Importance of the location of a veterinary centre

How decisive is the location of a veterinary centre for its economic success?

This is the question that VMS proposed to debate at the recent congress on veterinary centre management organised by AVEPA-Agesvet in Madrid.

To do this, we chose to measure the revenues and profitability (expressed as a % of ebitda over revenues) of more than 1,500 veterinary practices that filed their profit and loss accounts with the commercial register.

We then cross-referenced this economic data with the physical location of each of the centres. And for the purpose of classifying the "quality" of the locations, we turn to the INE (Instituto Nacional de Estadística) database where it is possible to access various socio-demographic indicators even at the census section level. In VMS we decided to carry out our analysis at the level of census districts (see the example of Madrid, in figures 1, 2 and 3).

Figure 1: The 21 census districts of Madrid
Figure 2: Heat map of the districts of Madrid according to the number of households (the coloured dots identify the location of the different types of veterinary centres).
Figure 3: Heat map of the districts of Madrid according to average household income (the coloured dots identify the location of the different types of veterinary centres).

Analysis and conclusions

Two "quality of location" parameters were chosen: the number of households (as an indicator of the potential volume of clients) and the average income per household (as an indicator of the economic capacity of these clients).

The Spanish census districts were then classified into 16 quadrants, according to the quartile they occupied in each of these parameters.

Figure 4 shows the quadrants as well as the values of each quartile for both parameters.

Figure 4: Ranking of Spanish census districts where at least one veterinary centre is located, based on the parameters "number of households" and "average income per household".

Finally, we placed the more than 1,500 centres analysed in each of the quadrants (according to their census district) and calculated the average revenue and ebitda/revenue for the centres in each quadrant.

Our starting hypothesis was that the quartiles with the highest number of households and the highest average income would house the veterinary centres with the highest income and the highest profitability.

However, without going into the technical details of the statistical calculations performed (see figure 5), the data did not support this hypothesis.

Figure 5: Density functions of the distribution of results for the parameters "ebitda/revenue (%)" and "revenue" for the different income quartiles and number of households. The large overlap of the distributions can be observed.

From VMS, these are the main reflections generated by our research:

  • There is no clear or strong statistical relationship between population density or economic level of the area and the ability of veterinary centres to earn more income and be more profitable.
  • Perhaps we have not yet defined precisely enough what a "good location" is (main road, visibility, accessibility...). A more thorough analysis would probably be necessary to completely rule out a statistical relationship.
  • Our intuition is that there are probably other variables much more relevant than population density or the economic level of the area. Some examples could be the quality of the reception staff, communication skills in the consultation room, medical knowledge, quality of the facilities, opening hours...).
  • In all geographical areas there are centres with excellent, good, bad, poor and lousy economic results... we cannot and should not "stigmatise" areas: success depends, most probably, more on internal factors of the clinic itself than on the surrounding environment..

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