McDaniel decided she could take on a $750,000 loan to expand her practice by adding more than two dozen doggy bedrooms, an exam room for special procedures, and an artificial turf play field. He bought an underwater treadmill for rehab care and installed a frothy drink machine to treat his 35 employees.
“I dream big, I will say it. It seems extreme in some respects,” McDaniel said.
Similar stories can be found across the country as the animal health care field experiences astonishing growth. Now vets are tearing down walls or breaking ground to make room for new clients for boarding, day care and grooming.
Their balance sheet is getting even more complicated. In the first nine months of 2022, small-business lending to VT offices at PNC Bank grew 23 percent, a spokeswoman said. At Huntington National Bank, vet credit requests have quadrupled over the past four years.
Experts say that there has been an increase in the number of pet adoptions. According to the American Society for the Prevention of Cruelty to Animals, more than 23 million American households — nearly 1 in 5 — adopted a pet during the coronavirus pandemic. The share of households with at least one dog increased from 38 percent in 2016 to 45 percent in 2020, having decreased the previous year. Cat ownership is projected to increase from 25 percent in 2016 to 29 percent in 2022.
For Brian Greenfield and his colleagues at Animal Clinic Northview, the pandemic pet boom has inspired them to accelerate their expansion timeline. The clinic outside Cleveland added 12,000 square feet of state-of-the-art space, which includes 10 exam rooms, two operating suites, a renovated intensive care unit, a rehab pool and an underwater treadmill. The cost of the project is $4 million, 75 percent of which is in the form of a loan from PNC.
Becca Byrd in San Antonio bought a plot of land to start a second vet practice in 2018 and complete it with a “pet retreat and spa” in 2021. Boarding suites have flat-screen televisions that display burning fireplaces or play cartoons.
McDaniel’s luxury dog boarding service allows owners to connect with their pets via daily video calls. The clinic’s staff of veterinary technicians and assistants put the puppies to bed each night and give them nightly treats.
Tommy Monaco starts his own specialty surgery practice in northern New Jersey. His wife, Francesca, quit her job as a management consultant at ed-tech firm Blackboard to run the business’s finances. Jonathan Traill in southern New Jersey added 2,500 square feet of space to his “mom and pop” general vet practice with a $700,000 loan from TD Bank.
“The door has been open to veterinarians throughout the pandemic,” said Brandi Keck, head of veterinary lending at Live Oak Bank. “It became incredibly clear very quickly that the veterinary industry was going to be one of the winners.”
The vet from ‘the pet’s point of view’
Pet expenses, including health care, are considered largely discretionary. Researchers often track consumer spending on pet food, toys, training and even surgery to measure consumer confidence.
But in the years before the pandemic, debt underwriters were beginning to find that classification was increasingly unreliable. People no longer view their pets as property, said Ed Nunes, a senior manager at TD Bank, which oversees veterinary loans. He sees them as family.
There is also new research that suggests that pets were a panacea for many of the stresses associated with isolation, loneliness and poor health habits during the pandemic.
Researchers from the University of Montreal found that dog ownership had a significant positive effect on health during the pandemic. Researchers found that owning at least one dog encouraged immunocompromised people to exercise more and sleep better, while non-dog owners spent more time sitting and lost sleep.
Similar dynamism also helped save the veterinary medicine industry during the Great Recession; Nunes said revenue from the vet sector has mostly flattened rather than tanked.
The pandemic triggered two other dynamics: Not only did people adopt more pets, but they were stuck together at home. Veterinarians say that when humans are more attentive to their animal companions, they spend more money on them.
Who Spends the Most Time (and Money) on Pets?
That meant more visits — emergency rooms sometimes reported hours-long waits to see patients, and some vet offices said they stopped taking new clients for preventive care appointments — and non Higher expenditure on medical services.
In other words, said Byrd in San Antonio, we spoiled our pets. And since pets don’t pay for their care, veterinarians tailor their businesses to attract human clients. So boarding facilities start to look more like resort hotels, and day-care centers look more like kindergartens than kennels.
“Anthropomorphism is everything,” Bird said. “I think that’s true of me as well.”
Veterinarians are quick to point out the medical case for some of these features. Knowledge and scientific advances in veterinary medicine have been rapid, Greenfield said in Ohio, and veterinary clinics need to continually invest to re-equip their facilities.
