Market improving, but value of veterinary degree unclear

AVMA releases new economic analyses
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AVMA economists predict an improving market for veterinary services over the next several years.

But they also released results of analyses indicating the typical veterinary college graduate will earn less during his or her career than the typical bachelor’s degree holder, once educational costs are considered.

The AVMA Veterinary Economics Division’s latest estimates project a decline in the excess capacity for veterinary services, a measure that is related to underemployment and refers to unused but available ability for veterinarians to deliver services. The number of veterinary college graduates also is expected to level off by 2018, while pet populations are expected to grow over at least the next decade.

Michael Dicks
(Photo by Katie Burns)

Michael Dicks, PhD, director of the Economics Division, said during the AVMA Economic Summit Oct. 28 in Rosemont, Illinois, that the figures presented during the meeting were preliminary, and the AVMA plans to publish a refined report in January.

Capacity to serve

Just 6 percent of veterinary services in the United States will go unused by 2016 and continuing through 2025, according to estimates in an update of the AVMA workforce model. The previous workforce model estimated excess capacity for veterinary services was 12.5 percent for 2012, but it projected a dip down to 10 percent before an increase back to 12.5 percent for 2025.

Ross Knippenberg, PhD, economic analyst in the AVMA Veterinary Economics Division, said veterinary service prices have increased faster than inflation, gross domestic product per capita has risen slower than the long-term trend, and the supply of new veterinarians has increased faster than the long-term trend.

“But the outlook is actually pretty good,” Dr. Knippenberg said.

Economic meeting
(Photo by Greg Cima)

The excess capacity estimates improved because of changing assumptions that include lower than expected current excess capacity in private practice, a projected increase in the number of veterinarians in military and civil service, higher projections for livestock numbers, a correction to an underestimation of faculty at veterinary colleges, and a projection that the growth in the number of new veterinarians will level off after 2018.

AVMA capacity surveys in 2012 and 2014 found that the percentage of U.S. veterinary practices working at full capacity increased from 35 percent in 2012 to 51 percent in 2014. Excess capacity at practices decreased from 17 percent for 2012 to 13 percent for 2014, although by only one percentage point for companion animal practices.

“It’s not across-the-board better, but on average, it is better,” Dr. Knippenberg summarized. “Veterinary compensation is improving. These results primarily reflect an improving macroeconomic forecast.”

Bridgette Bain, PhD, a statistical analyst in the AVMA Veterinary Economics Division, said about 20 percent of veterinarians surveyed want to work less, with a mean of about 13 fewer hours, whereas about 14 percent want to work more, at a mean of 12 hours.

Bridgette Bain
Bridgette Bain, PhD, AVMA statistical analyst, reported an unemployment rate of about 3.4 percent for U.S. veterinarians. (Photo by Katie Burns)

She also said about 3.4 percent of U.S. veterinarians are unemployed. Figures from the Bureau of Labor Statistics indicate the overall national unemployment rate was 6.1 percent in the third quarter of 2014 and about 3.1 percent during the same period for individuals who have at least a bachelor’s degree.

Value of a degree

Some of the figures the AVMA presented during the meeting indicate that veterinarians graduating today can expect lower career earnings than the typical bachelor’s degree holder once educational costs and debt are considered. That is particularly true among those who enter equine or food animal–predominant private practice, where the career-long difference is about $500,000 when discounted back to present value dollars.

“The return on investment is currently negative, and it will become more negative over time,” Dr. Dicks said.

For female veterinarians, who are the majority in the veterinary profession, the net present value of career earnings is $70,000 less than for bachelor’s degree holders. Male veterinarians can expect a net present value career total of about $40,000 more than that of bachelor’s degree holders.

Dr. Link Welborn, a member of the AVMA Veterinary Economics Strategy Committee and a practice owner in Florida, said the findings on the return on educational investment were the most agonizing of the day.

Some of the debt and income problems that are facing recent graduates are truly alarming.

Dr. Link Welborn, a practice owner in Florida

“Some of the debt and income problems that are facing recent graduates are truly alarming,” he said.

He also said, “We do have to be concerned about the potential to lose some of the best and the brightest and have to present a balanced story in order to prevent this from happening.”

Practice owners earn more than associates, he said, but many younger veterinarians believe ownership is unrealistic with high student debt, even though many institutions will lend to those who have good credit and high student debt.

Entrants to the workforce

The number of veterinary school graduates entering the U.S. workforce is expected to rise from about 3,600 in 2014 to 4,300 yearly in 2018, when the total is expected to level off, Dr. Dicks said.

