At every turn we are assailed by news coverage which reminds us that the civilised world is subsiding into an anarchic swamp of economic malfeasance. One wonders to what extent the crisis is a product of the necessity for 24 hour news crews to fill the airwaves 24/7 with something - anything -to report and also why we ever allowed the investment practice of betting against the desired outcome, producing a personal gain for investors but at a huge cost for normal citizens.
When the Prime Minister announced at his party conference that Britain, once great in a previous era, could once again be great if we all wanted it enough he was, in equal measure, pilloried for jingoistic rhetoric and applauded for positive thinking. Perhaps it all goes to prove that just like investors backing actions both for and against a singular result, it is possible for commentators on public life to have their cake and eat it.
While the economist Minsky would have ascribed our current problem to the problems of money supply, his "financial instability hypothesis" related the endogenous nature of money to the ultimate consequence for the way in which debt-rendered, economic problems of a capitalist economy are accompanied by the conflict between present money and future money. The "financial instability hypothesis" starts with a high level of investment due to the promise of a high return of profits, with profit providing cash flow to service debt which in turns yields more profits and leads to a boom in the equity market. For as long as people speculate on either a successful or an unsuccessful outcome to this theory, the electorate will continue to lose and individuals will continue to gain.
That’s all very well in theory but here in the real world of veterinary practice, the view is starkly different. The promise of several hundred thousand public sector jobs and the inevitable knock-on from ancillary industries, will have an effect on our practice income. The refusal of banks to lend to small businesses and to individuals is already having a profoundly restrictive effect on consumer spending, partly because many are fearful about their employment prospects, many are busily trying to pay down their credit cards and because many would spend more if they could borrow more. Despite all the hype and despite the scale of the bale-out, banks are still not adequately meeting their lending targets to small businesses such as veterinary practics. Large companies are, largely, awash with cash so the economic bottleneck is clear for most of us to see.
Of course, on a national level, borrowing more to service debt cannot make sense but our economy depends on people spending money at grass roots level; spending money on goods which generate an income for producers, retailers and professional suppliers of goods and services. To maintain the way in which our current business model operates, we will need to reinstate spending within our practices, whether they be small animal, mixed, equine, farm or exotic in nature but herein lies a problem. The current UK inflation rate is already reaching the foothills of what would, normally, trigger anti-inflationary measures from the Bank but to do so would threaten the very modest green’ish shoots of economic recovery at business level and would add a huge fiscal burden to families if the mortgage rate increases. Not to do so runs the risk of an inflationary spiral which will, affect our ability to service veterinary client demand at affordable prices and will put pressure on staff salaries which would, inevitably in some cases, lead to changes in our staffing ratios and our ability to maintain our business model in its current form.
By now, any observer of our economy will be asking where the answer lies and, in reality no-one knows; not the politicians, not the economists and least of all, the financial market. This is an unprecedented situation – completely different from the problems in the late 1980s or in 2008, which many have held up as a sound reason for veterinary practice to believe it would be immune to this current problem.
We have a spiralling debt problem throughout Europe, in the US and even the cash rich countries like Russia and China have had to take steps to shore up their currencies and at no time in recorded history have we seen such a scale of fiscal uncertainty. This is why it would be unthinkable to assume that if we just keep our heads down long enough, this storm will simply blow over. Of course, some form of normality will resume over time but the current veterinary practice business model needs to be robust enough to ride out the gales and it is the largely part-time nature of veterinary employment which gives us the best chance of getting through this crisis. In a business which relies on open ended, full-time employment, any changes in staffing numbers or ratios will be difficult, time consuming and expensive to achieve. However, where so much of the veterinary workforce is already choosing a part-time employment model, this gives partners and principals the option to trim the service level as you would in other service-based businesses, such as advertising , to restrict paid hours when demand falls and to increase them when demand picks up.
In 1997 when the first Quo Vadis report, into the future of the veterinary profession and its clients, was published and presented to the profession in a series of road shows around the country, the topics which caused most heated discussion at the time were:
1. corporate practice and
2. the desire on the part of many graduates to work part time.
To a dispassionate observer, there would appear to be a certain irony about this: as far as employee benefits and conditions are concerned, the corporate practice model has done much to shape the working conditions and rewards available to employed vets and it would appear likely that the willingness of many vets to work flexible and ultimately restricted hours may prove to be the salvation of a profession that is long overdue in examining and revising its age-old business model. What Minsky would have made of that is anyone’s guess.
Finally, to travel where most sensible commentators might choose otherwise, allow me to put my head above the parapet one more time. The third topic which exercised those attending the Quo Vadis road shows was a far thornier one and, ironically, may prove to be what will keep small animal practice afloat in such difficult times, and that was the progressive feminisation of the profession.
The extreme female bias of the groups graduating from veterinary school in the 21st century is not an exclusively British phenomenon but is echoed around Europe and, indeed far wider still. Look at the gender of graduates in markets as far apart as South America, Russia, Europe and the US, and the same pattern is repeated with 90+% of graduates being female. Back in the late 1990s, this was seen as a possible harbinger of doom for a profession which was then, largely owned or managed, by male veterinary surgeons. Much has changed since then; partnerships have become largely unattractive to recent graduates, night and weekend work has been, largely, gifted to outside agencies by principals and partners who were tired of having to cajole graduates to do O-O-H work, or do it themselves instead, and practices have found themselves differentiating their market offering by the level of service offered rather than by the far more comfortable measure of their veterinary skill and experience. Moreover, corporate practice has stepped in to fill the gap created by graduates’ reluctance to buy into practice and has provided a pension fund and exit route for the fortunate few.
At the other end, some of those graduates who might have been willing to look at taking on a partnership, have found an outlet in corporate joint venture practice and gradually, over the last fifteen years or so, the small animal business model has been changing. As veterinary surgeons we dislike change, particularly when we have made a massive investment in the business model itself. One such change has been, through the progressive feminisation of the profession, the ability to fine tune the costs by adjusting part-time staff input but this is just a temporary measure. When the UK emerges from this economic crisis, we will need to make more and further reaching changes to this business model if we are to survive until, and through, the next economic challenge.