HOW’S it going out there? Has the tail end of the recession caught up with the veterinary sector where you are? A friend who is a partner in London recently told me things were getting bad for his clients: some were down to their last two Range Rovers.
Things have slowed down a bit here too this month, but not much more than is usual for the seasonal trend at our practice. Our stats have also shown that over the last three years there has been a slight decrease in new clients registering, but an increase in number of transactions and turnover. That seems to be in line with the last Fort Dodge indices and a fairly national trend.
We seem to be doing more things for fewer people. I think that is the way veterinary practice has been going recently. To extend that idea across practice types, referral practices must be doing a lot more things for a lot fewer people and as new procedures and kit becomes available they will also create novel markets that just didn’t exist recently; so not just more quantitatively but qualitatively as well. Emergency service clinics have also created a new market over the last decade.
Despite all the current economic concerns – from on-line medicine sales to competition from paraprofessionals – we have, as a profession, extended our range of employment opportunities significantly in modern times.
If anyone has a 30-year collection of the Vet. Record, it would be an interesting project to analyse veterinary jobs available and see how much that has changed. In the 1979-09 editions, how many jobs would be advertised for referral clinics, or out-of hours providers? How many would require familiarity with MRI scanners and how many would offer no on-call? How many would be mixed practice? How many would specify a certificate or diploma holder? When would be the last job offered where “Your wife takes the phones” was the normal way of dealing with on-call?
For each 10 traditional general practice jobs 30 years ago, there must be one or two new roles that didn’t exist back then. The employment and economic profile of the profession has changed markedly.
Behavioural economics
Economics is a strange “science” and I have recently been reading about a new way of looking at it, called “Behavioural Economics”, as popularised by the Yale professor, Robert Shiller.
This is a combination of psychology and traditional economics. It considers people’s motivation to spend and their behaviour with money, rather than just what a mathematical model assumes they will do with money acting purely on a rational basis.
The “ultimatum game” is a demonstration of behavioural economics. There are two “players”: a “proposer” and “responder”. The proposer is given £10 on condition that he or she offers some of it to the responder. If the responder accepts the offer, each player gets to keep the amounts agreed. If he or she rejects it, both get nothing. Only one offer can be made.
Traditional economics says players are both selfish and will act in a logical way, and predicts that the proposer will offer only a penny and the responder, preferring a penny to nothing, will accept. But this is not what happens with real people.
The most common offer is half the total sum, and offers of less than 30% are almost always rejected. If the proposer’s offer is seen as unfair, the responder will decline free money. Let’s all try this in the staff room and see what happens!
Another insight from behavioural economics is that what people are prepared to pay for something changes depending on how much they want it and how much they think it costs to provide.
This means that, for example, any cut-price veterinary establishments, or too many special offers, devalue the public’s perception of how much it must cost us to provide veterinary services and consequently what they are prepared to pay for them.
Emotions
So the hard fact that there is less money around has to be viewed through the softer lens of human behaviour and does not necessarily mean that people behave rationally and spend less on everything. People behave emotionally with money, not just rationally. I would hope that people feel that spending on their pet’s health is something they want to do even in harder times.
This view of economics may give us some hope in the current economic climate and also explain why vets are one of the more recession-proof businesses on the high street.
Our behaviour as vets with money is also not completely rational and on the whole vets are usually slightly embarrassed when it comes to asking for payment of a large bill instead of viewing it as a purely fair economic transaction. The media are fond of running “shockingly expensive” vets’ stories, and I have heard of some myself, but the majority of us are inclined to go the other way.
Dubious behaviour
Here is an example of some dubious economic behaviour from a vet. We are having a loft conversion done on our average size end-terrace house. The electrician who is working on the house came in to the clinic as he had trodden on his puppy.
I examined it, was sure nothing was broken, and gave it a painkiller. For some reason I felt I couldn’t charge him a full consult fee as he was working on my house and the puppy’s problem was quite straightforward and so I charged half a consult fee.
A few weeks later I received from him a £1,400 bill for his work, also I imagine quite a straightforward job for him, and I was advised by the builder that the final electrician’s bill would be about £2,500. In other walks of life things have a price and that’s it, a rational and fair price with no negotiation.
Whilst on the one hand I think behavioural economics gives us some hope for our businesses regarding income, on the other I think as vets we need to be a bit less influenced by behaviour when billing out!
Incidentally, I can also claim to have caused the unseasonable late summer this September by invoking the law of sod: to protect the house during the loft conversion we have shelled out for a huge scaffold structure to go over the house to keep the rain out whilst the roof was off. It has a tin roof and plastic cladding.
Needless to say, it didn’t rain once in September whilst the roof was removed. The builders even had to take off some of the cladding, as they were too hot.
I think next August I’ll get the rest of the roof done and fork out for another scaffold cover to guarantee sunshine. It will be great to go to the beach and not have to wonder where the sea ends and the rain begins.
■ Any thoughts or comments, please e-mail me on garethcross@ hotmail.com, and if anyone does play the ultimatum game at work, let me know and we’ll publish the results.
