Exploring Veterinary Economics: Increasing Supply of Services above Baseline Estimates

The latest article in Dr. Michael Dicks’ series, “Exploring Veterinary Economics,” has been posted.

Two new veterinary colleges are scheduled to provide new veterinarians to the workforce by 2018. This article explains the potential impacts of these additions on the veterinary workforce.

The article series is available to AVMA and SAVMA members only.

 

 

2 thoughts on “Exploring Veterinary Economics: Increasing Supply of Services above Baseline Estimates

  1. Linwood, thank you for taking the time to voice your concerns about the current level of excess capacity in the veterinary profession. We realize that you speak for a lot of other veterinarians.
    In April, the 2013 Workforce Study and the AVMA Workforce Advisory Group’s Implications and Recommendations report was made available to the national media and the AVMA held several media events to “get the word out” to explain the current veterinary workforce conditions.
    The term excess capacity is used to describe the current situation because this indicates that supply, demand and price are involved in the measure. Reducing the supply, increasing the demand or changing the prices all will impact the level of excess capacity. To suggest that there is an overload, oversupply or excess supply of veterinarians assumes that all potential demand has been met and that veterinary services have been provided at whatever price consumers are willing to pay. I think you will agree that this is not the situation.
    First, as the articles in Exploring Economics have indicated, both the increases in prices for veterinary services and the decline in disposable incomes (caused by the economic downturn) have reduced the demand for veterinary services. Thus, as the economy recovers excess capacity will decline. And, if the prices for veterinary services are held at current levels the quantity demanded of those services will increase as the economy improves and the general price level increases.
    This does not suggest that we should sit on our hands and hope that an improved economy will produce a more robust market for veterinary services. I point this out because it is important to understand the positive attributes of excess capacity. Excess capacity allows for the expansion of output in the event of a spike in demand, it allows for business expansion, flexibility, and the proper maintenance of human and capital resources.
    A recent GAO report indicated that in the event of a disease outbreak similar to Foot and Mouth that there are insufficient number of veterinarians to meet this challenge. There are also over 200 rural areas that are in need of veterinary services and many companion animals that have not seen a veterinarian in over 18 months. These are all opportunities for veterinarians to expand demand for their services. In addition, the absence of excess capacity creates an incentive for others to offer some veterinary services.
    However, on the negative side too much excess capacity leads to underemployment, unemployment, declining incomes and exits from the profession.
    Then, how do we find the right balance? What is the AVMA’s role?
    I am certain that most of our members believe in the free market. This means that we will allow the market to guide resources rather than allowing some entity to determine the amount of supply and demand. As a result, the market is going to overshoot and undershoot. When excess capacity is too large the supplier will be forced to reduce supply or increase demand and when there is too little excess capacity the consumer will be forced to reduce demand or pay higher prices. As an economist I support the idea that the market will most efficiently allocate resources.
    Again, this does not mean that I should sit idle and hope for the best. The market works best when all participants are informed. My role will be to First, provide the best information possible about the supply and demand for veterinary services and I hope veterinarians will follow Exploring Economics to receive that information. Second, to help increase demand by identifying areas of need and identifying strategies for turning these needs into demand. Third, identify pricing strategies to increase the quantity of veterinary services demanded while increasing veterinary incomes. Finally, we need to provide state and federal legislators with information on the economic impacts on veterinary clinics that result from the numerous laws, regulations and taxes that they discuss every year to minimize the adverse impacts of government actions on veterinarians.
    In the future we will be asking AVMA members to help us gather a lot of information. This information is necessary to enable AVMA to assist veterinarians in the ways just mentioned. I hope you will help us “do more about the problem” by taking the time to provide us with accurate information.
    Thanks again for taking the time out of your busy schedule to be involved in this issue. Certainly, understanding the current problem and its causes is the first step in finding solutions.

  2. And is the AVMA or anyone supised by this 12% overload???? Who but the AVMA did not see it coming????? Who but the AVMA feels that the 12% is overly conservative????? But most importantly, why did and why does the AVMA not shout this from the rooftops in National News Media to let people know that too many veterinarians means less service for all and the continuation of the lament of new graduates; “I CANNOT AFFORD TO PRACTICE”!!!! What is it that the AVMA is doing other than acting like the Cricket fiddling while the Ants work to prepair for winter????? Even this website has 4 layers to go through to get to the article which is protected by password, but should be available for any media that will publish the message!!!!!!!! Give me a break AVMA. Start doing more about the problem and less about frittering away opportunitites.