Dr. Cyril Clarke, dean of the Virginia-Maryland College of Veterinary Medicine, thinks veterinary colleges have all but finished making substantial increases in enrollment for the near future, as many of those institutions would need substantial investments in faculty and facilities to educate more veterinary students.

Dr. Clarke
Dr. Cyril Clarke, dean of the Virginia-Maryland College of Veterinary Medicine, thinks veterinary colleges have all but finished making substantial increases in enrollment for the near future. (Photo by Katie Burns)

Dr. Dicks expects the cost to each student will continue rising.

“I think, for me, that’s a foregone conclusion,” he said. “It’s been that way since the 1990s, only it’s getting worse as legislation and legislators continue to defund public education.”

Dr. Clarke said students are deciding to join the veterinary profession despite the cost. As for differences in income across veterinary careers, he described veterinary student populations as shoppers in different stores.

U.S. veterinary colleges are trying to avoid tuition increases, Dr. Clarke said, and he expects colleges will increase their emphasis on reducing or preventing educational debt. He also expects an emphasis on providing services in varied fields of veterinary medicine and training students to serve diverse communities.

Cycles expected

Dr. Jeffrey S. Klausner, senior vice president and chief medical officer for Banfield Pet Hospital, said every industry has down cycles. But he thinks the growth in the human and pet populations will drive demand for veterinarians over the next decade.

“I don’t believe the sky is falling,” he said. “What’s happening in companion animal (practice) is expected.”

Dr. Jeffrey S. Klausner
(Photo by Katie Burns)

While the U.S. now has about 33 small animal veterinarians for every 100,000 pets, he presented AVMA projections predicting that the ratio will decrease to 31 per 100,000 by 2025.

He also sees opportunities to reduce the portion of pets that do not see a veterinarian in a given year­—about 45 percent of cats and 19 percent of dogs during 2011.

While he said a veterinarian could open a practice with relative ease 20 years ago, veterinarians now need to be more innovative to be successful. For example, veterinarians can better describe the need for preventive care during pets’ adult lives, and they can open clinics for evening and weekend hours that are convenient for pet owners.

Stan Johnson, PhD, an economist and chair of the board of the National Center for Food and Agricultural Policy, said that raising the price of canine wellness visits can lead to a decrease in the quantity of visits, but a decrease in dog owners’ incomes does not necessarily lead to fewer visits. He and three other analysts came to these tentative conclusions after looking at AVMA data on veterinary spending.

Room for more discussion

Will Ambrosini, an economist from Seattle who spoke during a Q&A segment at the end of the meeting, noted that he had not heard presenters discuss technology that by improving the efficiency of veterinary practice, could let veterinarians see more patients, let clients pay less for the same services, and improve demand for veterinarians and veterinary students. He said after the meeting that he had attended because he and his wife, Dr. Yoko Ambrosini, have talked about starting a veterinary practice.

Julie Legred, a certified veterinary technician and executive director of the National Association of Veterinary Technicians in America, said during a break that she was glad to attend, but she thought the summit could have included more analysis of veterinary technicians’ student debt and their contributions to veterinary practice profits and workloads.

“We have debt coming out of school, too,” she said. “Some of them are $55,000-plus, and it’s a two-year program.

“So, if technicians were utilized correctly across the board, would that play into how much money is generated in practices and how much more work is coming their way, and could (that) benefit everybody?”

Dr. Tim Hackett, director of the Veterinary Teaching Hospital at Colorado State University, said during a break that it was good to hear positive news about the rebounding economy, opportunities for veterinarians in areas such as livestock medicine, and potential for growth in the veterinary profession. Enrollment in veterinary schools seems to be stabilizing, and the ratio of veterinarians to pets and pet owners seems to be constant, he said.

“I think that, overall, I’m going to take away some positive information from this,” he said.

AVMA Econ logoIn January, the AVMA plans to release the findings from the AVMA Economic Summit as the first in a series of six reports that will provide more details about the markets for veterinary services, veterinarians, and veterinary education.

Related JAVMA content:

Service surplus (June 1, 2013)

Veterinary economics a priority in 2014 (March 1, 2014)

Economics division analyzes problems, causes (Oct. 1, 2014)

Service surplus (June 1, 2013)

Veterinary economics a priority in 2014 (March 1, 2014)

Economics division analyzes problems, causes (Oct. 1, 2014)