Charting the Future for Rural Veterinary Medicine
Rural America is facing a growing crisis of access to veterinary healthcare.
The US Census Bureau predicts a possible national shortage of 15,000 veterinarians by 2025, with the majority needed in rural areas. As we discussed in a previous blog, rising student loan debt and debt-to-income ratios are resulting in a shift towards fewer veterinary medical students coming from rural backgrounds. Combined with a (largely false, as we discuss shortly) perception of low earning power in rural areas and on-call requirements for many rural associate positions, this is disproportionately driving young veterinarians to take roles at suburban and urban practices. With a large segment of the current veterinarian workforce at or nearing retirement age, many rural communities are seeing their few local veterinary practices closing shop without a new generation of veterinarians returning to these communities.
The practice-level economics at rural veterinary hospitals is challenging: These practices generally have less flexibility in pricing, as veterinary hospitals need to keep their prices in line with local income levels as much as is feasible. Rising standards of care in veterinary medicine in recent decades have necessitated prices across the industry rising at a rate exceeding inflation, and excessive student loan debt among younger veterinarians means there is a higher financial floor needed to cover their combined cost of living and debt payments than in the past. Some costs of operating a business scale with local cost of living, such as business rent and staff wages, but others do not, such as Cost of Goods Sold.
The individual economics for rural associate veterinarians can be great: When it comes to attracting veterinarians to rural communities, the issue is more with marketing than economics. In general, most veterinarians overestimate the income gap and underestimate the cost-of-living gap when comparing comparable urban/suburban job opportunities to rural ones.
Let’s look at an example: according to NerdWallet’s cost of living calculator, a job paying $90,000 per year in the area of Tyler, TX (shameless plug for an AVP partner practice that is hiring in that area!) would provide comparable discretionary income to the following compensation:
$120,000 in Chicago, IL
$150,000 in Boston, MA
$185,000 in Brooklyn, New York, NY
$200,000 per year in San Francisco, CA
This is also important when comparing signing/relocation bonuses to an apples-to-apples basis. The same signing bonus in a rural community that would cover an entire year of rent, allowing you to truly “try before you buy” and save that extra income to secure permanent housing, would likely only cover 3-6 months of rent in a major metro area.
Many debt-saddled younger veterinarians are scared away from pursuing rural positions because they feel that the income gap between urban/suburban and rural practices means that pursuing rural work will not be economically viable, when in reality their available after-expenses income with which to service debt and enjoy their time outside of work would likely be greater at many rural associate positions.
The USDA NIFA Veterinary Medicine Loan Repayment Program is a great start and needs to be protected: Veterinary medicine is an essential service, full stop. This is an easy distinction for the USDA to make, as the economic value that veterinarians play in agriculture is massive and the shortage of food animal veterinarians is causing clear and quantifiable. However, the rural shortage of small animal veterinarians is significant and damaging to rural communities too, and a similar program for loan repayment for small animal-exclusive clinicians in shortage areas should be an important point for the veterinary profession to lobby. As a society we increasingly consider our pets to be a part of our direct family and, by extension, veterinary access for pets should be treated as a necessity! In addition to loan repayment, controlling the amount of veterinary student loan debt is of critical importance.
Emergency/on-call requirements are a significant hurdle for rural practices to hire veterinarians: 24/7 emergency care access has significantly improved in most suburban and urban areas as a standalone model of care, allowing many general practices to reduce or eliminate on-call requirements for their veterinarians. However, most rural communities do not have enough caseload density to support dedicated veterinary emergency facilities, leaving GPs continuing to carry this traditional responsibility of ensuring that their clients have access to emergency care. However, when given the option to choose between jobs that require on-call and those that don’t, the choice is easy for veterinarians who are job hunting as on-call responsibilities are very detrimental to work-life balance – especially at small clinics where on-call responsibilities for as many as 100+ hours per week that fall outside of normal work hours might be split between as few as one to three clinicians. Eliminating off-hours emergency availability is a much more ethically challenging decision for rural practices, as unlike their suburban and urban counterparts they don’t have the option to refer clients to a reasonably close emergency facility. Put simply, if an animal is experiencing a true, time-sensitive emergency there would be nowhere else for them to go when the nearest emergency facility might be several hours away.
Consolidation is an answer to many challenges of rural veterinary practice: Consolidation, or “corporate” veterinary medicine has earned every bit of its bad reputation. Over the last two decades or so, private equity-backed consolidators have been a “bull in a china shop” in veterinary medicine, leaving a wake of broken promises and bad behavior.
That doesn’t mean that there aren’t powerful economic levers to consolidation that, in the right hands, could benefit our profession and especially the people working within it. AVP is forging a new direction, free from private equity and their pressure to make short sighted business decisions.
We are vet-founded, vet-operated, and not private equity-backed. That reflects in the way we serve our partners and teams. We utilize fair equity partnerships to co-own practices with local clinicians to bring the economic and operational benefits of consolidation while retaining the local culture, feel, and style that is the “secret sauce” that makes independent veterinary practices so great.
A hub-and-spoke model of delivering care may be the best answer to the rural veterinary healthcare access crisis. In the hub-and-spoke model, larger regional “hubs” of full-service practices are supported by smaller limited-service satellite clinics in their local communities. By pooling resources like staff, inventory, and equipment across this local network, the network can provide the resources of a larger, full-service hospital to a local region while ensuring that local access for general care remains convenient. For clinicians, this also allows regional on-call services to be pooled among a larger group of clinicians (unlike the current model, where each small independent clinic needs to serve its own town on a 24/7/365 basis), solving the current hurdle of many rural practices of requiring clinicians to commit to a large amount of on-call.
Additionally, consolidators can add the benefits of economies of scale, data leverage, and industry best-practices to address the more challenging practice-level economics for rural veterinary practices. By providing operational efficiencies, reduced COGS, and affordable benefits, veterinary groups can improve financial margins which can then be reinvested in driving growth, providing teams with the tools they need to improve quality of care, and improve compensation for team members.
Regardless of whether you’re located in the big city or serving a much smaller community, AVP is interested in partnering with great clinicians who run great veterinary practices.
If you’re a practice owner and interested in finding out more about partnership, please reach out to me at bill@associatedveterinary.com. If you’re a veterinarian, credentialed technician, or any other veterinary leader or team member, please reach out to our Director of People & Success, Tedd Trabert, at tedd@associatedveterinary.com to find out more about career opportunities at AVP’s partner practices.
Don’t forget to meet me at VMX Booth 2835. Let’s discuss the future of our profession.
Happy Holidays!
Dr. Bill