The business of veterinary medicine has weathered pretty well during the pandemic. Most hospitals have gone to curbside medicine and extended appointment times with reduced hours. Much of what has been seen as reductions in income have been self-induced and has not been based on client demand. Hospitals should recover quickly once a sense of normality returns to the marketplace.
Telemedicine has taken a foothold and should create a change in business that allows practitioners to stay in close contact with their clients. Telemedicine is most likely a permanent tool that hospitals will use past the pandemic. Those who have not yet considered this viable option should take a look at the products that have been developed specifically for the veterinary profession, many of which integrate with the current veterinary software.
Veterinary hospitals saw their worse income decline in the month of April with drops in income in the range of 20% to 30% in New York and the Northeast mostly by a drop-in invoice volume. Hospitals have been able to maintain an increase in the average invoice by about 5% so far in 2020. Income in the first quarter was the same as in 2019 or in some cases actually greater. We do expect the second quarter of the year to be a negative growth quarter in overall economic activity that will take us halfway to a recession. The largest question for most hospitals is what will the consumer spending habitsbe once government stimulus money runs out. The good news is that even in the last recession, veterinary hospitals saw no more than a 10% to 15% drop in sales during the worst of it. Compared to many other types of businesses, veterinary medicine tends to fare well during poor economic times. Hopefully this time it will open the labor markets a bit and allow hospitals to find adequate staff which has been so difficult to do during our run on economicexpansion during the last 7 years.
Hospitals will need to find their new normal for conducting business. It looks like curbside medicine will still apply for the time being. Check on your state’s VMA webpage for requirements to open and create a safe work environment. Many have applied for the SBA PPP loans which should provide adequate funding for cash flow during the 8 weeks that hospitals can use the money for payroll costs. Hospitals should focus on maintaining payroll levels to receive full forgiveness of their loans. Beware, right now, forgiveness will mean taxability according to the IRS. Loan forgiveness will occur during July and August. We expect the process to be detailed. The forgiveness application has been released and is available on the SBA website. Congress is still considering changes to the program that will relax some of the rules. Expect to supply a lot of documentation.
Burzenski and Company, P.C is a veterinary accounting and consulting firm that specializes in working with veterinary practices assisting them with their business and financial needs. If you have the need for PPP loan assistance or are struggling with financial issues during this time and would like to hear how we may be able to assist in working with you during these unusual and different times, please feel free to contact Gary I. Glassman CPA at 203-468-8133 or gary@burzenski.com.
