The American Pet Products Association reports that the companion animal market represents $62.75 billion dollars in sales annually. Furthermore, 65% or 79.7 million homes in the U.S. have a pet. With such a large market and increase in spending, how are we using data to analyze, target, and project trends? This question is increasingly important with the emergence of technology in the veterinary market, as this has generated more data to be collected and examined than ever before. This paper will identify ways veterinarians, buying groups, manufacturers, distributors, and pet owners can leverage animal health market data for optimal pet health.
First, it is important to understand what big data means. The term big data is fairly young, with the first documented use in 1997 by a NASA scientist. The definition we will use comes from the book Big Data: A Revolution that Will Transform How We Live, Work, and Think by Viktor Mayer-Schonberger and Kenneth Cukier. They define big data as “The ability of society to harness information in novel ways to produce useful insights or goods and services of significant value” and “Things one can do at a large scale that cannot be done at a smaller one, to extract new insights or create new forms of value.”
Veterinary Hospital Trends
Most Veterinarians will agree that they did not go to school for business or get excited about their financial coursework. Focusing on providing care for pets is far more rewarding than sitting in front of a computer pouring over Excel spreadsheets or trying to figure out how to run a report on their practice management software. Even the most robust practice management system can lead a practice manager or owner to spend hours exporting and manipulating spreadsheets to consolidate reports into the desired format.
The industry is beginning to address these issues. Within the past five years, veterinarian hospitals have been inundated with an influx of technology solutions for patient care, financial analysis, marketing and even wearables for pets. One of the biggest disruptions is the switch from paper charts to electronic medical records. Hospitals that make this switch find improved workflow, as information is more readily accessible, and increased billing efficiencies. Additional software is evolving to assist in the transition to electronic medical records. These softwares include template driven medical notes and bi-directional diagnostic integrations. The newest trend is the appearance of cloud-based or SAAS practice management software systems that reduce the initial cost of ownership and remove the burden of a server-based platform, saving time and money in maintenance costs.
Strengthening the bonds between a client and the veterinary hospital was a focus of the American Animal Hospital Association State of the Industry report in 2015. Sharing diagnostic information, educational resources, patient reminders, and client self-serve vaccination record retrieval and appointment bookings creates loyalty and keeps retention rates high. These tools for clients use the data input in the practice management system to store, share and integrate communication between the veterinary hospital and the owner.
With the increase in paperless or paper-lite practices, the wide adoption of client marketing and communication platforms, there is a tremendous amount of data being collected. The question is, what can we do with it?
Group Purchasing Organizations and Buying Groups
Just as the human healthcare market saw corporate consolidation and the entrance of accountable care organizations, the veterinary health market is seeing a rapid consolidation of individual hospitals by corporate organizations. According to the TVC Research Journal, 2015, approximately 48% of small animal clinics belong to a corporate hospital group, buying group, or purchasing cooperative. The advantages of a Veterinarian joining a buying group or selling their practice to a corporate group can be varied. Some of the top reasons include reduced purchasing prices, business acumen, and benchmarking.
The advantages these member hospitals receive from buying groups comes with the challenge of sorting through data that is not standardized. Service and inventory codes are not required to be standardized, like the ICD codes used in the human health market, so preparing reports comparing two hospitals can be very challenging depending on the practice management system and internal coding procedures. Some buying groups standardize the practice management system in order to alleviate this variable, while others allow for autonomy.
The process of extracting and normalizing this data across multiple software platforms becomes extremely valuable when looking for ways to reduce expenditures and increase revenues. Once data is normalized, benchmarking and forecasting becomes increasingly feasible.
Manufacturers and Distribution
This segment of the market has been at the forefront of the technology innovation. In order to remain competitive and provide their customers with a way to provide the best care for their patients, numerous advancements have evolved. Take for instance the diagnostic testing market in animal health. Wutchiett, Tumblin & Associates stated in their Well Managed Practice Report that 20-25% of diagnostic charges are not charged to the client. Technology has now addressed this issue. Instead of filling out a three-part carbon copy manually and sending the sample to the lab, this process has become automated within the practice management system. Once a charge is entered into the patient’s electronic chart, the lab requisition is automatically generated or sent to lab equipment in-house. This automation extends to the return of the sample results electronically via practice management system or even mobile applications.
Competition among companies providing customer communications and marketing solutions has increased development and creativity among software offerings. Gone are the days where you depended on the receptionist to call at the end of the day to remind clients of their impending appointments the following day. Instead, technology provides a portal for online interactions. Big data is also impacting marketing efficacies. With the increase in data being input into platforms, there are many ways to help practices target and market to smaller demographics. Take for instance a diagnostic result that is out of the reference range that could indicate the first-line treatment of a therapeutic diet.
There are 79.7 million homes that have a member of their family that shows their affection by licking, wagging their tails, or shaking their feathers. Pet owners are also showing us how much their pets are a part of their family by the sheer number of dollars being spent each year.
Millennials have officially surpassed the Baby Boomers as the largest living generation. According to the Pew Research Center, the Baby Boomer population will decline from 74.9 million in 2015 to 16.6 million by mid-century. What does this mean for the animal health market? Millennials are known spending large amounts of time on mobile devices. Doesn’t it make sense to speak the language of the largest living generation by incorporating technology into how they interact with their pet’s health care providers and services? Using applications, chatbots, and predictive healthcare analytics, Millennials are allowed to take a bigger role in the care and decisions regarding their pets.
The size of the companion animal market is split between food supplies, over the counter medications, veterinary care, live animal purchases, boarding, and grooming. With the amount of data that is collected and increasing as technology improves, there is a greater need to provide solutions to organize data.
The power of this data does not simply come from the input of information in practice management systems, but the integration of additional external data points. Turning big data from the companion animal market into easily accessible reporting tools is a static approach that the market has access to through extraction, transforming and loading utilities. The challenge for the future is to envision ways to project trends and integrate other data points to truly begin to transform this market.
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