Supply-side economics


Portland, Ore. - The greatest opportunities in veterinary medicine have yet to be realized.

PORTLAND, ORE. — The greatest opportunities in veterinary medicine have yet to be realized.

That's the message from John Payne, CEO of Banfield Pet Hospital when asked to offer a long-range view of the market.

It's a perspective that runs contrary to the latest data showing a veterinary services market in modest retreat following a painfully slow U.S. economic recovery that has been punctuated by this year's Bayer/Brakke/NCVEI study showing a drop in caseload and recent data from the American Veterinary Medical Association (AVMA) documenting a slight drop in starting salaries for new graduates and escalating student debt.

The economic concerns of the market, Payne contends, are symptoms of trends that have been slowly chipping away at trip drivers to veterinary hospitals—changes in vaccination protocols, reliance on Internet, product distribution and other market forces expanding access to traditional veterinary care.

And while the economic picture for 2012 is already being billed as challenging for many veterinarians, it is not indicative of the market potential, Payne says.

Simply consider there are 78.2 million dogs in the United States and 86.4 million cats according to the latest numbers from the American Pet Products Association. In 2008, the Bureau of Labor Statistics reported that 59,700 veterinarians were in the workforce. Those statistics alone tell Payne the pet-owner market is underserved when it comes to the veterinary market.

"One could argue that 62 percent of U.S. households own a pet. We have a growing population. I don't believe veterinarians are seeing enough pets right now. But I believe the supply is there, and it is just not being served."

In fact, during last year's Pet Healthcare Industry Summit, a Banfield-hosted meeting that drew attendance of more than 100 market leaders, Payne pounded the table for action to help boost declining client visits. He was a leading voice in this call for action.

This year, the Partnership for Preventive Pet Healthcare was unveiled in July spearheaded by the AVMA, American Animal Hospital Association and a host of pet-health manufacturers with the goal of increasing veterinary visits and consumer education about preventive healthcare. And the group is executing a multi-year campaign to better educate consumers and veterinarians about the need for preventive veterinary care.

The goal is get more pet owners to access veterinary care sooner, especially in light of data showing increases in diseases like heartworm, dental disease, diabetes and obesity.

This campaign hopes to improve the economic conditions of the market, Payne says, and it is coming at a time when student debt levels have skyrocketed.

In fact, at the 2011 Pet Healthcare Industry Summit a very disturbing trend was analyzed by Dr. James F. Wilson, regarding escalating student debt, he says.

"He presented a very compelling scenario that student debt is almost like the debt crisis we have in the United States that is spiraling out of control. When you stop and calculate what it does to a new graduate, it's eye opening. They are in debt for the next 20 years. And it will impact their quality of life," Payne says.

"I think we are getting to a point where a student looks at this profession and says, 'I'd like to be a veterinarian but can't afford it.' And we have seen a steady decrease in the number of applicants. I'm worried it may go lower and that will impact the quality of students," Payne says.

There is no question that Banfield is actively recruiting veterinarians. While one segment of the profession is saying there are too many companion-animal veterinarians, Payne says Banfield's 800 hospitals need more doctors.

"All the way through the recession, we are seeing more pets than we have ever seen before. And we need more doctors. I can't speak for any other practice, because I don't have the data, but it doesn't appear to me we have too many veterinarians. I can tell you we can use all the experienced and new grads that we can recruit in our practice."

Payne also acknowledges the profession is lacking substantive data to prove or disprove there is an oversupply of veterinarians. "I know people get scared when visits are down, but you have to back it up with facts and data points."

Veterinary medicine, however, needs to reaffirm its relevancy to pet owners, Payne says. Veterinarians protect health and reverse disease when it's caught early; pet owners need to know it. And that is a goal for the Partnership for Preventive Pet Healthcare, to offer pet owners a compelling case to obtain preventive annual veterinary care.

Will it work?

"Absolutely it will work," Payne says. "It is not just me saying that. The industry has put money where its mouth is. We have a very solid group of people who believe it will work, and they have committed substantial funds to make sure of it."

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