With the number of COVID-19 cases and human deaths in the US continuing to surge as of press time in early May, some states were already planning to relax tough safeguards on the ground.
In April, over objections from public health officials, the Trump administration issued guidelines for governors to take a step-by-step approach to reopening their states.
Such efforts are due, in part, to the financial problems millions of Americans experience as a result of vacations, layoffs, and closed businesses.
Mississippi Governor Tate Reeves told Fox News in an interview on April 19, “We can’t wait for a cure for this. … We have serious mental health problems in this country right now and we also have a serious economic crisis in this country. “
The best scenario for the US economy to recover in a post-COVID-19 world is presented as a V-shaped graph with a sharp decline in economic activity and a rapid recovery. In the U-shaped model, the economy declines, remains depressed for a while, and then recovers. The worst case scenario is an L-shaped graph where economic activity is falling and not recovering to previous levels.
The overall impact on the veterinary industry is an open question, although some economic data from practices across the country sheds some light on the subject.
Industry analyst VetSuccess has followed the daily impact of COVID-19 in more than 2,500 practices across the country. The company reported that the year-over-year loss of revenue and invoices was less profound in the second week of April than in the previous weeks. This shows a flattening with a decrease in the range of 10% to 15%.
Smaller hospitals – with annual sales of less than $ 1.5 million – outperform larger practices. In particular, the practices in Texas, Louisiana, Alabama, and Arizona saw average year-over-year growth.
Average daily sales per practice nationwide fell 8% year-over-year, compared to 12% in the first week of April. Sales at larger practices decreased by 12% compared to 2% at smaller practices. Excluding home delivery data, pharmacy revenue increased 5%, while over-the-counter drug and diet revenue decreased 10% and professional service revenue decreased 10%.
Daily average bills per practice declined 13% year-over-year, compared to 16% the previous week. Major practices were down 15% compared to 17.5% the previous week. Minor practices were down 5.5% compared to 11% the previous week. The three states with the largest year-over-year change in bills were Connecticut, down 28%; Massachusetts down 26%; and Maryland by 25%.
Which one will it be?
During an April 22 webinar, AVMA chief economist Matthew Salois, PhD, referred to an article in the Harvard Business Review that outlined three possible recovery scenarios for the US economy, from best to worst.
The first and most preferred scenario is presented as a V-shaped graph showing a sharp decline in economic activity followed by a rapid recovery. The least desirable model of the Great Depression is the L-shaped chart, which shows that economic activity is decreasing and not recovering to previous levels.
“Obviously this is not what you want and we need to make sure that the right actions and decisions are being taken to keep this from happening to our economy,” said Dr. Salois.
In between these two scenarios is the U-shaped model, which is very much aimed at how the great recession played out in the late 2000s, when the economy fell, stayed depressed for a while, and then rebounded.
“This is more of a hit on the kneecaps,” explained Dr. Salois. “It hurts. You heal, but not without persistent injury. There are some economic losses and falls in productivity, and some practices will not survive.
“I hope the veterinary profession is somewhere between the V and U models. I don’t think the worst-case scenario is necessarily the most likely scenario, but I think we need to take the appropriate steps to ensure we recover as quickly and painlessly as possible. “
Make it easier for small businesses
In late April, Congress attempted to ease the blow to the US economy with a $ 484 billion package that included $ 370 billion in Small Business Administration loan programs, including the new Paycheck Protection Program.
The bill, first passed by the Senate on April 21 and two days later by the House of Representatives, also included $ 75 billion to help hospitals and $ 25 billion for coronavirus testing.
The PPP was created by the Coronavirus Aid, Relief and Economic Security Act to allow small businesses to apply for low-interest private loans to cover their payroll and certain other expenses. However, the program quickly exhausted its initial allocation of $ 349 billion, and the SBA stopped accepting applications on April 16.
Of the final $ 370 billion for SBA loans, the package provides $ 310 billion for the PPP, of which $ 60 billion for smaller institutions under the bill and $ 60 billion for the SBA disaster loans for emergencies, with $ 50 billion earmarked for EIDL loans and $ 10 billion to support EIDL’s cash grants of up to $ 10,000.
The AVMA website provides information on COVID-19 laws and assistance programs, as well as additional information on these small business loan programs and how to apply.