What’s in Store for 2024?

Originally Published in Todays Veterinary Business – https://todaysveterinarybusiness.com/veterinary-politics-and-policy-0224/

Following an up-and-down 2023, economic tailwinds are propelling the pet economy in the first quarter of 2024. Issues persist within the veterinary industry, and vigorous and open debate will hopefully lead to solutions over time. Let’s dive into topics that will occupy our attention through the end of the year.

Pressure on Private-Equity Consolidators

The period from 2018 to 2022 saw private-equity firms steadily investing in the buyout and consolidation of general, specialty and emergency practices nationwide. The consolidator headcount ranged from 50 to 70, and transaction EBITDA multiples stretched from 10% to 22% (at the highest point).

Many, but not all, private-equity investors target a four- to five-year run, which makes 2024 an interesting year for those firms. Purchase multiples have trended downward over the past

18 months, so some investors face challenges as they pursue an exit. Those factors should accelerate the transactions pace after a sluggish 2023. Worth noting is that Goldman Sachs’ 2024 M&A Outlook sees deal activity picking up meaningfully across many sectors of the business world. Keep your eyes on the weekly Fountain Report newsletter for transaction updates.

An emerging trend in 2023 should continue this year. Animal health and pet companies will expand horizontally in 2024 and not just in the same market niche. Technology is a key driver, opening the door to leveraging knowledge and data across both segments. A cooling trend is unlikely.

Access Is the Word

For at least the past two years, every veterinary conference, organization and publication has devoted an agenda item or column to the topic of access to veterinary care. However, the conversation stretches beyond direct care to access of any sort. For example:

• Does every pet owner (or potential pet owner) see a path to accessing veterinary care?
• Are new compounding regulations restricting access to vital medications?
• Can qualified students access enough seats in veterinary colleges?
• Can practices access enough veterinary technicians and assistants?
• Can clinics hire enough licensed veterinarians to meet client demand?
• Are most pet owners legally able to access veterinary professionals through telemedicine if appointments aren’t feasible due to a lack of supply or constraints caused by geography, transportation or finances?

A dark cloud will hang over the pet industry until we can answer those questions with a resounding “Yes!” Multiple groups are exploring and, in some cases, advancing solutions to access problems. So, let’s break down the overarching issue of why some pet owners cannot access veterinary care into these three reasons:

• A shortage of working professionals limits the number of available appointments.
• The cost of in-clinic care is beyond the reach of some clients.
• Some pet owners can’t take their dog or cat to a veterinary clinic due to life circumstances or geography.

Those reasons either exist or they don’t. Each city, town and region either has appointments available for pet owners, or they don’t. Every pet owner can afford to pay for in-clinic services, or they can’t. Every pet owner can get to a clinic, or they can’t. The Arizona and California legislatures resoundingly decided that access to care is a genuine issue and approved pragmatic veterinary telemedicine laws. You can be certain more states will join the debate in 2024 and beyond.

More Veterinary Schools

My August/September 2023 column () explored existing and emerging veterinary schools in the context of the veterinarian shortage. While the debate has quieted, some veterinary organizations continue to doubt the shortage.

Nevertheless, at least eight new programs are coming before the accreditation body, the Council on Education. I am a consultant to six of those institutions. All I can reveal now is that all six are serious, innovative programs with strong financial backing, and they would make a dent in the DVM shortfall. But don’t be mistaken — we’re in for a long run of shortages, just like in human health care.

Demand for pet health care will not slow. Millennials and Gen Zers own over 50% of U.S. pets, and their children are unlikely to abandon pets as adults.

Stay tuned, but don’t expect final accreditation decisions before 2025 and, in some cases, 2026.

Veterinary Technicians Are Fired Up

The National Association of Veterinary Technicians in America and state and local groups are gaining power and changing the technician landscape. However, much work remains to address compensation, retention and the scope of practice. Those topics have bedeviled veterinary technicians for years.

Large states like New Jersey and Florida refuse to license veterinary technicians despite recognizing hundreds of other professions as worthy of licenses. Licensing signals standards, accreditation and, ultimately, value in the eyes of consumers. Credentialed or licensed veterinary technicians must pass a national exam just as veterinarians do. As a commentator and advocate who often looks to human medicine for opportunities to improve pet care, I cannot imagine any category of human health professionals not being deemed licenseworthy.

Technicians also want to expand their scope of services to match the academic training and board certification demanded of them, but the process is slow and not always welcomed by veterinarians. For many technicians, a wider scope of practice is the solution to the veterinarian shortage. Licensed veterinary techs are pet care experts, so why wouldn’t practices fully utilize their skills?

Meanwhile, technicians are being pulled into the increasingly rancorous debate over midlevel professionals. Some see programs like Lincoln Memorial University’s master of veterinary clinical care as a career opportunity. Still, others fear that employing veterinary professional associates will lower the use of or need for technicians. As physician assistants became more common in human health care, nurse compensation increased.

Unfortunately, powerful trade associations are determined to stop veterinary midlevel professional programs in their tracks. Look for battles ahead, given the quantity and quality of the organizations and veterinary leaders supporting the concept.

Humane Breeding of Dogs

People are weary of the puppy mill issue. Ultimately, it boils down to a simple question: Is every commercial breeder operating a puppy mill, as some organizations contend, or can breeders, regardless of size, adopt best practices and be treated differently?

Progress has occurred over the past three years, driven by the success of Purdue University’s Canine Care Certified program and the use of independent auditors to confirm that breeders comply with detailed standards covering every aspect of humane breeding.

Observers wonder whether the issue can ever be settled, but hope springs eternal. Don’t expect an agreement if animal welfare groups or experts reject the very notion that a commercial breeder can operate humanely. We start 2024 fresh with opportunities to test the ideology, but it’s too soon to predict the near-term outcome.

Technology and Pet Care

All I can say with any confidence is that technology’s here, it’s growing, and consumers expect it. Veterinary professionals might argue that they are immune to millennial and Gen Z demands for convenient, tech-friendly services, like in every other facet of consumer life. However, I wouldn’t bet on it. The technology wave gets bigger each year, almost monthly. My bet is on the veterinary practices that grab a board and learn to ride the wave.