A few months ago, I was speaking at the Midwest Veterinary Conference, and the conversation turned to an open discussion around some of the biggest challenges facing hospitals. One owner was frustrated because clients seemed more resistant to fee increases than they had been just a few years ago. Another was worried about a new low-cost competitor opening across town. A third owner was struggling to recruit and retain team members while maintaining profitability.
At first glance, it sounded like three entirely different problems, yet the more we talked, the more I became convinced they were all wrestling with the same core issue: none of them had fully decided who they wanted their hospital to be.
Before you jump to agree, or disagree, let me ask a question. If a prospective client called your hospital tomorrow and then called three of your competitors, what would make your practice different? Not necessarily better or worse—as that’s in the eye of the beholder—but different.
The answer to that question is becoming increasingly important because I believe something significant is happening in Veterinary medicine: the middle-class Veterinary hospital is disappearing.
The ‘Good Old Days’
For years now, as I teach at Veterinary school, speak at conferences, and observe what’s happening in the profession through the lens of a practice owner, I’ve shared (and seen) that for decades, many Veterinary hospitals lived comfortably in the “middle.” They were not the Ritz Carlton or the EconoLodge; not Texas Roadhouse or a high-end steakhouse.
The average hospital provided good medicine and reasonable service. Its fees were somewhere in the middle of the local market—usually by happenstance versus intention—clients generally accepted recommendations and revenue, not necessarily profitability, grew steadily. In other words, life was pretty good for the stereotypical “Dr. Smith” of our profession.
The above is oversimplifying a bit, but many hospitals were able to build successful businesses without having to think too hard about market positioning. Today, that is becoming much more difficult. Clients have more options than ever before. Corporate groups continue to expand; urgent care facilities are growing; low-cost providers are becoming more sophisticated; and clients, like most consumers, expect convenience, digital communication, online scheduling, and rapid access to care.
As our industry outside of our four walls is evolving and demanding more from us, internally our expenses continue to climb. Payroll, benefits, equipment costs, vendor fees, and the list goes on are on the rise. Many owners find themselves trying to solve these challenges through a familiar approach: work harder and be everything to everyone.
Unfortunately, I don’t think that’s a sustainable strategy.
Three Types of Hospitals Are Emerging
As I travel the country and work with Veterinary hospitals of all sizes, I increasingly see successful practices falling into one of three broad categories.
The first are what I would call premium experience hospitals. The AVMA would label them as “earns”-based. These hospitals have intentionally decided they are not going to compete on every price. That doesn’t mean they’re not mindful of shopped items and it doesn’t mean they don’t pay attention to their local market and client needs, but it does mean that they’re comfortable with having prices that are not middle of the road.
Since most clients can’t tell the difference between “good” medicine and “great” medicine, these hospitals are competing on medicine, sure, but equally important on service, experience, and relationships. Their facilities are often beautiful (or at least well maintained, clean, and functional); their teams are highly trained and well leveraged; their ideal client experience is clearly defined and delivered; and their fees tend to be higher, but their clients understand the value proposition.
The second category is convenience-focused hospitals. These practices recognize that many pet owners value accessibility almost as much as medicine. These hospitals emphasize online scheduling, same-day appointments, efficient workflows, extended hours, and ease of doing business—not that the premium model hospitals can’t leverage some of these, too. They have built their model around meeting clients where they are.
I’m actually typing this on a work trip and just down from my hotel is an UrgentVet. While I haven’t stepped into that exact clinic yet—I probably will just for the fun of it—I did walk by last night and it’s sleek, highly automated (at least based on what I could see looking at the front desk and reception area), and its hours are designed to offer convenience.
The third hospital category focuses primarily on affordability. These hospitals operate, or at least should operate, highly efficient systems designed to provide care at a lower price point. While some practice owners view them as competition, I would submit they serve an important role within our profession by increasing access to care.
To harken back to an earlier analogy, the Ritz Carlton or even Hampton Inn doesn’t likely view Motel 6 or the EconoLodge as competitors. Not because either is right or wrong, but because they have very different ideal clients and everything about each brand—from the facilities to the staff to the experience to the rooms to the price—is designed for that ideal client.
In looking at these models, it’s important to note that all three can be successful. There is nothing in this article intended to cast judgment on one model over the other. They all exist for a reason. The right model should appeal to the individual owner’s “why” and priorities, and all three can be—which doesn’t mean they are by nature—profitable and sustainable.
The challenge occurs when we try to be all three at the same time.
The Dangerous Middle
Several years ago, I had a mentor share a lesson with me that has stuck ever since. He told me that most business owners get into trouble when they try to be everything to everybody, and Veterinary medicine is no different.
Let’s think about what many hospitals are attempting to do. We want to offer “gold standard” (whatever that means these days) medicine, we want to offer maximum convenience, and we want to have the lowest prices in town. The problem is that all three goals require resources:
- Premium medicine requires investment.
- Convenience requires staffing and technology.
- Low prices (with high volume) limit our ability to pay for both.
Something eventually has to give.
I cringe whenever an owner tells me they want to maintain the lowest prices in their market while also increasing wages, adding equipment, improving benefits, expanding hours, and renovating their facility. I don’t cringe because I don’t respect their vision or because I’m judging their wish, but because it’s virtually impossible to be the “cheapest” and have everything I just listed.
Last year, I worked with an owner who wanted to remain one of the least expensive hospitals in her market while simultaneously adding another veterinarian, expanding technician pay, remodeling the facility, and investing in new equipment. Every one of those goals made sense independently. Together, however, they created a math problem the hospital simply couldn’t support.
This isn’t necessarily a management problem. Often, it’s a strategy problem.
Who Do You Want To Be?
One of my favorite exercises with practice owners is to ask them a simple question: What is your “why?”
In other words, why does your hospital exist?
Answering that question will help define what your hospital will be known for. The answers are fascinating, and thinking over the last few months of asking that question, range from some wanting to be known for exceptional medicine, others for client service, others as the most trusted practice in their community, and others as an employer of choice.
The fun thing, at least for me, about that question is that there is no right answer. The key, and what I encourage all of us to have, is an answer.
I’ve found that owners who can clearly articulate their “why” make decisions faster and with more confidence. They know which opportunities to pursue; which clients they are trying to serve; and, sometimes most importantly, which opportunities to decline.
Without that clarity, we often find ourselves making decisions that pull the practice in multiple directions simultaneously, resulting in frustration, confusion, and often disappointing financial performance.
The Opportunity
If you’ve read this far, you might think I’m pessimistic about the future of Veterinary medicine. Nothing could be further from the truth. In fact, I remain incredibly optimistic about our profession.
Pet ownership remains strong, the human-animal bond continues to deepen, and demand for quality Veterinary care remains significant. I believe the practices that clearly define who they are and who they serve have tremendous opportunities ahead of them.
The hospitals that thrive over the next decade won’t necessarily be the biggest or the cheapest. They won’t necessarily have the fanciest buildings or be in one geographic region over another. I believe they will be the hospitals that make intentional decisions about their identity and consistently deliver on that promise.
I’ll leave you with one final question. If a prospective client called your hospital tomorrow and asked, “Why should I choose you?”, would your answer be immediate and clear? If not, now might be the perfect time to figure it out.