Saturday, December 7, 2013

1248. Transforming the small animal veterinary industry

Saturday Dec 7, 2013

On Saturdays, Dr Jason Teo takes over in the afternoon from me and sometimes we talk about the veterinary industry and sometimes we share ideas of clinic management.

There are around 60 small animal veterinary practices and so the caseload/practice is low while prices are undercut such that it is not possible to recover costs for some practices. "A top-end blood test machine costs $64,000. The test costs $150. There needs to be 427 tests to be done to cover the cost price of the machine. This works out to be around 1 test/day which is easily achieved in busy clinics. In some heartland clinics, there may be an average of 10 cases.day. The price-conscious pet owner does not want to pay for the tests and so there may be less than 3 blood tests/week as blood test costs add up to the total medical costs. The cost of the test kit rotor is $30 and so the vet is grossing $120 instead of $150. There is the maintenance cost of the machine as this is not free. My point is that the heartland pet customer will like to spend as little as possible on pet care, less than $100 per visit and will go elsewhere if the costs are higher. Blood tests and X-rays add to the costs and they do not want them.

"Intense competition is a fact of life," I told Dr Jason Teo that I had listened to the audio files of how a poor Italian immigrant became a powerful rich man in Europe. His son bought a almost bankrupt newspaper, "The National Enquirer" and made it very successful in the US by giving what the customer wants and not what the owner thinks that the customer should get. "At first, it published gory murders but later changed to positive inspiring family stories. He got the papers marketed in super markets. He paid journalists much more than the industry but would fire anyone whom he disliked."

In other words, he can transform the small animal veterinary industry if he knew how. "How about Dr Daniel doing it?" he asked me. "It needs money as this publisher suffered losses at the beginning. He does not make money immediately till later."          

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