Veterinary Activity Index
Darren Osborne, MA OVMA Director of Veterinary Economic Research
Strong December Boosts Annual Revenues
Monthly revenue in 2009 was anything but consistent. Both companion animal hospitals and mixed and large animal practices saw falling revenues alongside double digit growth in the same quarter. For mixed animal practices, it seemed that having a good month meant you had a have a bad one. Companion animal revenues seemed to follow a pattern of up-up-down, up-up-down all year long. Amidst all the uncertainty in the market and all the inconsistency in revenues, there were positive gains in revenue.
Mixed and large animal hospital annual revenues were tracking higher than companion animal hospitals until the third quarter. Two negative growth months in October and November caused annual revenues to fall behind companion animal hospitals yielding revenue growth of 3.4% for the year. This is great when you consider the plight of the agricultural sector and there were four months with negative growth but not so great when you compare it to the higher growth they have come to expect over the last few years. Mixed and large animal hospitals finished the year much like they started with a modest growth rate of 4%.
Companion animal hospitals finished the year with their strongest quarter ever fishing with 4%, 6% and 10% growth in October, November and December over the same months last year. December was an amazing finish; double digit growth is one thing, but to have it two years in a row (last year December revenues were up 14%) suggests the market is changing. December used to be one of the slowest months for revenue but with two years in a row of double digit growth, it is turning into the best month of the winter season. Annual revenues for companion animal hospitals were up 4.0% for the year.
There is nothing to suggest the uncertainty in the economy will disappear. Next year will probably be a lot like the last two with topsy-turvy growth. Add in a dash of Harmonized Sales Tax and it will be a wild ride. The take home message from the charts is to expect the unexpected. If you have a bad month or two, maybe it’s not you; hang on and try to enjoy the ride.
How Does The VAI Work?
The OVMA Veterinary Activity Index (VAI) is an OVMA Economics Committee project involving a sample of hospitals across Ontario. The index is used to measure monthly changes in revenue for small and mixed animal hospitals – similar to the way Statistics Canada measures Gross Domestic Product (GDP) or inflation (CPI). The results are regularly reported in Focus.
An index was constructed from a sample of exclusively small animal and mixed animal hospitals that offered to supply monthly hospital revenue.
If you are wondering how your hospital measures up, you can compare your hospital to the graph. The absolute size of the hospital is not important since the figures represent percentage changes from month to month. A ten-person hospital can use the following formula in the same way a one-person hospital would. To compare your hospital revenue with the graph, plot your monthly revenue and compare the cycle. To index your monthly revenue for direct comparison, divide your actual monthly revenue by the average monthly revenue and multiply by 100.
For example: Suppose your annual revenue is $120,000. Your average monthly revenue would be $10,000 per month. If your January revenue was $7,500, then the index would be: $7,500 ÷ $10,000 x 100 = 75.
The monthly index is just the start. The important information is in Figures 3 and 4, which show the change in revenue over the same period last year, allowing you to compare your growth with the average.