AVMA’s Veterinary Economics Director, Dr. Mike Dicks, has been writing regularly over the last four years about the economics of the veterinary markets. During that time, he has seen two key veterinary performance indicators worsen – the debt-to-income ratio and the net present value of the DVM degree – while at the same time the U.S. economy as a whole has been expanding.
In addition. the number of pets in the United States has been growing, but the number of invoices per veterinary practice has shown no increase until recently, and the proportion of pets not seen by a veterinarian has grown.
All of that sounds discouraging. Yet in the face of declining economic performance in the veterinary markets, outside investments have continued to flow into the profession to purchase veterinary hospitals, leading to concentration and consolidation in the market. These economic trends would seem to pose two questions:
- If the veterinary markets are underperforming, why is equity from outside the profession pouring into the veterinary services market to purchase veterinary practices?
- If the veterinary markets are underperforming while the U.S. economy is expanding, what will happen to economic performance when the economy dips into another recession?
Dr. Dicks addresses these questions in a new article in our Exploring Veterinary Economics series, and he touched on the same topics in a recent article published in dvm360 magazine as part of a monthly series contributed there by the AVMA’s Veterinary Economics Division.
According to Dr. Dicks, although total veterinary practice revenues have increased, a decline in real median incomes over the last two decades has squeezed pet owners’ purchasing power, reducing their ability to buy veterinary services and exacerbating a gap between the need for veterinary care and actual demand for services. This gap between need and demand for animal care provides considerable opportunity for the veterinary profession, according to Dr. Dicks, and is a principal factor drawing investments from outside the profession. The future economic health of the veterinary profession will depend on effective strategies to close this need-demand gap.
We encourage you to read the full Exploring Veterinary Economics article.