The veterinarian-producer relationship is crucial in today’s production plans to maximize the profitability of both business endeavors. Food animal producers struggle with some of the same issues as veterinarians. In fact, both businesses mirror one another. Producers have entered into a new era with the advent of changing markets, increased accountability of the product they produce, and increasingly tighter margins. As veterinarians, we need to be at the forefront of these issues in order to help partner with our clients in the 21st century of production agriculture.
While I sincerely believe agriculture has a bright future, we as rural food animal practitioners are facing a new set of challenges we’ll need to address. Six years ago, when I authored a perspective for another industry publication, I was pretty confident our practice was on the right track and had all the answers. Today I don’t have the answers I did back in 2006—just a lot more questions.
Since then, our mixed animal practice in south central Missouri has increasingly seen the profitable farmers and ranchers rapidly expand and the smaller ones phase out. Cattle numbers have held steady or increased in our practice, but a lot fewer people control them, which changes practice demographics. In 2006, a large producer ran 500 cows; today that number is 2,000-plus cows.
In 2008, with the housing and stock market crash, we saw an extraordinary change in our practice. A lot of the growth we experienced up until then was from baby boomers migrating from suburbia to live their country dream. The halt of this movement has had an immediate and long-term impact on hobby farms and recreational land values, and has dramatically affected our new client growth. I personally don’t expect this growth to return. The next generation highly values free time and, as we know, country life with land and animals requires a resource commitment, including time and effort. However, I think we will see an increase in land being purchased from outside speculators who are looking to generate returns on their investment.
Some six years ago, I looked at how to capitalize on what I had—how to work “smarter” so to speak—because new grads were hard to find, let alone hire. This demographic has also changed. Veterinary schools have nearly doubled enrollment and the job market has become somewhat saturated, as opposed to a lack of new graduates entering into rural practice five years ago. Now there are multiple applicants for every one opening, and new grads can land jobs if they choose to be geographically unrestricted.
On the flip side, student loan debt has sky rocketed to an excess of $250,000 with a $350,000 loan debt predicted in the near future, but with starting salaries that have held flat at best. The formula of veterinary school expense compared to new grad income of $45,000 to $60,000 annually is not a sustainable model.
New graduates also do not seem to be interested in practice ownership and veterinary schools are pushing specialization and abandoning traditional revenue sources such as reproduction. But, there can be no production without reproduction.
Furthermore, profit margins are tighter and return on investments is less than six years ago. This limits incentives to reinvest and grow practices with new graduates who are unable to generate their salary in the first year, but deserve higher pay than they are receiving.
The possibility of changes in state practice acts, plus an increase in outside non-professional competition from direct marketing, etc. are additional challenges facing rural practitioners.
While I don’t necessarily view all of the issues outlined here as negatives, they are challenges that we, as practitioners, need to overcome. It’s my belief that the rural mixed animal practitioner is not the dinosaur that many in the ivory towers of education portray us to be, but the ultimate in adapting and evolving to our economic climate.
We are equipped to handle the changes that face us, and it is up to us to change the culture of veterinary practice. Veterinary schools are not equipped or qualified to talk about the economic impacts on veterinary practice, although their actions can affect it.
Many of us in rural practice gravitate toward what we do well, but don’t have the luxury of relying on that service for our sole survival, nor do we want to. We also are not likely going to be the sole source of information and service for our clients, but we need to strive to be the first source they contact.
For continuing success, we veterinarians must be interactive and proactive with clients. Larger producers have taken advantage of economies of scale. They are controlling costs by spreading them over more units, and more market control. I think that’s where we’re headed, too. We, as practitioners, need to have similar philosophies that justify our service in these larger operations while we help smaller producers fit into the larger model of efficiency or niches.
For example, through management programs and informative seminars, we are educating our clients to properly perform their own herd vaccinations, treatments, and minor emergencies. This ultimately has helped us to become better partners in their own overall management and profitability. Likewise, it’s helped us decrease the time we spend on emergency services and increase the time we spend working efficiently and productively.
We have decreased the amount of miles put on our trucks by 15,000 miles per year and also decreased our average hours worked per week to 45. Basically, we are working smarter and well scheduled, but are doing a lot more units. Time is money and we need to make sure that we spend more time generating income, not looking out a windshield.
Herd work is the primary reason why we now go out into the country. Our investments have been in our haul-in facilities. I don’t think we’re unique there, but that facility has been the most steadfast for servicing the smaller producer, as well as for all semen testing on bulls and equine work, because it basically saves us another pickup and veterinarian and allows us to spend more time generating revenue.
We have found that clients can usually find a truck and trailer to haul their animals to us, and they get to the point where it’s just routine coming to the clinic.
Obviously there are scenarios where we have to go outside of the clinic, but even then it has to be for a well-established client with whom we have an obligation to service. The days of running 30 miles to look at one cow or one horse are no longer justifiable. The cost of facilities may be substantial up front, but when you look at the wear and tear on vehicles and windshield time too, you can justify some pretty elaborate ones. We trade pickups a whole lot less than we used to, too.
Consider Demographics, Adapt
There have been a lot of changes within the last four years and I believe the main thing we have to look at in our practices is how we can become more efficient while we keep an eye on the demographics of practice. This can be very difficult to do because demographics are often considered in hindsight rather than foresight.
We must be more cost conscious and efficient with our time, as well as creative in how we create revenue. Raising prices is an obvious fix, but not always easy to do without pricing yourself out of a job.
The bottom line is we need to mirror the changes that are taking place within agriculture and our communities and adapt our practices accordingly.
David Gourley has owned Whetstone Veterinary Service, LLC, a four-person mixed animal practice, for 16 years. He holds undergraduate and graduate degrees from the University of Missouri (UM) in animal science, with a focus on beef forage management and applied reproduction. He received his doctor of veterinary medicine in 1993, also from UM.
Gourley is a member of the Missouri Veterinary Medical Association; American Veterinary Medical Association; Society for Theriogenology; American Association of Bovine Practitioners; American Association of Equine Practitioners; and the Academy of Rural Veterinarians. He serves on the Missouri State Veterinary Licensing Board, and is a Community First Bank and local school board member.
His wife, Melissa, also a veterinarian (MU 1996), is a partner in practice. They have three children, Mac, 14, Will, 12, and Marly, 11. The Gourleys also own and operate a 100-head Red Angus seedstock operation and hold an annual bull sale.