The Rise in Veterinary Spending & The Current Economy
I wrote a piece last week on the recession’s impact on veterinary medicine. In my research to help quantify things, I found some interesting data. For example, between 1980 and 2005, what people spend on veterinary services virtually doubled in real dollars. That means, even with adjustments for inflation, pet owners are spending about 100% more per year. And, for the “best clients,” who routinely take pets to the doctor (aka … you and me), it’s actually 124% of what it used to be.
A bunch of things account for this rise: tremendous advancements in diagnostic and therapeutic options, the rocket-like rate of growth in the human-animal bond, and the fact that veterinary practices didn’t charge as much as they should have in the past.
That’s beginning to change. In fact, veterinary costs have risen twice as fast as the Consumer Price Index, which tracks what households pay for goods and services.
The point financially where people stop treatment has risen 250% in 10 years — from $576 in 1997 to $1,451 in 2006. (Personally, that amount seems low to me. Goodness knows I’ve dropped $1,500 without sneezing in the not-so-distance past.)
You’ve probably heard of the 15% rule, where 75 percent of a financial outcome stems from just 15% of someone’s customers. That, dog lovers, explains why veterinarians adore people like us. We’re the cornerstone of the industry.
One study predicts that as a result of rising veterinary costs pet insurance market inroads might get as high as 15-20% (again the same people in the pool here), and it goes on to say that pet owners like us are “disproportionately valuable to the practice; pet insurance makes them even more so.”
Why? Because industry researchers know that people with insurance are more likely to agree to things a veterinarian recommends and having financial help (via insurance) in truly emergency situations allows people to raise that stop-treatment financial threshold.
Despite other drops in the pet markets — everything from toys to food — pet insurance new customer rates and policy renewal rates are holding strong in the poor economy.
A study released in December 2008 by Brakke Consulting, which often does big studies of the veterinary market, showed some interesting results relating to the current economy:
- 46% of pet owners indicated that their financial situation was worse in 2008 than in 2007.
- 27% said employment for the household’s chief wager earner has declined in the last year.
- The impact is worse in the Mid-West and in families with annual household incomes below $50,000.
I only got to read a synopsis and interview the study manager since the full study report costs $6,000, but it said, “There is some indication that pet owners may even be reducing the number of pets they own.”
Now, that doesn’t seem to be the case in our dog-blog community, but I can see how it might be elsewhere.
There was also a funny online survey done by the American Kennel Club in December 2008 that asked people about pet spending. In response to a variety of would-you-give-up questions, 97% of dog owners said they would make sacrifices in discretionary spending to afford their dogs’ needs.
Many of the items offered up where for those with money to spend anyway — like spa treatments, teeth whitening, but it’s nice to know people would make sacrifices (or at least say they will).
However, apparently having Internet access is NOT something people would cut from the budget in order to afford dog care. I guess 70% said they could not live without it.
Whew! The dog-blog market is safe!