Study probes income disparity question

CLEVELAND — Age, experience, business orientation and practice maturity might explain why income disparities exist between the profession's men and women.

Financial review frequency, leadership skills, sound judgement, employee development and productivity awareness each contribute to personal-income bumps in the tens of thousands. But the most significant fuels to salaries appear to be practice longevity and veterinary experience, both of which likely propel business savvy and financial acumen, according new findings in the 2004 AVMA-Pfizer Business Practices Study.

Veterinarians age 54 and older with at least 23 years of experience earn about $27,000 a year more than the national average of $94,650, according to the study.

Though it might be little surprise that older, more experienced practitioners earn more money, the study is believed to be the first to try to determine why disparities in personal income exist among men and women, especially among owners.

"One of the things that is most intriguing is the difference in owners' salaries, and one of the things that contribute to that is that practices owned by women tend to be younger practices," says John Volk, senior consultant for Brakke Consulting, which conducted the AVMA-Pfizer study, for which Volk was project manager. "The data show that the longer a practice has been in business, the more veterinarians tend to earn. Practices that are owned by men average 28 years old, and those owned by women average 18 years old, and the data show that a practice takes 15 years to mature. Once you get past that 15-year threshold, which isn't a hard line, then practitioners tend to work fewer hours and have higher production. So we think that some of the difference in income is a business maturation process."

Male owners earn about $40,000 a year more than their female counterparts who work at least 40 hours per week. Anecdotal reports long have surmised that productivity disparities likely contribute to the gap in personal income, but new information revealed in the AVMA-Pfizer report reveals that the rift in revenues does not account fully for the inequality in personal income.

Male practice owners with 15-22 years experience generate 30 percent more revenue than female owners with the same experience level and comparable hours worked, but men enjoy 44 percent more personal income. That means women earn at least 14 percent less personal income after adjustments for productivity.

The gap widens for associates. Though male associates with one to seven years experience who work at least 40 hours a week generate 5 percent more revenue, they enjoy a 26-percent premium on compensation compared to women with similar experience who work at least 40 hours per week. The result: Men in this group earn an average of $80,720 a year versus $64,100 for women.

Though Volk says it would be dangerous to make assumptions about the productivity data, female associates know their production levels less than half the time; 44 percent of male associates don't know their productivity, and almost a quarter of all owners don't know their production levels.

"There is no question that veterinarians need to know more about their production so that they can improve their economic fortune," Volk says.

Owners are twice as likely as associate veterinarians to know productivity.

But just gauging "more than 40 hours a week" might be too broad to make any concrete assumptions about productivity disparities between men and women, contends Karen Felsted, CPA, MS, DVM, CVPM, a consultant with Brakke and editorial advisor to Veterinary Economics.

"The study was never designed to measure production differences between men and women and because this is such an important issue, I would be hesitant to draw any definitive conclusions from this data."

But the data that suggest age, experience business orientation and age of practice influence income have a lot of teeth, Felsted says.

Although gender rarely plays a role, the intuitive assumption is that it is difficult to substitute experience for a practice manager, and it takes some time to learn how to reap the full rewards out of a new establishment.

"Practices need some time to learn how to do it right; successful ones have learned from their mistakes," Felsted says. "Clients just assume that a practice is going to grow with its medical and surgical knowledge, so what really matters to clients is the presentation of the facility and the way in which they are treated. Does the doctor answer their questions? Are they running on time? Does the reception area smell like urine?"

Veterinarians not alone

Veterinary medicine isn't the only profession trying to elevate women's income on par with men. "The data for veterinarians is pretty consistent and reflective of data from society as a whole," Volk says.

In 2003, women earned about 76 percent of what men make as a national average, according to the U.S. Census Bureau. Women earned just 61 percent of a man's income in 1960.

Education level doesn't appear to bridge the salary gap, either. In 2003, the mean annual salary for female neurosurgeons was $337,031, while male neurosurgeons earned 487,000, according to the National Association for Female Executives (NAFE). Women anesthesiologists earned $64,290 less than male colleagues did, and male ophthalmologists and dermatologists outpaced their female counterparts by more than $50,000, according to the NAFE 2004 Salary Survey (2003 data).

"Without a doubt, it is a societal issue, Felsted says. "But it impacts veterinary medicine, and any profession in which you don't have a predominant gender, because it is going to keep the average salary down. If there are more women in the profession, and women make less, then the average salary for the profession is going to be less, and that is going to make the profession less attractive to new entrants."

The wage disparities might begin with a person's first professional job and compound with each subsequent position, says Dr. Hilary Lips, director of the Center for Gender Studies and chair of psychology at Radford University in Radford, Virginia. She says some research indicates that men care more about money as a hallmark for personal and professional success. But a number of factors might be fueling wage discrepancies for owners, such as management styles, level of benefits for employees, reinvestment into the business and prioritization of curb appeal and facility aesthetics.

"Making more money isn't a great motivating factor for me," says Nancy Katz, DVM, owner of a three-year-old startup in Upper Montclair, N.J. "My bigger motivation is to have a great team, provide good-quality medicine and be happy with what I do."

Katz says she is comfortable with her income level, and although "money isn't a great motivating factor" for her, 70-hour work weeks and a commitment to understanding the financials of her business have created a good amount of success and stability.

"I'd like to be able to do the management part a little better and perhaps spend a little less time doing that, but I think part of operating a new practice is that you must keep track of things fairly closely, so I'm not ready to hand that off to an office-manager type yet," Katz says. "But considering the age of my practice, I'm happy with where I am."