McDaniel decided he could take out a $750,000 loan to expand his practice with more than two dozen dog rooms, an exam room for special procedures, and an artificial turf playground. He purchased an underwater treadmill for rehabilitation care and had 35 employees install a water drink machine as a treat.
“I dream big, I’ll say it. It seems extreme in some situations,” McDaniel said.
While the animal health sector is experiencing dramatic growth, similar stories can be found across the country. Now veterinarians are tearing down walls or knocking down floors to make room for new clients clamoring for boarding, daycare and grooming.
Their balance sheets are also getting more complex. A spokesperson said that in the first nine months of 2022, loans from small businesses to veterinary offices at PNC Bank increased by 23 percent. Veterinary loan requests at Huntington National Bank have quadrupled in the past four years.
Experts say this is due to the increase in pet adoptions. More than 23 million U.S. households – about 1 in 5 – acquired a pet during the pandemic. coronavirus A pandemic, according to the American Society for the Prevention of Cruelty to Animals. The proportion of households with at least one dog jumped from 38 percent in 2016 to 45 percent in 2020, leveling off last year. Cat ownership increased from 25 percent in 2016 to 29 percent in 2022.
For Brian Greenfield and his associates at Animal Clinic Northview, the pandemic pet boom has encouraged them to accelerate their expansion timelines. The clinic outside of Cleveland added 12,000 square feet of modern space, including 10 exam rooms, two operating theaters, a remodeled intensive care unit, a rehabilitation pool, and an underwater treadmill. The project cost $4 million, 75 percent of which was in the form of loans from PNC.
Becka Byrd in San Antonio purchased a plot of land to start a second veterinary practice in 2018 and opened it in 2021, complete with a “pet shelter and spa.” Hostel suites feature flat-screen TVs that show burning fireplaces or play cartoons.
McDaniel’s luxury dog boarding service allows owners to interact with their pets via daily video calls. The clinic’s staff, consisting of veterinary technicians and assistants, put the puppies to bed and give them nightly treats each night.
Tommy Monaco in northern New Jersey established his own private surgical practice. His wife, Francesca, left her job as a management consultant at education technology firm Blackboard to manage the finances of the business. Jonathan Trail in southern New Jersey added 2,500 square feet to its “mother and father” general veterinary practice with a $700,000 loan from TD Bank.
“Throughout the pandemic, the door has remained open to veterinarians,” said Brandy Keck, head of veterinary lending at Live Oak Bank. “It turned out incredibly quickly that the veterinary industry was going to be one of the winners.”
Veterinarian ‘from the pet’s point of view’
Pet expenses, including health care, are largely considered discretionary. Researchers often track consumer spending on pet food, toys, education, and even surgery to gauge consumer confidence.
But in the years leading up to the pandemic, credit insurers began to feel that the classification was increasingly unreliable. Ed Nunes, a senior executive at TD Bank who oversees veterinary loans, said people no longer view their pets as property. They see them as family.
There’s also new research showing that pets are a panacea for many of the stress factors associated with isolation, loneliness, and poor health habits during the pandemic.
Researchers from the University of Montreal found dog ownership has had significant positive health effects during the pandemic. The researchers found that owning at least one dog encouraged people with compromised immunity to exercise more and sleep better, whereas those without dogs spent more time sedentary and lost sleep.
Similar dynamics also helped to isolate the veterinary industry during the Great Recession; Income from the veterinary industry has mostly flattened rather than decreased, Nunes said.
The pandemic has accelerated two more dynamics: Not only are people getting more pets, they’re also stuck at home. Veterinarians say that when people are more mindful of their animal companions, they spend more on them.
That meant more visits — emergency departments sometimes reported waiting hours to see patients, and some veterinary offices said they stopped taking new clients for preventive care appointments — and spent more on non-medical services.
In other words, Byrd said, in San Antonio, we pampered our pets. And because pets don’t pay for their own care, veterinarians go about their business to attract human clients. So boarding facilities begin to look like resort hotels, and day care centers begin to look like kindergartens rather than kennels.
“Anthropomorphism is everything,” Byrd said. “I think that’s true even for myself.”
