The Profitability Gap in Busy Canadian Veterinary Practices
Running a veterinary practice in Canada today demands constant trade‑offs. Your appointment book is full, your team is working hard, and appointments keep filling up. But when you look at your bottom line, the numbers might not reflect all that activity. If this sounds familiar, you’re not alone.
Recent Canadian data shows that being busy doesn’t automatically mean being profitable. Understanding this distinction is essential to improving your practice’s financial health.
The Canadian Veterinary Landscape: What the Numbers Tell Us
According to Innovation, Science and Economic Development Canada’s 2023 industry statistics, Canadian small and medium-sized veterinary enterprises averaged $883,100 in annual revenue with an 88.5% profitability rate. This suggests that most practices can be profitable with effective management.
However, the reality varies significantly by practice size and type, and a high revenue doesn’t guarantee high profit.
The 2021 Reality Check
Data from the 2021 Provincial Practice Owner’s Economic Surveys shows that Canadian companion animal hospitals experienced a 10.3% revenue increase to $717,251 per full-time equivalent (FTE) veterinarian. At first glance, that appears strong. But expenses rose 14.4% to $478,665 per veterinarian, resulting in only an 8.4% net income growth to $238,586.
This shows that revenue growth without expense management can reduce profitability.
Where Your Money Goes
The Canadian Veterinary Medical Association’s 2022 analysis breaks down companion animal hospital expenses:
- Veterinarian wages and benefits: 27%
- Non-veterinarian wages and benefits: 23%
- Medications and supplies: 34%
- Occupancy: 11%
- Administrative costs: 5%
The Cost of Underutilizing Your Team
One of the most significant findings from Ontario veterinary practice research involves registered veterinary technicians (RVTs). Adding an RVT per veterinarian can generate an additional $79,118 in gross annual revenue. More importantly, practices that fully utilize their technical staff are more profitable than those where veterinarians frequently perform RVT duties.
A key finding: clinics paying RVTs over $21 per hour earn $122,342 more in revenue per veterinarian than clinics paying $15/hour or less. This demonstrates that investing in quality staff and paying competitive wages can increase profitability.
The Financial Impact
Consider this scenario: Technician appointments can generate $672–$1,565 in daily revenue while freeing up veterinarians for higher-value procedures. When non-veterinarian wages represent 27% of expenses, raising fees by 3.7% can offset a 20% increase in RVT wages.
Pricing and Fee Increases
Many practice owners hesitate to raise fees, fearing they’ll lose clients. However, demand for veterinary medicine is relatively ‘price inelastic,’ meaning most clients are not sensitive to price changes for essential services.
The CVMA projects that 2022 inflationary increases require at least a 10% overall fee increase to maintain profitability. For example, a 10% fee increase on $500,000 gross revenue increases net income from $150,000 to $200,000 if expenses remain constant. That’s a 33% increase in profit from a 10% fee adjustment.
The actual cost to provide a 30-minute exam is $198.67, while the recommended exam fee is $119.50. Think of exams less as direct profit-makers and more as gateways to other necessary procedures.
Regional Variations Matter
Location significantly affects profitability. Veterinary practices in British Columbia, Saskatchewan, Manitoba, and New Brunswick continue to outperform national averages, showing stronger revenue and income growth. Ontario and Alberta saw more modest gains, while Nova Scotia reported slower growth and some declines in net income.
By 2024, Canada’s veterinary industry grew nearly 8% in active veterinarians and 13% in practice facilities, contributing to a 7.4% rise in total economic output. Alberta alone produced over $3 billion in economic activity driven by a strong mix of companion and agricultural veterinary services.
Preparing for a Future Sale
If you’re considering selling your practice eventually, profitability becomes even more critical. Sellers typically prefer share sales to claim the Lifetime Capital Gains Exemption, allowing up to $1.25 million in tax-free gains (as of June 25, 2024). However, banks require two years of accountant-prepared cash flow statements before financing a practice purchase.
This means your profitability today directly impacts your practice’s future value and saleability.
Taking Control of Your Practice’s Financial Future
Transforming busyness into profitability requires strategic thinking and professional guidance. Canadian veterinary practices can be highly profitable, but success depends on understanding your numbers, optimizing your team structure, and making informed decisions about pricing and expenses.
Working with financial professionals who understand the unique challenges of veterinary practices can help you identify opportunities you might be missing and develop strategies that turn your busy practice into a truly profitable one.
At Envision Accounting, we specialize in helping growing veterinary practices transform complex financial data into strategic insights. Our free 30-Minute Financial Checkup can help you understand where your practice stands and identify specific opportunities for improvement. If you’d like an objective review of your numbers and options, we’re available to help.
Frequently Asked Questions
- How much should I pay my RVTs to maximize profitability?
Research shows clinics paying RVTs over $21/hour earn significantly more revenue per veterinarian than those paying $15/hour or less.
- What percentage of my revenue should go to expenses?
Canadian practices typically see expenses at 66.8% of revenue, with the remainder as net income for well-managed practices.
- How often should I raise my fees?
With current inflation, the CVMA recommends at least 10% annual increases to maintain profitability, though this varies by practice.
- What’s the difference between busy and profitable?
Busy means high patient volume; profitable means revenue exceeds expenses by a healthy margin after paying all costs including owner compensation.
- Should I focus on revenue growth or cost control?
Both matter, but cost control often provides faster results. A 10% fee increase can boost net income by 33%.