More and more practices are taking a new approach to not only medical treatment but other pet services, called “fear free.” It also includes basic protocols for vaccine administration (using food to build trust and positive reinforcement) and nail trimming (again food, but sometimes a mild sedative for anxious pets), although each step is explained by doctors. and includes counseling among pet owners.
There are also standards for pet boarding and day care. Individual dog enclosures, for example, may have some privacy, such as a curtain or blanket where a dog can burrow according to Fear Free Protocol. Cats are well served by placing a diffuser with calming pheromones or playing some music around a facility. Dogs and cats like wildly different tunes.
“Now we’re looking at what do our facilities look like from the pet’s perspective?” said Carmen Rustenbeck, CEO of the International Boarding and Pet Services Association. “What does it look like? What does it sound like? What does it smell like? How does it feel on their paws?”
The fear-free approach has become so popular that TD Bank’s Nuances study it so they can better evaluate loan applicants’ business plans.
“Part of being an exclusive lender is being a trusted advisor to the doctor,” he said. “I know a lot about practice management.”
Greenfield said that on the medical side, pet parents are willing to invest more money in treatments to extend their pets’ lives.
That’s a great thing for pets — “greater longevity, healthier, happier, pain-free quality of life,” Greenfield said — but it adds economic pressure to a vet industry that’s already suffering from a shortage of doctors and technicians. is facing. It’s starting an arms race among physicians to have the best facility, or the most advanced equipment, or the best facilities. And that extends beyond medical care and into day-care centers and boarding.
It is not cheap for veterinarians to make all these investments. Their business is capital intensive – a new piece of equipment is pricey, and labor costs are even higher. Bank officials say some practice owners take loans to keep a working line of capital to pay employees.
In many cases, larger student loans increase the burden. According to personal finance site Bankrate, the cost of four-year vet school averages more than $200,000, forcing many students to take out loans. And when they graduate, they can expect a median salary of $100,370 per year, according to 2021 federal statistics.
Nevertheless, the Bureau of Labor Statistics predicts strong demand for physicians, with veterinarian jobs expected to grow by 19 percent over the next decade, compared to 3 percent for human doctors and 5 percent for the rest of the U.S. workforce. .
That cost is generally worth it, though, given how flexible the industry is. “We know that even when times are tough, [a pet owner] is going to take care of his dog,” said David Burch, director of specialty banking at Huntington. “And if something bad happens, he’ll probably choose not to travel to Disney World so he can take care of his dog. “
Burch said defaults on veterinary loans are so uncommon, Huntington doesn’t measure them. And so many veterinarians are interested in becoming practice owners that doctors are often willing to acquire struggling practices and take on their financial liabilities. A constant refrain in the industry is that the fastest way to get ahead of student loans is to buy into the practice.
Vet clinics, the owners say, simply have to meet the expectations of consumers.
During Bird’s practice expansion, she created a separate room for pet acupuncture — good for treating arthritis, and even nausea and gastrointestinal inflammation, she said — and for euthanasia counseling, and pet boarding. a whole wing.
Large, corporate animal hospitals can feel like an assembly line for surgery, said Tommy Monaco, who started his own practice in northern New Jersey in November. They thought a small surgical practice would be a successful alternative and designed the animal to maximize patient and pet parent comfort.
At his clinic, Greenfield and his ownership partners wanted the ability to treat more animals and not send clients to other facilities for rehab care or prescriptions. He more than doubled the size of the hospital’s pharmacy and added a brightly lit exercise room for animals recovering from surgery or those with chronic joint and muscle problems.
Across a small divide is a rehab pool where vets can jump into the 97-degree water and splash around with recovering pups — or dogs who need some low-impact exercise. Above the rear stairwell, the hospital has two apartments for doctors who need naps between shifts and a large conference area for training sessions.
When Greenfield recruits new veterinarians — the practice is an almost constant hiring spree, he said — he shows them the clinic and watches their eyes light up as they walk through an operating observation room, a sizeable ICU and a Pass through the drive-thru window, just in case the hospital has to go back to social distancing care.
“Quite frankly,” he said, “at the time we built it, we thought it was a bit too big.”