Sunday, December 16, 2012

Job Meltdown and Debt Crisis Among Veterinary School Graduates

Dr_Clark_s_PictureA colleague passed along a link to a thought-provoking blog post by Dr. Andrew Clark, a veterinary doctor who runs a consulting practice on the business of veterinary medicine.  His business gives him a bird's eye view of the forces roiling the industry. 

Suffice to say, what is happening in the veterinary education, and the broader vet industry, is eerily close to the problems in legal education and the legal profession. 

Here is an excerpt of Dr. Clark's in-the-trenches view.  The post is titled, "Student Debt ... Our Best Thinking Got Us Here":

If you follow my blog or have worked with me, you already know that one of my favorite sayings is “our best thinking got us here.” That is certainly the case with the Veterinary Student Debt situation. We need some new thinking regarding what generates student debt and what hampers the ability of students to pay back the debt.

In the course of my management consulting business, I am fortunate to work at the interaction intersection between Veterinarians, Veterinary practices, Veterinary Colleges, Veterinary Students and Businesses that provide services and products to the veterinary profession. One of the most common and sincere concerns expressed by people in all of the groups is concern over the impact of student debt on the profession. The student debt situation is a circular process involving Veterinary students, Veterinary colleges, the AVMA, lenders and Veterinary Practices (employers).

I don’t have a solution to the problem but I have some observations and ideas that could be woven into the fabric of a different strategy for financing veterinary education. Although it may happen, my intent is not to offend everyone in the entire veterinary profession with one blog but rather to stimulate creativity and innovation.

Veterinary Compensation

Because the most common theme in discussions involving student debt is “Veterinary jobs should pay more,” I will enter the circle at the Veterinary Practice (employers) point. The assumption seems to be that every Veterinary business is profitable enough to pay whatever is necessary to cover student loans. When graduate Veterinarians enter the workforce a huge majority become employed by small businesses. No amount of marketing, posturing, denial or wishful thinking will change the fact that small businesses success or failure is driven by supply and demand.

From my position in the industry, in the economy in which we all work, the demand for veterinary services appears smaller than the supply of veterinarians. I routinely look at the financial statements of over 50 veterinary practices; equine, mixed and companion animal. Those financial statements demonstrate that practices do not generate enough profit to pay Veterinarians sufficiently to repay student loans under the repayment terms commonly available. That is a remarkably bad situation since the successful transfer of the Veterinary Profession from one generation to another is dependent upon the next generation being solvent and content.

Many practices are changing management practices to become profitable. That will help when practices generate enough earnings to add higher veterinary compensation to the cost structure of the business and remain solvent. Clearly compensation is not a realistic short term ‘fix’ until supply and demand for veterinary services shifts back to favor the Veterinarian.

Lenders ...

Lenders are rightfully concerned about security when they loan anyone money including students. Bankruptcy on student loans used to be a big loss for lenders. However, under the new regulations, student loans cannot be discharged by bankruptcy so there is significantly less risk now. [I wonder if the veterinary industry has its own Matt Leichter.]

Veterinary Colleges

When the dust all settles, Veterinary Colleges are in the business of selling Veterinary Medical Degrees to students who buy a degree with the intention of using it to make a living. In the age of austerity, Veterinary colleges have faced massive budget cuts. One response has been to increase class size, generating tuition revenue for the school. In effect, the colleges are generating more customers for their product and increasing the supply of veterinarians.

From my perspective and experience, the veterinary profession is upside down as far as supply and demand goes. We have inadequate demand for Veterinary services to support the number of veterinarians in practice. Increasing class size diminishes the earning potential and therefore the value of a Veterinary Medical degree yet the cost of the degree continues to escalate. That strategy only works for schools because student loans are easy to acquire and young consumers following their life’s dream are still willing to borrow the money to purchase the degree at an ever higher price with challenging terms. ...

AVMA Accreditation

It is difficult for me, a person working in ‘the business trenches’ of veterinary medicine, to understand the timing of the AVMA’s decision to accredit more schools. This clearly increases supply of veterinarians in the face of decreasing demand for veterinary services thereby reducing the value of a veterinary degree and the earning power of a veterinarian, both of which contribute to student debt management challenges.

Another component of accreditation that is an integral part of the challenge of rising student debt is the requirement to have a research program in order for a school to be accredited by the AVMA. The paradigm that effective teaching of veterinary students requires faculty involved in a research programs has never been assessed to be of measurable benefit to student success in general or even specialty practice.

In general, Assistant, Associate and Full Professor ranked positions are allotted 50% FTE (Full Time Equivalent) in non-teaching functions which include research. Who is paying for that 50% of their time? Many veterinary schools have chosen to hire instructor level individuals that are nearly 100% FTE in teaching to release higher ranked faculty to do research. Why are these instructors that do no or very little research acceptable as educators, when the need for research to enhance education is the paradigm?

