Letter to dvm360: We must solve our economic problems before the market does it for us

As I read the June 2015 edition of dvm360 I see yet another couple of articles on the woes of high debt loads for veterinary students, and for the first time I finally read that some schools have realized that increasing scholarships is the only viable solution to the problem. While I applaud these efforts, I also realize that they are not enough. As a profession we cannot rely solely on the institutions that educate our veterinarians to also fund their education. We as practice owners must bear some responsibility for the educational costs of the employee veterinarians who earn revenue on our behalf. However, I also believe the cost must be shared by the individuals who consume veterinary medicine: pet owners.

Starting in mid-2010 our small animal hospital added 50 cents to every exam we performed. In 2011 we presented our first scholarship for $2,000 to a deserving student at Oregon State University. Since then we have increased the scholarship by $2,000 annually and this year awarded $10,000 in scholarships. We have also added 50 cents to every bottle of the private-label shampoo, vitamins and dental chews we sell. On each invoice we tell our clients that 50 cents of the exam fee or product purchase supports scholarships for veterinary students at Oregon State University, and the response has been overwhelmingly positive. Every American knows how expensive college is today, even at state universities, and our clients appreciate the fact that we are giving back to our community.

I know that my hospitals alone cannot tip the scales of student indebtedness, but if every hospital in every state added just 50 cents to each examination, veterinary student debt would be decreased significantly. Even in a small state like Oregon there are more than 500 veterinary hospitals. We could make the burden of student loans a thing of the past.

But this will not solve the problem of student debt if it only causes tuition to increase faster. If large endowments alone were enough to fund tuition, Harvard would be free to all who could get accepted, and we know that is not the case. Veterinary colleges must stop increasing tuition at a higher rate than inflation.

Colleges of veterinary medicine must also stop enlarging classes in an effort to capture more tuition in the face of shrinking state support for higher education. In fact, class size must fall, fewer veterinarians must graduate and there must be some reduction in the number of veterinary hospitals if the industry is to prosper. These are the truths that we as an industry must face sooner or later, and the only way to reduce the number of private practice hospitals is to reduce the number of veterinary students. This will happen one way or another as it has with law schools in America where enrollment is down because applications are down. Any profession that pumps out more graduates than the market can absorb will eventually see a reduction in student applications.

Instead of closing schools like the dentistry profession, let's gradually reduce class sizes across the country, increase the quality of education and come to an orderly supply and demand equilibrium. With fewer hospitals the number of visits per hospital would gradually increase, and I don't know of a veterinary hospital that couldn't squeeze in five more exams a day without having to add an additional doctor or staff member.

Increased utilization of our hospitals and staff will lead the way to higher profitability, just as increased utilization has caused air carriers to significantly increase profitability in the last few years (we'll ignore baggage fees!).

Some experts are still suggesting that if we just raise our fees, the problems in veterinary medicine-in particular low wages-will be solved. Unfortunately, we know from Econ 101 that the higher the price of any item, the less of it will be consumed. A drop in demand for our services is the last thing we need in veterinary medicine. The reality is that veterinarians currently have very little pricing power (the ability to raise prices without a loss of quantity demanded due to price elasticity of demand) and because of that, the prospect for increasing profits solely by increasing prices is likely not sustainable (we've already tried that!). As a result, increasing wages for future veterinarians is very much in question.

The best hope for our profession is: (1) a shared responsibility for increasing scholarships among veterinary colleges, practice owners and pet owners, (2) veterinary colleges reducing class sizes and controlling costs to keep tuition increases from outpacing inflation, and (3) a reduction in the number of private hospitals to drive increased utilization of assets and, ultimately, higher profits. Only this combination of factors will lead to higher wages for new graduates and greater income for practice owners. Let's hope we have the courage to make these decisions voluntarily before the inevitable forces of supply and demand make them for us in a much more painful way.

John Maddigan, MS, DVM

Owner, Willamette Valley Animal Hospital, Salem, Oregon