Veterinarians are quick to point out the medical condition for some of these possibilities. Greenfield, Ohio, said that knowledge and scientific advances in animal medicine are rapid, and veterinary clinics must continually invest in re-equipping their facilities.
More and more apps are taking a new approach, not just to medical treatment, but to other pet services known as “Fearless”. This includes the basic protocols for vaccine administration (using food for confidence building and positive reinforcement) and nail clipping (again, eating, but also a mild sedative for sometimes anxious pets), although each step involves consultation between doctors and pet owners.
There are also standards for pet shelter and day care. For example, according to Fear Free protocols, individual dog enclosures can have some privacy, such as a curtain or blanket, where a dog can nest. Cats are well served by placing diffusers containing calming pheromones around a facility or playing specific music. It seems dogs and cats love wildly different tunes.
“Now we look, what do our facilities look like from a pet perspective?” said Carmen Rustenbeck, CEO of the International Boarding and Pet Services Association. “How does it look? What does it feel like? What does it smell like? What does it feel like in your paws?”
The fearless approach became popular enough that TD Bank’s Nunes scrutinized it so that loan applicants could better evaluate their business plans.
“Part of being a specialist lender is being a trusted advisor to the doctor,” he said. “I know a lot about practical management.”
From a medical standpoint, Greenfield said, pet parents are increasingly willing to invest money in treatments to prolong the lifespan of their animals.
That’s great for pets—”Longer life, healthier, happier, pain-free quality of life,” said Greenfield—but it adds to the economic pressure in a veterinary industry that is already short of doctors and technicians. It initiates an arms race among practitioners for the most beautiful facility, the most advanced equipment, or the best facilities. And this extends beyond medical care to daycare centers and hostels.
It’s not cheap for veterinarians to make all these investments. Their work is capital-intensive – new equipment is expensive and labor costs are high. Bank officials say some practice owners take out loans to have working capital to pay staff.
In many cases, large student loans increase the burden. According to the personal finance site, four years of veterinary school cost an average of more than $200,000. Bankruptcyforcing many students to borrow money. And by the time they graduate, they can expect an average salary of $100,370 per year. Based on 2021 federal data.
Even so, the Bureau of Labor Statistics predicts strong demand for practitioners, with veterinary jobs increasing 19 percent over the next decade, increasing 3 percent for human physicians and 5 percent for the rest of the U.S. workforce.
However, given how resilient the industry is, these costs are often well worth it. “We know that even in difficult times, [a pet owner] “He’s going to take care of his dog,” said David Burch, head of private banking at Huntington. “And if something bad happens, he may choose not to go to Disney World to look after his dog.”
Defaults on veterinary loans are so rare, Burch said, that Huntington didn’t measure them. And he’s so interested in owning veterinary practices that doctors are often willing to take on challenging practices and take on their financial responsibilities. A constant refrain in the industry is that the quickest way to avoid student debt is to get into a practice.
Owners say veterinary clinics need to keep up with consumers’ expectations.
During Byrd’s app expansion, she built a separate room for pet acupuncture—good for arthritis treatment and even nausea and gastrointestinal inflammation, she said—and an entire wing for euthanasia consultations and pet boarding.
Tommy Monaco, who set up his own practice in northern New Jersey in November, said larger, institutional animal hospitals can feel like an assembly line for surgeries. He thought a smaller surgical practice would be a successful alternative and designed it to maximize animal patient and pet parent comfort.
Greenfield and his partners wanted the capacity to treat more animals at his clinic and did not want to have to send clients to other facilities for rehabilitation care or prescriptions. They more than doubled the size of the hospital pharmacy and added a brightly lit exercise room for animals recovering from surgery or with chronic joint and muscle problems.
Opposite a small compartment is a rehabilitation pool where vets can jump into the 97-degree water and splash around with puppies recovering or dogs that just need some low-impact exercise. Up the back stairs, the hospital has two apartments for doctors who need a nap between shifts, and a large conference space for training sessions.
When Greenfield hires new vets—the practice is almost constantly hiring, he said—he shows them the clinic and watches their eyes twinkle as they pass by an operating room, a large intensive care unit, and a car window, just in case. the hospital has to go back to social distancing care again.
“Obviously,” he said, “when we built it, we thought it was a little too big.”