The world is changing around us and we need to have a fresh look at research program requirements for accrediting schools. It is impossible to understand how the cost of faculty in 50% FTE positions is not passed along to the student in the form of tuition fees, etc. That component of tuition is financed by student debt. ...

Epilog[ue]

This blog is aggregations of realities that I observe in the course of helping veterinarians manage their businesses and new graduates manage their debt. Although I am not in a position to resolve these challenges, I am in a position to share my observations and invite people in policy making capacities to use some new thinking. After all, our best thinking got us here. ....

[posted by Bill Henderson]

http://lawprofessors.typepad.com/legalwhiteboard/2012/12/job-meltdown-and-debt-crisis-among-veterinary-school-graduates-.html

Blog posts worth reading, Cross industry comparisons, New and Noteworthy | Permalink

Comments

This post is written from a point of view that seems to assume that there is a central planning solution to the dilemma facing veterinary students, graduates, and practicing DVMs. In a way there is, but the actual solution lies outside the scope of that mindset. It is rather the voluntary devolution of the centralized state. The elimination of subsidies and regulations enforced centrally would drive agriculture back toward small family farms and this decentralization would drive up demand for a more widespread distribution of veterinary care. Not having government accreditation of schools and the lack of subsidization thereof would mean an appropriate market level of such schools would be reached commensurate with the demand. The apparent chaos of the situation would be the dynamic opposite of the slow-churning bureaucratic wasteland inevitably produced by centralization.

Posted by: teapartydoc | Dec 21, 2012 4:52:07 AM

I'm just a user of veterinary services (small farmer raising colored angora goats, angora rabbits, chickens, etc. plus all the LGDs needed to protect the livestock from predators).

I find it increasingly difficult to find a veterinarian with a large animal practice that I can afford anymore. As a result, I have learned to do as much as I can for my animals myself - I give vaccines, I can splint a break, I take care of their health in every way possible.

I miss the days when we had a veterinarian who would come out to the farm and knew about all the animals here. Seems like most vets these days only want a small animal practice in the city or suburbs - to make a lot of money. The few large animal vets I'm aware of all charge a fortune and really only want to treat horses .... they figure people with horses can afford to pay more.

I think the recent veterinary school graduates have unrealistic expectations on what they can charge small farmers, and as a result, the farmer learns to do as much as possible herself.

Posted by: Beth Donovan | Dec 21, 2012 6:43:36 AM

Try being a purebred dog breeder. The cost of veterinary care, even routine procedures such as planned c-sections, spays, dental cleanings have skyrocketed well past the pace of inflation - and by extension, puppy prices. Most don't dream of turning a profit, we breed to produce an occasional litter for show with the majority going as pets. We swallow the losses, but lately, those swallows are becoming big gulps.

Meanwhile, the veterinary colleges are churning out activist vets indoctrinated with an animal rights mindset, who are suspicious of breeders and downright hostile towards purebred dogs, our breed standards and traditions, and animal sport in general.

Why do we do this? A lot of us have asked ourselves that question, and have decided to do it a lot less often. Registrations for purebred dogs have plummeted. Nobody in the veterinary industry has even bothered to notice, or ask why that might be happening.

Posted by: Kate | Dec 28, 2012 8:26:10 PM

Horses are luxuries, so any veterinarian student should diversify their skills in order to treat beef cattle, goats, chickens, etc. Many graduates end up working for the USDA in some form or another. This also pertains to human health vis a vis nurses and doctors. If I remember correctly, the government, and medical professionals themselves, have a hand in how many students can enter health programs.

Posted by: Valerie | Dec 28, 2012 9:38:37 PM

'Tis good that you bring up the difficulty of finding a large animal veterinarians, Beth. At least 10 years ago some people began to notice that girls were dominating vet school enrollment and a far smaller percentage of them were training for large animal practice than had been the case. Observers of the profession have been predicting a surplus of vets for kittens and puppies and a corresponding dearth of vets practicing large animal care.

Good luck on your farm. Looks like more DIY animal care is in your future, Beth.

Posted by: Micha Elyi | Dec 28, 2012 10:27:13 PM

I agree Beth. We have a small hobby farm with steers, pigs, and chickens. Minimum charge for a vet to come out is easily over a hundred dollars so we always try to doctor the animals ourselves. The information and medicines one can find online allows for this. Tiny, independent family farms don't need big agri-business bills. Vets have priced themselves out the large and growing agrarian-centered family farm market.

Posted by: Iggycatster | Dec 29, 2012 7:13:44 AM

People always seem to want things cheaper & remember how things were in the old days. Bad news is this is a new economy where a student goes into debt >$250,000 & spends 8 years getting that DVM. Then they can go into debt $250-500,000 to open their own clinic. If they start out as an associate DVM in a practice, they may earn $65,000 for the 1st year or more. As an owner they might earn 50 hours a week. Those who do farm animals will be on call 24/7.
How many of you would think this is a good business investment ?

