We are enveloped in a world where a new coronavirus, Covid-19, affects all of us. As veterinary professionals we have a bit more of a measured response to the hysteria and misinformation we read and hear about in the news, but what does this mean for our businesses? There is a lot of doom and gloom about the economy. Is a recession coming? Will it be bad? How long will it last? How will it impact my business? The last part is what I have been thinking about a lot lately, as I assess not only my own veterinary practice, but those that we manage and support at Oculus Insights.
We can look at the impact of any recession through the lenses of history, since we only recovered from the last great recession about 10 years ago. What is less obvious is the impact on our businesses when our clients may be forced to work from home, or their ability to move freely is hindered.
Let’s look at the economic factors in place. The last recession started with a lack of demand by consumers and businesses to purchase goods, materials and services. When the housing market collapsed most people didn’t have the funds to consume which led to a business slowdown, which led to layoffs, which led to reduced demand and so on. It was a vicious circle. It was only when Central Banks pumped money into the market to create demand did, we crawl out of the recession. The impact on vet practices was varied depending on where you live, and what species you handled. Companion animal practices in North America and Europe saw at worse a slight dip in revenue since people consider their pets as members of their families. Pet owners would rather spend less on themselves, than deprive their pet family from what they need. Overall, it was an equal split between companion animal practices seeing a decline in revenue and patient visits and those that saw an increase with the same. Food animals suffered a little because if there is less demand for meat by consumers there are fewer animals to treat, but food animal veterinarians are used to an ebb and flow of farming. Equine practices suffered considerably since horses are more expensive to keep than a dog or cat and most equestrian activity depends on disposable income.
Will the Covid-19 recession be any different? The world is a lot different economically than it was in the late 2000s. China is now the major supplier of most manufactured goods, including medications and medical supplies. By shutting down its industries in the hopes of containing the coronavirus outbreaks it interrupted the supply chain of goods coming to the Western world. We aren’t seeing the impact of that now, but we will start seeing shortages of goods later this spring and early summer. Contrary to the great recession that was based on poor demand this potential recession may start as a reduced supply recession. That will lead to a decline in business sales, which could lead to layoffs which lead to reduced demand and the start of a demand-based recession. The obvious way this plays out is once the supply is plentiful businesses and consumers will begin buying again, businesses will hire, and demand will return.
In theory, this is all great, but the increasing spread of the infection is leading to major downturns to the airline, hotel and entertainment industries to name a few. Italy has basically shut down. The economic impact of the need to curtail the spread of the disease is causing a major demand shock to the economy everywhere that will likely cause a recession, unless countries can contain the virus very quickly.
The above is a very high-level assessment of what could cause a recession. There are so many other factors at play that can influence the timing and severity of an economic downturn. All we know for sure is that we face great economic uncertainty in the coming months. But if we have learned anything from the Great Recession is that veterinarians are fairly insulated from extreme economic downturns. This is very good news.
What about people working from home, or have limited ability to move about in their communities? I think this is going to be a benefit for the veterinary industry. I see a couple of scenarios for companion animal vets. The first is that clients stay home from work or school and get to spend even more time with their pets. They begin to notice persistent scratching or a slight limp. The more time they spend with their pets the more they bond with them the more they want to make sure they are comfortable. We may see an increase in visits after people have been home for a couple of weeks and have noticed things they didn’t notice before or were too busy to deal with.
What about the people that face restricted movement, as we see in Italy and some communities in the USA? Dogs won’t get walked as much so they will get a bit heavier and more sedentary which means when they do resume their usual activities when restrictions are lifted, we might see more exercise-induced injuries. Not ideal for the client, or pet, but certainly something that vets can get ahead of by offering exercise and dietary tips on carrying for dogs when movement is restricted. Let’s not profit off of the misfortune of our patients, rather let’s enhance client loyalty by helping them care for their patients better during these difficult times.
I see the same happening with equine vets. Horse owners can’t get out to see their horses for a while, and when they are allowed to move more freely, they start riding harder to make up for lost time and injuries ensue. What can you do to help clients minimize the chance of causing injuries when they return to riding?
It is a scary time now when all of us are under threat by not only the coronavirus personally, but the effects on the economy in general. We know from the past Great Recession that most of us will be fine, but that activity between pet or horse owner and their animals may change significantly for potentially days and weeks. Every crisis offers opportunities so let’s look at our own clients and their animals and see what we can do to support them during this time of turmoil. Whatever is going on now will end, and those of us who react proactively will come out the other side stronger with more loyal clients and healthier patients.