is thanks to this app ( that we are now able to give the profession this very valuable information.

Further to this, practices that have been operating for less than 2 years are eliminated from the trial, practices whose record keeping is inconsistent are eliminated from the trial and practices who have changed software over the last 12 months are often eliminated – once again, similar to a drug trial where patients with underlying problems are not selected.

With the above selection, the data is limited to about 300 full-time vet equivalents spread across Australia; the trial could probably include more, but clean data is better than high volumes of lower quality data. Furthermore, none of these are from corporately owned practices, so this ensures that there is a diversity of management and practice types in the sample.

No clinical trial is complete without another type of sanity check that is performed independently, otherwise how would you avoid the placebo effect. As a sanity check, the data is then compared to what we see in our valuations at ValuVet ( and what the accountants and business advisors see at APL Accountants (
So what does data look like?

In Dec 2023 (The December just gone by), revenue was up by 3% compared to Dec 2022. This is better than the negative 2% we had a year ago, but still below inflation, which is at about 5%. This means that against inflation, the industry is shrinking by a very small amount.
Number of patients seen was down at negative 4.5%, which again is better than the negative 10% seen a year ago.
However, we need to keep in mind that in 2022 we were comparing to the boom of 2021 and now we are comparing to a much weaker year, so the fact that the industry has been beaten by inflation cannot be ignored when the bar we were comparing to was not that high.

Similar figures were displayed in October and November 2023 so December was not just a one off outlier.

So what does this mean for privately held practices?
Whilst it is easy to think your business is performing just like the industry average, this is not always the case. As we said in the previous paragraph, our sanity check is based on hands on work done by the accountants at Valuvet and APL Accountants who work individually on each practice and prepare both valuations and 3 monthly reports for each practice. What we can see here is that the variance in performance is higher than ever. There are practices doing very badly and there are practices that are booming more than ever – so what could possibly be causing this variance? Is your practice a boomer or a buster?

The answer lies in the fact that history shows us that recessions are the times when the weak get weaker and the strong get stronger. Just like on a bicycle race on the Tour de France, we only see the bunch of riders really break up when they get to the mountains. On the flat stages everyone stays together.
So the practices that are booming are likely doing so because their closest competitors are doing exponentially worse. A practice headed by good decision makers will do better in times when a lot of difficult decisions need to be made. This means that now, more than ever, the decision makers in business have to be well informed and proactive (at least more well informed and more proactive than their competitors).

Having a complete snapshot of your practice financials, practice sales trends and individual team performance is more important than ever. That is why we strongly recommend that practices have fully reconciled financials and a formal financial report prepared every 3 months (annual quarter). We also like them to have a 3 month forward looking financial projection so that they can plan ahead and targets for their 4 most important sales metrics – This is where APL Accountants fits in with their services and provides this to all their advisory clients.

To assist with being proactive is something altogether different. Here we have had to identify what we feel is the greatest threat to the industry in terms of the sales not keeping up with inflation. For the first time ever in September APL Accountants started to measure client attrition as an average across their customer base. Because this involves a rather complex calculation, it has never really been used as a global industry KPI. Client attrition measures the percentage of your clients that visited your practice 1 year ago and then never returned in the last 365 days. Historically, pre-Covid this was 25% – meaning that one out of every 4 clients you see today will not be at your practice in a year’s time. This value had been measured on a client by client basis but was never averaged out across the industry.

When APL Accountants decided to take a much closer look at this in September, they discovered that client attrition had increased to 30% – meaning that almost one out of every 3 clients will not be around in a year’s time! This takes about 25% off the lifetime client spend at a practice!

Identifying this problem has put in motion some things where practices can proactively reduce their client attrition.
The most effective way of doing this is by utilising a direct marketing strategy using text messages because currently text messaging has the highest open rates and response rates compared to other methods of contact. Profitdiagnostix therefore has initiated a direct marketing service using text messages to lost clients. Because they were already reporting on client attrition, the lists of lost clients and patients were already available. This is proving a very effective tool in managing lost clients, but is also providing useful information because the two way text messages allow clients to respond. And the responses give an indication as to why clients are not visiting a particular practice, for example:
– is there a significant sample of responses saying that they are no longer using your practice and going to a competitor?
– or are clients saying that they don’t have the money and will come back later when they do?
– or are they complaining about your service and / or pricing?
– or are they saying thank you, please book us an appointment

In summary, to maintain the value and profitability of your business in a recession is not impossible, but it does require that you keep a closer look at the numbers compared to boom periods when work is just coming through the door. Sometimes you have to move out of your comfort zone and ask for financial and reporting services that you historically may not have considered, for example:
– more intensive financial reporting so that you can look at where the financial leaks are in your business, including business valuations where introduction of junior vets as stakeholders in the business is likely to improve team performance.
– looking at team performance on an individual by individual basis and structuring pay increases strategically to favour better performers
– direct marketing strategies to existing clients that might yield a few uncomfortable truths and feedback about your business.
It is often these sorts of financial and reporting services that give the correct decision making power to business leaders, but they are not DIY. They generally require the services of an external expert.