Posted by: charles citizen | Dec 29, 2012 7:36:40 AM

I typed greater than 50 hours a week, but it posted "earn."

Posted by: charles citizen | Dec 29, 2012 7:39:29 AM

I could be wrong, but I don't think copying and pasting nearly the entire blog entry counts as an "excerpt." At least you linked to the blog, but if this is an example of the type of value the legal profession now adds to society, you shouldn't be surprised when lawyers can't make enough to cover student loans.

Next time just link to the blog if you aren't going to make any constructive points other than a simple paragraph stating the obvious.

Posted by: Ed Dantes | Dec 29, 2012 7:42:25 AM

Beth the entire point of this article is to point out that veterinarians AREN'T, in fact, making a fortune. Last year, the average debt load for a graduating veterinary student was just over $150,000. The average starting salary (for those who had even found jobs) was $45,575. That's obviously an unsustainable difference and VERY different situation from when Good Old Doc would come out to your farm and charged way less - he had a far smaller debt load in relationship to his salary (the rule of thumb was typically a debt load equal to or smaller than the starting salary).

Medicine also grows and evolves. 40 years ago, the things your veterinarian did for your animals were far less sophisticated than the things they are able to do now (and no one was running around suing them for malpractice). That makes it cost more, but outcomes are often better as well.

Of course, there is a rise in salary with experience but it never reaches astronomical proportions. See the Bureau of Labor Statistics' 2010 numbers: http://www.bls.gov/ooh/healthcare/veterinarians.htm#tab-5 (where interestingly, equine vets make the least of all, guess they just really love horses after all!). I know people with no college degrees who make more than $39.44/hour. I will literally not pay off my loans until retirement age. My payment is $750/month for 30 years - that's almost 20% of my take home pay (and I'm at a point where that probably won't get much higher). I wouldn't go to vet school again and I encourage starry-eyed students "who love animals" to actively seek other options. The profession is in crisis and it's not an affordable career anymore. The vet schools just keep raising tuition and churning out more grads, who can't find jobs.

Your vets are not trying to rip you off, people. They are just trying to make a living, pay the staff, keep the lights on, pay for the gas to get to your farm. None of us are driving Porsches. They go through the same education and have the same loans as your MDs. They buy the same drugs and equipment as MDs, but they have to charge you far less for them because they know you have to pay for it out of pocket. Keep in mind too that most of your "recent veterinary school graduates" aren't in charge of making the prices. They are working for an older vet/practice owner.

Posted by: HillaryDVM | Dec 29, 2012 7:43:05 AM

To Ed Dantes, I would be willing to bet that Dr. Andrew Clark is happy and flattered that his analysis, with a link and full attribution, is being read by a non-vet audience. His analysis is indeed carrying the post. My contribution was finding it and signaling its relevance to those in the legal industry. That is power of the Internet -- insights from disparate places are easier to connect, so we in the legal industry can see our own situation with a fresh perspective.

The plight of veterinarians is not obvious to lawyers. Now some of us lawyers see the connection. Yes, in hindsight, it all looks obvious. bh.

Posted by: Bill Henderson | Dec 29, 2012 2:26:34 PM

Charles Citizen,
You're right; the cost of education has priced many Vets out of the market. A Vet license shouldn't cost +$250K. I won't be surprised if we see more unlicensed specialists working under-the-counter in the future. Supply and Demand. I don't live in the past. However, people who think paying $150 + for a quick visit to administer some medicine and shoot the breeze are living in a reality that's quickly going away.

Posted by: Iggycatster | Dec 29, 2012 5:16:29 PM

I'm sad to know that things are hard for vets. Yet again, it's not easy for anybody right now. My friend is becoming a vet and I hope they do well.

Posted by: Vet in Frankfort | Jan 17, 2013 8:17:14 AM

Just because it's hard to get a vet to come to your farm doesn't mean that there is a deficiency of vets. There has to be a high enough density of animals in an area to support a vet. Ten farms in the middle of nowhere with a few goats or sheep just won't cut it. A vet needs thousands of animals in a relativley small radius, especially when it comes to large animals, to make a living. Today farms are consolidating, the animals are moving to fewer but larger locations and the vets must follow them to be able to make a living. In addition, if you consider what you would pay for the equivalent care in human medicine you may quickly realize that the charges aren't so high after all. They even come to your door. Good luck getting your MD to do that for $100 bucks. It is a pretty depressing profession to be getting into right now and it would be awfully nice if people appreciated how extremely low cost vet care is compared to the margins made by our human MD counterparts.

Posted by: Vet student | Feb 25, 2013 1:00:02 PM

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