How many times a day do you find yourself defending the high prices attached to your services? Even if your desk isn’t in spitting distance from your practice’s reception area (like mine is), you’ll likely overhear an earful of price gripes at least once a day. Even those among us lucky enough to have dedicated team members handle all our financial communications will invariably find themselves forced to defend, mollify, or commiserate when confronted. GettyImages/Scorpp For those of us who prefer to take the opportunity to explain a bit about the economics of veterinary medicine, there’s no simple answer. After all, veterinary prices are by no means the sole cause of our clients’ economic woes. Driving past a gas station should be evidence enough of that. Prevailing consumer sentiment, however, is veterinary prices are especially steep. We can all point to inflation and the consumer price index as increasingly problematic in recent years, but our long-time clients know better. They have seen veterinary prices climb dramatically over the past decade, and they’re not stupid. They know it has nothing to do with the national economy or even with healthcare in general. They’re aware the veterinary profession is experiencing a relatively special sort of disruption—and they are not happy about it. What the stats say Here’s a quick summary that underscores the reality of inflation in veterinary services relative to other sectors in the U.S. economy: Category Approximate increase over the past 10 years* Veterinary services ~55–60 percent All goods and services (consumer price index) ~35 percent Human medical care services overall ~30–40 percent *Consumer Price Index data; source: Bureau of Labor Statistics The most impressive bit here is prices have risen especially sharply since the pandemic (roughly 2019). More stats: Veterinary services: roughly 40–45 percent higher. Overall CPI: roughly 25 percent higher. Human medical care: only about 15–20 percent higher. So, while some veterinarians like to point to rising healthcare prices overall, tie increases to the cost of education, blame prices on our suppliers (or corporatization in general), or even accuse our clients of expecting higher quality care for the same price, the truth is less nuanced yet more complicated than many of us expect: Labor is the most significant driver of veterinary price increases. Don’t blame us While I tend to offer this explanation to my fiscally affronted clients, I don’t often have the time to offer an economics lesson or summarize a Veterinary Practice News opinion piece in the exam room. Still, the one thing I never fail to mention is this: We, veterinarians, are not to blame. We’re reaping few benefits from the higher cost of vet care. In fact, as a whole, veterinarians are making less money than we did a decade or two ago (even after student debt was already a significant variable in the equation). How can that be? Aren’t starting salaries higher than ever before? Sure, they are, but even when you account for the fact our earnings have remained relatively flat compared to the overall rate of inflation, that’s still only part of the story. Mind the gap In the American Veterinary Medical Association (AVMA)’s most recent economic reports, the profession has identified what some of us have long observed firsthand: salary progression among veterinarians has compressed. New graduates may be entering the profession at historically high salaries, but seasoned veterinarians have not experienced proportional increases. The net result is the gap between a new graduate’s and the average veterinarian’s earnings has narrowed dramatically. How dramatically? You might be surprised. Here are some depressing stats (per the AVMA): In 2001, the average veterinarian earned 93 percent more than a new graduate. Today, the gap is only about 19 percent. Now, that doesn’t mean individual vets are not getting raises after a few years, nor does it mean new grads are necessarily being paid more than they deserve. Rather, it means our career earnings curve has flattened out overall. Which is, in a phrase, “No bueno!” Not only does this lead to attrition in our numbers mid-career, it also leads to burnout based on a lack of appreciation for our services. I mean, what incentive do you have to hang around if your earnings top out at only 19 percent more than a new grad? What does that do to your self-esteem as an experienced clinician? Does it even seem fair? In another phrase, “Hell no!” After all, in what other industry does a markedly more qualified individual earn only 19 percent more than an individual who desperately needs your guidance (and to whom we are likely donating some of your earnings in the process of mentoring)? If it’s not vets…then why the higher labor costs? I don’t want to come down on new grads. To do so wholly misses the point. The point is higher prices do not reflect higher labor costs for veterinarians as a whole (despite the high starting salaries obscuring the reality), but they do largely reflect the problem of veterinary labor writ large. After all, veterinary medicine is a people business, and it’s not just veterinarians needing to get paid. Vet techs, assistants, CSRs, managers, kennel staff, and specialists all need to get compensated, too. To wit, here’s a quick rundown of additional reasons explaining the uptick in payroll and its associated expenses: 1) Veterinary shortages Even before the pandemic forced a flurry of retirements and closures into a profession in disarray, veterinarians were in short supply, but the chaos wasn’t limited to veterinarians alone. Vet techs, CSRs, and other front-line support staff also defected as the pandemic deepened and the confusion became too emotionally trying to bear (read: burnout). Many took time off, but most found other lines of work or remained in retirement. A veterinary shortage is expensive. That means more time spent hiring, attracting talent by paying large signing bonuses, remunerating existing veterinarians who want equivalent inducements, and/or spending more on relief veterinarians than would otherwise make any fiscal sense. Plus, it often means paying overtime--the bane of any practice manager’s existence. 2) Turnover Over my three decades in practice, I’ve never seen turnover like this. Sure, our practice is under new management, which makes things tricky, but this goes way beyond my workplace. On average, practices see a new employee every month or two. That’s just not healthy. What’s more, it’s expensive, driving labor costs up significantly when scheduling gets messy, extensive training is involved, and new hires demand more for taking jobs on the spot than practices would otherwise prefer to pay were they not left in the lurch by untimely departures. 3) Regulation Running a practice increasingly means more than just medicine. OSHA, controlled substances, cybersecurity, medical records management, radiation safety, hazardous waste disposal, and employment law (among other compliance requirements) all carry costs that fall under the labor umbrella. 4) Standards I remember feeling lucky to have one dedicated tech in the OR helping me. Across all practice areas, the norm is now double to triple the team treating the same patient load. More sophisticated lab work, advanced monitoring, better drug protocols, and more comprehensive imaging options all improve outcomes—outcomes our clients demand–but they also mean a lot more labor. So, what do I tell my clients? When I do feel compelled to launch into a teaching moment, I don’t gloss over the fact third-party suppliers and practice consolidators are demanding a bigger slice of the pie (which is expensive and often hurts veterinarians). However, I nevertheless concentrate on the fact veterinary inflation is mostly a story of labor becoming more expensive as a result of more sophisticated veterinary care. Which is no less than what they demand for their pets. Patty Khuly, VMD, MBA, runs a small animal practice in Miami, Fla., and is available at drpattykhuly.com. Columnist’s opinions do not necessarily reflect those of Veterinary Practice News.
